Exhibit 4.1
Form of Pooling and Servicing Agreement
HEADLANDS MORTGAGE SECURITIES, INC.
as Sponsor
HEADLANDS MORTGAGE COMPANY
as Seller and Master Servicer,
and
[ ],
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of , 199
-----------------------
Mortgage Pass-Through Certificates
Series 199 -
TABLE OF CONTENTS
Section Page
ARTICLE I
Definitions
1.01. .........................................................I-6
Accretion Directed Certificates...................................I-6
Accrual Amount....................................................I-6
Accrual Certificates..............................................I-6
Accrual Termination Date..........................................I-6
Agreement.........................................................I-6
Allocable Share...................................................I-6
Allocated Amount..................................................I-6
Allocated Amount Decline..........................................I-6
Amortization Payment..............................................I-7
Amount Held for Future Distribution...............................I-7
Applicable Credit Support Percentage..............................I-7
Appraised Value...................................................I-7
Available Funds...................................................I-7
Bankruptcy Bond...................................................I-7
Bankruptcy Coverage Termination Date..............................I-8
Bankruptcy Loss...................................................I-8
Blanket Mortgage..................................................I-8
Book-Entry Certificate............................................I-8
Business Day......................................................I-8
Certificate.......................................................I-8
Certificate Account...............................................I-8
Certificate Account Deposit Date..................................I-8
Certificateholder or Holder.......................................I-8
Certificate Insurance Policy......................................I-9
Certificate Insurance Premium.....................................I-9
Certificate Insurance Proceeds....................................I-9
Certificate Insurer...............................................I-9
Certificate Owner.................................................I-9
Certificate Register and Certificate Registrar....................I-9
Class .........................................................I-9
Class Certificate Balance.........................................I-9
Class Interest Shortfall.........................................I-10
Class Optimum Interest Distribution Amount.......................I-10
Class Subordination Percentage...................................I-10
Class Unpaid Interest Shortfall..................................I-10
Closing Date.....................................................I-10
Code ........................................................I-10
COFI ........................................................I-10
COFI Certificates................................................I-10
Component........................................................I-10
Component Balance................................................I-10
i
Section Page
Component Certificates...........................................I-11
Converted Mortgage Loan..........................................I-11
Convertible Mortgage Loan........................................I-11
Cooperative Corporation..........................................I-11
Coop Shares......................................................I-11
Cooperative Loan.................................................I-11
Cooperative Property.............................................I-11
Cooperative Unit.................................................I-11
Core Percentage..................................................I-11
Corporate Trust Office...........................................I-11
Credit Enhancement Fee...........................................I-11
Credit Enhancement Fee Rate......................................I-11
Credit Support Termination Date..................................I-12
Current Bankruptcy Amount........................................I-12
Curtailment......................................................I-12
Custodian........................................................I-12
Cut-Off Date.....................................................I-12
Cut-Off Date Pool Principal Balance..............................I-12
Cut-Off Date Principal Balance...................................I-12
Debt Service Reduction...........................................I-12
Debt Service Reduction Mortgage Loan.............................I-13
Defective Mortgage Loan..........................................I-13
Deficient Valuation..............................................I-13
Deficient Valuation Mortgage Loan................................I-13
Definitive Certificates..........................................I-13
Delinquent Installments..........................................I-13
Denomination.....................................................I-13
Depository.......................................................I-14
Depository Participant...........................................I-14
Determination Date...............................................I-14
Distribution Date................................................I-14
Due Date ........................................................I-14
Duff & ▇▇▇▇▇▇....................................................I-14
Eligible Account.................................................I-14
ERISA ........................................................I-15
Escrow Account...................................................I-15
Event of Default.................................................I-15
Expenses ........................................................I-15
Expense Fee......................................................I-15
Expense Rate.....................................................I-15
FDIC ........................................................I-15
FHLMC ........................................................I-15
Final Distribution Date..........................................I-15
Fitch ........................................................I-15
FNMA ........................................................I-15
Fraud Coverage Termination Date..................................I-15
Fraud Loan.......................................................I-15
Fraud Loss.......................................................I-15
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Section Page
Fraud Loss Coverage Amount.......................................I-16
Fraud Loss Coverage Termination Date.............................I-16
Gross Margin.....................................................I-16
Guide ........................................................I-16
Independent......................................................I-16
Index ........................................................I-16
Initial Adjustment Date..........................................I-17
Initial Bankruptcy Coverage Amount...............................I-17
Initial Class Certificate Balance................................I-17
Initial Component Balance........................................I-17
Initial Fraud Loss Coverage Amount...............................I-17
Initial LIBOR Rate...............................................I-17
Initial Special Hazard Coverage Amount...........................I-17
Insurance Proceeds...............................................I-17
Insured Expenses.................................................I-18
Interest Accrual Period..........................................I-18
Investment Depository............................................I-18
LIBOR Certificates...............................................I-18
Liquidated Deficient Valuation Loss..............................I-18
Liquidated Deficient Valuation Mortgage Loan.....................I-18
Liquidated Mortgage Loan.........................................I-18
Liquidation Expenses.............................................I-18
Liquidation Period...............................................I-18
Liquidation Proceeds.............................................I-19
Loan-to-Value Ratio..............................................I-19
Maintenance......................................................I-19
Master Servicer..................................................I-19
Master Servicer's Certificate....................................I-19
Master Servicing Fee.............................................I-19
Master Servicing Fee Rate........................................I-19
Maximum Rate.....................................................I-19
Mezzanine Certificates...........................................I-19
Minimum Rate.....................................................I-19
Monthly Advance..................................................I-19
▇▇▇▇▇'▇ ........................................................I-19
Mortgage ........................................................I-20
Mortgage File....................................................I-20
Mortgage Interest Rate...........................................I-20
Mortgage Loans...................................................I-20
Mortgage Loan Schedule...........................................I-20
Mortgage Note....................................................I-20
Mortgaged Property...............................................I-20
Mortgagor........................................................I-20
Net Liquidation Proceeds.........................................I-20
Net Mortgage Interest Rate or NMR................................I-21
Net Prepayment Interest Shortfalls...............................I-21
Net Realized Loss................................................I-21
Net Special Hazard Losses........................................I-21
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Section Page
NMR ........................................................I-21
Nonrecoverable Advance...........................................I-21
Non-Delay Certificates...........................................I-22
Non-U.S. Person..................................................I-22
Notional Amount..................................................I-22
Notional Amount Certificates.....................................I-22
Offered Certificates.............................................I-22
Officers' Certificate............................................I-22
Opinion of Counsel...............................................I-22
Original Applicable Credit Support Percentage....................I-22
Original Mortgage Loans..........................................I-22
Original Subordinate Certificate Balance.........................I-23
Outside Reference Date...........................................I-23
Outstanding Mortgage Loan........................................I-23
Ownership Interest...............................................I-23
Pass-Through Rate................................................I-23
Paying Agent.....................................................I-23
Percentage Interest..............................................I-23
Periodic Rate Cap................................................I-23
Permitted Investments............................................I-23
Permitted Transferee.............................................I-24
Person ........................................................I-25
Physical Certificates............................................I-25
Planned Principal Classes........................................I-25
Pool or Trust Fund...............................................I-25
Pool Insurance Policy............................................I-25
Pool Insurer.....................................................I-25
Pool Scheduled Principal Balance.................................I-25
Prepayment Interest Shortfall....................................I-25
Primary Insurance Policy.........................................I-26
Principal Only Certificates......................................I-26
Principal Prepayment.............................................I-26
Principal Prepayment in Full.....................................I-26
Private Certificates.............................................I-26
Proprietary Lease................................................I-26
Prospectus.......................................................I-26
Prospectus Supplement............................................I-26
Purchase Price...................................................I-26
Qualified Insurer................................................I-26
Rating Agency....................................................I-27
Recognition Agreement............................................I-27
Record Date......................................................I-27
Reduced Scheduled Principal Balance..............................I-27
Reference Date...................................................I-27
Regular Certificate..............................................I-27
Relief Act.......................................................I-27
Relief Act Reductions............................................I-27
Remaining Liquidated Amount......................................I-28
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Section Page
REMIC ........................................................I-28
REMIC Certificate Maturity Date..................................I-28
REMIC Change of Law..............................................I-28
REMIC Provisions.................................................I-28
REO Mortgage Loan................................................I-28
REO Proceeds.....................................................I-28
Required Insurance Policy........................................I-28
Residual Certificates............................................I-28
Responsible Officer..............................................I-28
S&P ........................................................I-29
Scheduled Principal Balance......................................I-29
Seller ........................................................I-29
Seller's Agreement...............................................I-29
Senior Certificate...............................................I-29
Senior Certificate Balance.......................................I-29
Senior Percentage................................................I-29
Senior Prepayment Percentage.....................................I-29
Senior Principal Distribution Amount.............................I-30
Servicer ........................................................I-31
Servicing Fee....................................................I-31
Servicing Fee Rate...............................................I-31
Servicing Officer................................................I-31
Special Hazard Coverage Termination Date.........................I-31
Special Hazard Event.............................................I-31
Special Hazard Fee...............................................I-32
Special Hazard Fee Rate..........................................I-32
Special Hazard Insurance Policy..................................I-32
Special Hazard Insurer...........................................I-32
Special Hazard Loss Coverage Amount..............................I-32
Special Hazard Mortgage Loan.....................................I-33
Splinter Loss....................................................I-33
Subordinate Certificate..........................................I-33
Subordinate Percentage...........................................I-33
Subordinate Percentage Allocation................................I-33
Subordinate Prepayment Percentage................................I-33
Subordinate Prepayment Percentage Allocation.....................I-33
Subordinate Principal Distribution Amount........................I-33
Substitute Mortgage Loan.........................................I-34
Substitution Adjustment Amount...................................I-34
Substitution Date................................................I-34
Supplemental Mortgage Loan Schedule..............................I-34
Targeted Principal Classes.......................................I-35
Tax Matters Person...............................................I-35
Tax Matters Person Certificate...................................I-35
Trust Fund or Pool...............................................I-35
Trustee Fee......................................................I-35
Trustee Fee Rate.................................................I-35
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Section Page
Underwriter......................................................I-35
Voting Rights....................................................I-35
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
2.01. Conveyance of Mortgage Loans............................II-1
2.02. Acceptance by Trustee...................................II-2
2.03. Representations and Warranties of the Seller,
the Sponsor and the Trustee.............................II-3
2.04. Substitution of Mortgage Loans..........................II-8
2.05. Designation of Interests in REMIC......................II-10
2.06. Designation of Start-up Day............................II-10
2.07. REMIC Certificate Maturity Date........................II-10
2.08. Purchase of Converted Mortgage Loans...................II-10
ARTICLE III
Administration and Servicing
of Mortgage Loans
3.01. The Master Servicer to Act as Servicer.................III-1
3.02. Servicing Agreements between Master Servicer
and Servicers; Enforcement of Servicer's and
Seller's Obligations...................................III-2
3.03. Liability of the Master Servicer.......................III-3
3.05. Collection of Taxes, Assessments and Similar
Items; Master Servicing Accounts.......................III-7
3.06. Permitted Withdrawals from the Certificate
Account................................................III-8
3.07. Maintenance of the Primary Insurance Policies;
Collections Thereunder.................................III-9
3.08. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.......................III-10
3.09. Enforcement of Due-On-Sale Clauses; Assumption
Agreements............................................III-12
3.10. Realization upon Defaulted Mortgage Loans.............III-13
3.11. Trustee to Cooperate; Release of Mortgage
Files.................................................III-15
3.12. Servicing and Other Compensation; Payment of
Certain Expenses by the Master Servicer...............III-16
3.13. Annual Statement as to Compliance.....................III-17
3.14. Annual Independent Public Accountants' Servic-
ing Report............................................III-18
3.15. Access to Certain Documentation and Informa-
tion Regarding the Mortgage Loans.....................III-18
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Section Page
3.16. Rights of the Sponsor in Respect of the Master
Servicer..............................................III-18
ARTICLE IV
Master Servicer's Certificate; Monthly Advances
4.01. Master Servicer's Certificate...........................IV-1
4.02. Monthly Advances........................................IV-1
ARTICLE V
Payments and Statements to
Certificateholders
5.01. Distributions............................................V-1
5.02. Priorities of Distribution...............................V-1
5.03. Allocation of Net Realized Losses........................V-3
5.04. Statements to Certificateholders.........................V-4
5.05. Tax Returns and Reports to Certificateholders............V-8
5.06. Tax Matters Person.......................................V-9
5.07. Rights of the Tax Matters Person in Respect of
the Trustee..............................................V-9
5.08. REMIC Related Covenants..................................V-9
5.09. Determination of Pass-Through Rates for COFI
Certificates............................................V-10
ARTICLE VI
The Certificates
6.01. The Certificates........................................VI-1
6.02. Registration of Transfer and Exchange of
Certificates............................................VI-1
6.03. Mutilated, Destroyed, Lost or Stolen Certifi-
▇▇▇▇▇...................................................VI-7
6.04. Persons Deemed Owners...................................VI-7
ARTICLE VII
The Sponsor and the Master Servicer
7.01. Respective Liabilities of the Sponsor and the
Master Servicer........................................VII-1
7.02. Merger or Consolidation of the Sponsor or the
Master Servicer........................................VII-1
7.03. Limitation on Liability of the Sponsor, the
Master Servicer and Others.............................VII-1
7.04. Sponsor and Master Servicer Not to Resign..............VII-2
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Section Page
ARTICLE VIII
Default
8.01. Events of Default.....................................VIII-1
8.02. Remedies of Trustee...................................VIII-2
8.03. Directions by Certificateholders and Duties of
Trustee During Event of Default.......................VIII-3
8.04. Action upon Certain Failures of the Master
Servicer and upon Event of Default....................VIII-3
8.05. Trustee to Act; Appointment of Successor..............VIII-4
8.06. Notification to Certificateholders....................VIII-5
ARTICLE IX
The Trustee
9.01. Duties of Trustee.......................................IX-1
9.02. Certain Matters Affecting the Trustee...................IX-2
9.03. Trustee Not Liable for Certificates.....................IX-3
9.04. Trustee May Own Certificates............................IX-3
9.05. Eligibility Requirements for Trustee....................IX-3
9.06. Resignation and Removal of Trustee......................IX-4
9.07. Successor Trustee.......................................IX-5
9.08. Merger or Consolidation of Trustee......................IX-5
9.09. Appointment of Co-Trustee or Separate Trustee...........IX-6
9.10. Authenticating Agents...................................IX-7
9.11. Trustee's Fees and Expenses.............................IX-8
9.12. Tax Returns.............................................IX-9
ARTICLE X
Termination
10.01. Termination upon Purchase by the Master
Servicer or Liquidation of All Mortgage Loans............X-1
10.02. Additional Termination Requirements......................X-3
ARTICLE XI
Miscellaneous Provisions
11.01. Amendment...............................................XI-1
11.02. Recordation of Agreement................................XI-2
11.03. Limitation on Rights of Certificateholders..............XI-2
11.04. Governing Law...........................................XI-3
11.05. Notices.................................................XI-4
11.06. Severability of Provisions..............................XI-4
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Section Page
11.07. Certificates Nonassessable and Fully Paid...............XI-4
11.08. Access to List of Certificateholders....................XI-5
ix
Section Page
EXHIBITS
Exhibit A - Form of Face of Senior Certificates.........................A-1
Exhibit B - Form of Face of Residual Certificates.......................B-1
Exhibit C - Reserved
Exhibit D - Form of Face of Subordinate Certificate.....................D-1
Exhibit E - Form of Reverse of all Certificates.........................E-1
Exhibit F - Mortgage Loan Schedule......................................F-1
Exhibit G - Seller's Agreement..........................................G-1
Exhibit H - Request for Release of Documents............................H-1
Exhibit I - Form of Affidavit regarding Transfer of
Residual Certificates pursuant
to Section 6.02.................................I-1
Exhibit 1 Certain Definitions from Article I of the
Agreement
Exhibit 2 Excerpt from Section 6.02 of the Agreement
Exhibit J - Form of Investment Letter...................................J-1
Exhibit K - Form of Master Servicer's Certificate.......................K-1
Exhibit L - Form of Opinion of Counsel pursuant to
Section 6.02....................................L-1
THIS POOLING AND SERVICING AGREEMENT, dated as of ,
-------
199 , among Headlands Mortgage Securities, Inc., as sponsor
-
(together with its permitted successors and assigns, the
"Sponsor"), Headlands Mortgage Company, as seller and master
servicer (in each such capacity together with its permitted
successors and assigns, the "Seller" and the "Master Servicer")
and [ ], as trustee (together with its permitted successors and
assigns, the "Trustee").
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the
Sponsor, the Master Servicer, the Seller and the Trustee agree as follows:
PRELIMINARY STATEMENT
The Sponsor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. [The Trust Fund for federal income
tax purposes will consist of a single REMIC. The Certificates will represent the
entire beneficial ownership interest in the Trust Fund. The Regular Certificates
will represent the "regular interest" in the REMIC and the Residual Certificates
will represent the single "residual interest" in the REMIC. The "latest possible
maturity date" for federal income tax purposes of all interests created hereby
will be the Latest Possible Maturity Date.]
The following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in excess thereof
in which such Classes shall be issuable (except that one Certificate of each
Class of Certificates may be issued in any amount in excess of the minimum
denomination and, in addition, one Residual Certificate representing the Tax
Matters Person Certificate may be issued in a different amount):
===================================================================================================
Integral Multiples in
Class Certificate Excess of Minimum
Balance Pass-Through Rate Minimum Denomination Denomination
---------------------------------------------------------------------------------------------------
Class A-1 [Variable Rate (1)]
---------------------------------------------------------------------------------------------------
Class X (2) (3)
---------------------------------------------------------------------------------------------------
[Class R] [ ] [ ] [ ] [N/A]
---------------------------------------------------------------------------------------------------
Class M-1 [ ]%[Variable Rate (1)]
---------------------------------------------------------------------------------------------------
Class B-1 [ ]%[Variable Rate (1)]
---------------------------------------------------------------------------------------------------
Class B-2 [ ]%[Variable Rate (1)]
===================================================================================================
------------------------------------
[(1) The Pass-Through Rate for any Distribution Date will equal the weighted
average of the Net Mortgage Rates then in effect for each Mortgage Loan. The
Net Mortgage Rate for each Mortgage Loan will equal the Mortgage Rate thereon
on the first date of the month of the related Distribution Date less the
related Expense Rate. The Pass-Through Rate for the first Distribution Date is
expected to be approximately % per annum.]
(2) The Class X Certificates will have no principal balances and will bear
interest on the Notional Amount.
(3) The Pass-Through Rate for this Class for any Distribution Date will be
equal to the excess of (a) the weighted average of the Net Mortgage Rates of
the Mortgage Loans over (b) %.
I-2
Set forth below are designations of Classes of Certificates to the
categories used herein:
Accretion Directed
Certificates.......................... [ ].
Accrual Certificates.................... [ ].
Book-Entry Certificates................. All Classes of Certificates
other than the Physical Certif-
icates.
COFI Certificates....................... [ ].
Component Certificates.................. [ ].
Components.............................. For purposes of calculating
distributions of principal, the
Component Certificates will be
comprised of multiple payment
components having the
designations, Initial Component
Balances and Pass-Through Rates
set forth below:
Initial
Component
Designation Balance Pass-Through Rate
N/A N/A N/A
Delay Certificates...............All interest-bearing Classes of
Certificates other than the Non-
Delay Certificates, if any.
ERISA-Restricted
Certificates...................The Class M-1, Class B-1 and
Class B-2
Floating Rate Certificates.......[ ].
Inverse Floating Rate
Certificates...................[ ].
LIBOR Certificates...............[ ].
I-3
Mezzanine Certificates.......... The Class M-1 Certificates.
Non-Delay Certificates.......... [ ].
Notional Amount Certificates.... The Class X Certificates.
Offered Certificates............ All Classes of Certificates
other than the Private
Certificates.
Physical Certificates........... The [Class X,] Class R and
Subordinated Certificates.
Planned Principal Classes....... [ ].
Primary Planned Principal
Classes....................... [ ].
Principal Only Certificates..... [ ].
Private Certificates............ The Class R, Class B-1 and Class
B-2 Certificates.
Rating Agencies................. [ ].
Regular Certificates............ All Classes of Certificates
other than the Class R
Certificates.
Residual Certificates........... Class R Certificates.
Scheduled Classes............... [ ].
Secondary Planned
Principal Classes............. [ ].
Senior Certificates............. Class A-1, Class X and [Class R]
Certificates.
Subordinated Certificates....... The Mezzanine Certificates,
Class B-1 and Class B-2
Certificates.
Targeted Principal Classes...... [ ].
With respect to any of the foregoing designations as to which the
corresponding reference is "None," all defined terms and provisions herein
relating solely to such designations shall be of no force or effect, and any
calculations herein incorporating references to such designations shall be
interpreted without reference to such designations and amounts.
I-4
Defined terms and provisions herein relating to statistical rating agencies not
designated above as Rating Agencies shall be of no force or effect.
I-5
ARTICLE I
Definitions
Section 1.01. Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article.
Accretion Directed Certificates: As specified in the
Preliminary Statement.
Accrual Amount: With respect to any Class of Accrual Certificates and
any Distribution Date prior to the Accrual Termination Date, the amount
allocable to interest on each such Class of Accrual Certificates with respect to
such Distribution Date pursuant to Section 5.02(a)(i).
Accrual Certificates: As specified in the Preliminary
Statement.
Accrual Termination Date:
Advancing Date: The fourth Business Day preceding the
related Distribution Date.
Agreement: This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
Allocable Share: As to each Class of Regular Certificates, such Class'
share of the interest reduction in respect of any Debt Service Reduction
Mortgage Loan or Deficient Valuation Mortgage Loan or any Mortgage Loan that is
the subject of a Relief Act Reduction, such share being determined by the ratio
of one month's interest at the related Pass-Through Rate on such Class' Senior
Percentage or, in the case of the Subordinate Certificates, the Subordinate
Percentage Allocation of the Scheduled Principal Balance of such Mortgage Loan
and one month's interest on the Scheduled Principal Balance of such Mortgage
Loan at the related Net Mortgage Rate.
[Allocated Amount]:
[Allocated Amount Decline: As to each respective Allocated Amount and
Distribution Date, the excess of (x) such Allocated Amount immediately following
the Due Date in the month preceding the month of such Distribution Date over (y)
such Allocated Amount immediately following the Due Date in the month of such
Distribution Date; provided that the Allocated Amount determined pursuant to
clause (y) shall be zero immediately following the
I-6
Due Date in the month in which the Final Distribution Date
occurs.]
Amortization Payment: As to any REO Mortgage Loan and any month, the
payment of principal and accrued interest due in such month in accordance with
the terms of the related Mortgage Note as contemplated by the second paragraph
of Section 3.10.
Amount Held for Future Distribution: As to any Distribution Date, the
total of the amounts held in the Certificate Account at the close of business on
the preceding Determination Date on account of (i) Principal Prepayments and
Liquidation Proceeds received or made in the month of such Distribution Date and
(ii) payments which represent receipt of scheduled payments of principal and
interest in respect of a Due Date or Due Dates subsequent to the related Due
Date.
[Applicable Credit Support Percentage: As defined in
Section 5.02(d).]
Appraised Value: The value of the property underlying a Mortgage Loan
based, in the case of origination of such Mortgage Loan, on the lower of an
appraisal at the time of origination or the sales price of such property or
based, in the case of a refinancing, on an appraisal at the time of refinancing.
Available Funds: As to any Distribution Date, an amount equal to (a)
the sum of (i) the amount collected in respect of the Mortgage Loans as of the
close of business on the preceding Determination Date, (ii) the amount of any
Monthly Advance made on the preceding Certificate Account Deposit Date, (iii)
the aggregate of the Purchase Prices for Defective Mortgage Loans repurchased on
such Distribution Date pursuant to Sections 2.02 or 2.03, (iv) the aggregate of
the Substitution Adjustment Amounts in connection with any Substitute Mortgage
Loans substituted for Defective Mortgage Loans on such Distribution Date
pursuant to Section 2.04, (v) any amount required to be deposited in the
Certificate Account on the preceding Certificate Account Deposit Date pursuant
to Section 3.04(a), reduced by (b) the sum as of the close of business on such
preceding Determination Date of (x) the Amount Held for Future Distribution, (y)
amounts permitted to be withdrawn by the Master Servicer from the Certificate
Account in respect of the Mortgage Loans pursuant to clauses (i)-(vi),
inclusive, of Section 3.06 and (z) all income from Permitted Investments that
are held in the Investment Account for the account of the Master Servicer.
[Balloon Payment: The principal component of a payment due
on a Mortgage Loan on its maturity date.]
I-7
[Bankruptcy Bond: The limited purpose bond with respect to
proceedings relating to Mortgagors under the Federal Bankruptcy
Code, which proceedings result in Bankruptcy Losses, and all
amendments or endorsements thereto, or any replacement bond
obtained by the Master Servicer pursuant to Section 3.17.]
Bankruptcy Coverage Termination Date: The point of time at
which the Current Bankruptcy Amount is reduced to zero.
Bankruptcy Loss: Any Deficient Valuation or Debt Service
Reduction.
[Blanket Mortgage: The mortgage or mortgages encumbering
the Cooperative Property.]
Book-Entry Certificate: As specified in the Preliminary
Statement.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of North Carolina or in the state
where the Corporate Trust Office is located are required or authorized by law or
executive order to be closed.
Certificate: Any Regular Certificate or Residual Certifi-
cate.
Certificate Account: The segregated account or accounts established and
maintained by the Master Servicer pursuant to Section 3.04(b). Such accounts
shall be entitled " , as Trustee, for the benefit of Certificateholders of
Mortgage Pass-Through Certificates, Series 199 - Certificate Account" and shall
each be an Eligible Account. Funds deposited in the Certificate Account (other
than any income on Permitted Investments included therein) shall be held in
trust for Certif-icateholders.
Certificate Account Deposit Date: As to any Distribution Date, the
Business Day preceding such Distribution Date or if the Certificate Account is
held at ____________________, such Distribution Date.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Sponsor, the Master Servicer or any affiliate thereof shall be
deemed not to be outstanding and the Percentage Interest evidenced thereby shall
not be taken into account in determining whether the requisite amount of
Percentage Interests necessary to effect any such consent has been obtained,
unless such entity is
I-8
the registered owner of the entire Class of Certificates, provided that the
Trustee shall not be responsible for knowing that any Certificate is registered
in the name of such an affiliate unless one of its Responsible Officers has
actual knowledge.
[Certificate Insurance Policy: The certificate guaranty
surety bond, policy number [ ], dated ,
19 , issued by the Certificate Insurer in favor of the Trustee
for the benefit of the Certificateholders.]
Certificate Insurance Premium: The semiannual premium payable by the
Trustee to the Certificate Insurer under the Certificate Insurance Policy
specified in the agreement between the Certificate Insurer and the Sponsor.
Certificate Insurance Proceeds: Any proceeds of the
Certificate Insurance Policy.
Certificate Insurer: So long as the Certificate Insurance
Policy is in force, [ ], a
[ ], or any successor thereto, as
issuer of the Certificate Insurance Policy.]
Certificate Owner: With respect to a Book-Entry Certif-
icate, the person who is the beneficial owner of a Book-Entry
Certificate.
Certificate Register and Certificate Registrar: The regis-
ter maintained and the registrar appointed pursuant to Section
6.02.
Class: As to the Certificates, the Class A-1, Class X,
Class M-1, Class B-1 and Class B-2 Certificates or the Residual
Certificates, as the case may be.
Class Certificate Balance: As to any Distribution Date and any Class of
Regular Certificates (other than the Notional Amount Certificates), the related
Initial Class Certificate Balance reduced by the sum of (i) the amount
distributed to Holders of such Class of Certificates on prior Distribution Dates
and allocable to principal and (ii) the sum of (a) in the case of such Classes
of Regular Certificates, the amount of the related Net Realized Losses
previously applied in reduction of the Class Certificate Balance of such Class
pursuant to Section 5.03 hereof and (b) in the case of the Class of Subordinate
Certificates then outstanding with the lowest priority of distribution pursuant
to Section 5.02(a), the amount by which the Pool Scheduled Principal Balance as
of the Due Date in the month of such Distribution Date exceeds the aggregate of
the Class Certificate Balances as of such Distribution Date (after giving effect
to (x) distributions to Holders of Regular Certificates on such Distribution
Date
I-9
allocable to principal and (y) any allocation of the related Net Realized Losses
on such Distribution Date).
Class Interest Shortfall: As to any Distribution Date and Class of
Regular Certificates, the amount by which the amount described in clause (i) of
the definition of Class Optimum Interest Distribution Amount for the related
Class of Certificates exceeds the amount of interest actually distributed on
such Class of Certificates on such Distribution Date.
Class Optimum Interest Distribution Amount: As to any Distribution Date
and each Class of Regular Certificates, the sum of (i) one month's interest
accrued during the related Interest Accrual Period at the related Pass-Through
Rate on the applicable Class Certificate Balance or Notional Amount, subject to
reduction pursuant to Section 5.02(b), and (ii) any Class Unpaid Interest
Shortfall for such Class.
[Class Subordination Percentage: With respect to any Distribution Date
and each Class of Subordinated Certificates, the quotient (expressed as a
percentage) of (a) the Class Certificate Balance of such Class of Certificates
immediately prior to such Distribution Date divided by (b) the aggregate of the
Class Certificate Balances immediately prior to such Distribution Date of all
Classes of Certificates.]
Class Unpaid Interest Shortfall: As to any Distribution Date and each
Class of Regular Certificates, the amount by which the aggregate Class Interest
Shortfalls for such Class on prior Distribution Dates exceeds the amount of
interest actually distributed on such Class on such prior Distribution Dates
pursuant to clause (ii) of the definition of Class Optimum Interest Distribution
Amount.
Closing Date: , 199 .
Code: The Internal Revenue Code of 1986, as the same may be
amended from time to time.
[COFI: The Monthly Weighted Average Cost of Funds Index for
the Eleventh District Savings Institutions published by the
Federal Home Loan Bank of San Francisco.]
[COFI Certificates: As specified in the Preliminary
Statement.]
[Component: As specified in the Preliminary Statement.]
[Component Balance: With respect to any Component and any
Distribution Date, the Initial Component Balance thereof on the
Closing Date, less all amounts applied in reduction of the
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principal balance of such Component and Net Realized Losses
allocated thereto on previous Distribution Dates.]
Component Certificates: As specified in the Preliminary
Statement.
[Converted Mortgage Loan: A Convertible Mortgage Loan that
has converted from an adjustable Mortgage Rate to a fixed
Mortgage Rate.
Convertible Mortgage Loan: A Mortgage Loan with a Mortgage
Note that provides for the conversion thereof at the option of
the Mortgagor from an adjustable Mortgage Interest Rate to a
fixed Mortgage Interest Rate.]
[Coop Shares: Shares issued by a Cooperative Corporation.]
[Cooperative Corporation: The entity that holds title (fee
or an acceptable leasehold estate) to the real property and
improvements constituting the Cooperative Property and which
governs the Cooperative Property, which Cooperative Corporation
must qualify as a Cooperative Housing Corporation under Section
216 of the Code.]
[Cooperative Loan: Any Mortgage Loan secured by Coop Shares
and a Proprietary Lease.]
[Cooperative Property: The real property and improvements
owned by the Cooperative Corporation, that includes the
allocation of individual dwelling units to the holders of the
Coop Shares of the Cooperative Corporation.]
[Cooperative Unit: A single family dwelling located in a
Cooperative Property.]
[Core Percentage:]
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate business shall be administered, which office
at the date of the execution of this instrument is located at
_______________________________.
[Credit Enhancement Fee: As to each Mortgage Loan, the
amount payable to the Pool Insurer and the Special Hazard Insurer
in respect of such Mortgage Loan.]
[Credit Enhancement Fee Rate: With respect to any Mortgage
Loan, the sum of the Pool Insurer Fee Rate and the Special Hazard
Fee Rate.]
I-11
Credit Support Termination Date: The point of time at which
the Class Certificate Balances of all of the Subordinate
Certificates are reduced to zero.
Current Bankruptcy Amount: As of any Determination Date, the Current
Bankruptcy Amount shall equal the Initial Bankruptcy Coverage Amount as reduced
by the aggregate amount of Bankruptcy Losses previously incurred during the
period from the Cut-Off Date through the last day of the month preceding the
month of such Distribution Date; provided, however, that such amount may be
reduced from time to time with the written consent of the Rating Agencies
without resulting in a downgrading to the current rating of the Certificates.
Curtailment: Either any Principal Prepayment which is not a Principal
Prepayment in Full, any REO Proceeds treated as such pursuant to the second
paragraph of Section 3.10 or any Deficient Valuation that was covered by the
Current Bankruptcy Amount.
Custodian: [ ]
Cut-Off Date: 1, 199 .
Cut-Off Date Pool Principal Balance: The aggregate of the
Cut-Off Date Principal Balances of the Mortgage Loans which is
$ .
Cut-Off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-Off Date,
reduced by all installments of principal due on or prior thereto and not paid.
Debt Service Reduction: As to any Mortgage Loan and any Determination
Date, the excess of (i) the installment of principal and interest due on the
related Due Date under the terms of such Mortgage Loan over (ii) the amount of
the monthly payment of principal and/or interest required to be paid with
respect to such Due Date by the Mortgagor as established by a court of competent
jurisdiction (pursuant to an order which has become final and nonappealable) as
a result of a proceeding initiated by or against the related Mortgagor under the
Bankruptcy Code, as amended from time to time (11 U.S.C.); provided that no such
occurrence shall be considered a Debt Service Reduction so long as the Master
Servicer is pursuing an appeal of the court order giving rise to any such
modification and (a) such Mortgage Loan is not in default with respect to
payment due thereunder in accordance with the terms of such Mortgage Loan as in
effect on the Cut-Off Date or (b) scheduled monthly payments of principal and
interest are being advanced by the Master Servicer in accordance with the terms
of such Mortgage Loan as in effect on the Cut-Off Date.
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Debt Service Reduction Mortgage Loan: Any Mortgage Loan
that became the subject of a Debt Service Reduction.
Defective Mortgage Loan: Any Mortgage Loan which is
required to be repurchased pursuant to Section 2.02 or 2.03.
Deficient Valuation: As to any Mortgage Loan and any Determination
Date, the excess of (i) the then outstanding indebtedness under such Mortgage
Loan over (ii) the secured valuation thereof established by a court of competent
jurisdiction (pursuant to an order which has become final and nonappealable) as
a result of a proceeding initiated by or against the related Mortgagor under the
Bankruptcy Code, as amended from time to time (11 U.S.C.), pursuant to which
such Mortgagor retained such Mortgaged Property; provided that no such
occurrence shall be considered a Deficient Valuation so long as the Master
Servicer is pursuing an appeal of the court order giving rise to any such
modification and (a) such Mortgage Loan is not in default with respect to
payments due thereunder in accordance with the terms of such Mortgage Loan as in
effect on the Cut-Off Date or (b) scheduled monthly payments of principal and
interest are being advanced by the Master Servicer in accordance with the terms
of such Mortgage Loan as in effect on the Cut-Off Date.
Deficient Valuation Mortgage Loan: Any Mortgage Loan that
became the subject of a Deficient Valuation.
Definitive Certificates: As defined in Section 6.02.
Delinquent Installments: The aggregate of interest installments at the
related Mortgage Interest Rate (net of the Master Servicing Fee Rate and the
Servicing Fee Rate for such Mortgage Loan), together with the aggregate of
principal installments on the Mortgage Loans due from and payable by Mortgagors
on the Due Date for a month, in the amounts required under the Mortgage Notes as
in effect on the Cut-Off Date, but not paid as of the close of business on the
Withdrawal Date in such calendar month, regardless of whether the unpaid
installments are a result of a bankruptcy court's reduction of the principal
balance of or the interest rate on a Mortgage Loan, including a reduction in
interest payable as a result of a principal reduction during the pendency of a
proceeding under the Bankruptcy Code, or a reduction resulting from the
extension of the term of a Mortgage Loan by the bankruptcy court.
Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Certificate Balance of this Certificate" or the
"Initial Notional Amount of this Certificate" or, if neither of the foregoing,
the Percentage Interest appearing on the face thereof.
I-13
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is CEDE & Co., as the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "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: As to any Distribution Date, the day of each month
or if such day is not a Business Day the next succeeding Business Day; provided,
however, that if such next succeeding Business Day is less than two Business
Days prior to the related Distribution Date the Determination Date shall be the
next Business Day preceding the day of such month.
Distribution Date: The day of each month beginning
199 or, if such day is not a Business Day, the
Business Day immediately following.
Due Date: As to any Distribution Date and Mortgage Loan the
first day in the calendar month of such Distribution Date.
Duff & ▇▇▇▇▇▇: ▇▇▇▇ & ▇▇▇▇▇▇ Credit Rating Company, or any
successor thereto.
Eligible Account: Either (A) segregated account or accounts maintained
with an institution whose deposits are insured by the Bank Insurance Fund or the
Savings Association Insurance Fund of the FDIC, the unsecured and
uncollateralized debt obligations of which shall be rated at least "[ ]" by [ ]
and "[ ]" by [ ], and which has a short term rating of at least "[ ]" by [ ] and
"[ ]" by [ ], and which is either (i) a federal savings and loan association
duly organized, validly existing and in good standing under the federal banking
laws, (ii) an institution duly organized, validly existing and in good standing
under the applicable banking laws of any state, (iii) a national banking
association duly organized, validly existing and in good standing under the
federal banking laws and (iv) a principal subsidiary of a bank holding company
or (B) a trust account (which shall be a "special deposit account") maintained
with the trust department of a federal or state chartered depository institution
or of a trust company, having capital and surplus of not less than $50,000,000,
acting in its fiduciary capacity. Any Eligible Accounts maintained with the
Trustee shall conform to the preceding clause (B).
I-14
ERISA: The Employee Retirement Income Security Act of 1974,
as amended.
Escrow Account: The Escrow Account or Accounts established and
maintained as separate accounts by each Servicer pursuant to its Servicing
Agreement and caused to be established and maintained by the Master Servicer,
pursuant to Section 3.05.
Event of Default: As defined in Section 8.01.
Expenses: As to each Mortgage Loan, the sum of the related
Servicing Fee, Master Servicing Fee and Trustee Fee.
Expense Fee: As to each Mortgage Loan and Distribution Date the sum of
the related Servicing Fee, Master Servicing Fee and Trustee Fee multiplied by
the Scheduled Principal Balance of such Mortgage Loan on the Due Date in the
month preceding such Distribution Date.
Expense Rate: As to each Mortgage Loan, the sum of the
related Servicing Fee Rate, Master Servicing Fee Rate, the
Trustee Fee Rate [and the Credit Enhancement Fee Rate].
FDIC: The Federal Deposit Insurance Corporation, or any
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any
successor thereto.
Final Distribution Date: The Distribution Date on which the
final distribution in respect of the Certificates will be made
pursuant to Section 10.01.
Fitch: Fitch Investors Service, Inc., or any successor
thereto.
FNMA: The Federal National Mortgage Association, or any
successor thereto.
Fraud Coverage Termination Date: The point of time at which
the Fraud Loss Coverage Amount is reduced to zero.
Fraud Loan: Any Liquidated Mortgage Loan as to which a loss is
sustained by reason of a denial of coverage under any related Primary Insurance
Policy because of fraud, dishonesty or misrepresentation.
Fraud Loss: As to any Fraud Loan, the Net Realized Loss
with respect thereto.
I-15
Fraud Loss Coverage Amount: As of any Distribution Date an amount equal
to (i) during the period from the Cut-Off Date to the first anniversary thereof,
the Initial Fraud Loss Coverage Amount, reduced by Fraud Losses allocated to the
Certificates since the Closing Date (ii) during the period from the first
anniversary to the _____ anniversary of the Cut-Off Date, an amount equal to the
lesser of (a) ___% of the Pool Scheduled Principal Balance immediately prior to
each such anniversary reduced by Fraud Losses allocated to the Certificates
since such anniversary and (b) the excess of the Initial Fraud Loss Coverage
Amount over the cumulative amount of Fraud Losses allocated to the Certificates
prior to such Distribution Date, (iii) during the period from the _____
anniversary to the _____ anniversary of the Cut-Off Date, an amount equal to the
lesser of (a) ____% of the Pool Scheduled Principal Balance immediately prior to
each such anniversary reduced by Fraud Losses allocated to the Certificates
since such anniversary and (b) the excess of the Initial Fraud Loss Coverage
Amount over the cumulative amount of Fraud Losses allocated to the Certificates
prior to such Distribution Date, and (iv) after the _____ anniversary of the
Closing Date, zero. The Fraud Loss Coverage Amount may be further reduced from
time to time below the amounts specified above with the written consent of the
Rating Agencies and without resulting in a downgrading to the then current
rating of the Certificates.
Fraud Loss Coverage Termination Date: The point in time at
which the Fraud Loss Coverage Amount is reduced to zero.
[Gross Margin: With respect to each Mortgage Loan, the
percentage set forth in the related Mortgage Note to be added to
the Index to determine the Mortgage Rate on each Adjustment Date,
and which is set forth in the Mortgage Loan Schedule.]
[Guide:]
Headlands: Headlands Mortgage Company, a California
corporation, or its successors in interest.
Independent: When used with respect to any specified Person means such
a Person who (i) is in fact independent of the Sponsor or the Master Servicer,
(ii) does not have any direct financial interest or any material indirect
financial interest in the Sponsor or the Master Servicer or in an affiliate of
either, and (iii) is not connected with the Sponsor or the Master Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
[Index: As to each Mortgage Loan, the index for the
adjustment of the Mortgage Rate set forth as such in the related
Mortgage Note, such index being [the average weekly quoted yield
I-16
on U.S. Treasury securities adjusted to a constant maturity of one year as
published in the Federal Reserve Statistical Release H.15(519)] [the weekly
average of secondary market interest rates on six-month negotiable certificates
of deposit as published in the Federal Reserve Statistical Release H.15(519)]
[the average of the London interbank offered rates for six month dollar deposits
in the London market based on quotations at five major banks, as set forth in
the "Money Rates" section of The Wall Street Journal, Western Edition], or, if
the [Federal Reserve Statistical Release H.15(519)] [Money rates] section ceases
to be published or becomes unavailable for any reason, then as set forth in a
comparable publication selected by the Master Servicer, in each case as of a
date 45 days preceding such Mortgage Loan's Adjustment Date. Should the Index
become unavailable, the Master Servicer, on behalf of the Trustee, will select a
new index that is based upon comparable information.
[Initial Adjustment Date: As to each Mortgage Loan, its
first Adjustment Date following the origination of such Mortgage
Loan.]
Initial Bankruptcy Coverage Amount: $ .
Initial Class Certificate Balance: As to each Class of Certificates,
the aggregate of the Initial Class Certificate Balances of all Certificates of
the same Class, which is as follows:
Class A-1: $
Class M-1: $
Class B-1: $
Class B-2: $
Class R: $
As to each Certificate of the same Class of Certificates, the Initial
Class Certificate Balance set forth on the face thereof.
Initial Component Balance: As specified in the Preliminary
Statement.
Initial Fraud Loss Coverage Amount: $ .
----------------------------------
Initial LIBOR Rate: [ ]
Initial Special Hazard Coverage Amount: $ .
--------------------------------------
Insurance Proceeds: Proceeds paid by any insurer pursuant to any
Primary Insurance Policy and any insurance policy covering a Mortgage Loan,
including any amounts required to be paid pursuant to Section 3.08(a), in each
case other than (i) any amount
I-17
included in such Insurance Proceeds in respect of Insured Expenses and (ii)
amounts required to be paid over to the Mortgagor pursuant to law or the related
Mortgage or Mortgage Note.
Insured Expenses: Expenses in connection with a Mortgage
Loan covered by any Primary Insurance Policy or any other
insurance policy.
Interest Accrual Period: As to any Distribution Date and each Class of
Regular Certificates, the period from and including the first day of the month
preceding the calendar month of such Distribution Date to but not including the
first day of the calendar month of such Distribution Date.
Investment Depository: A bank or trust company so long as the long-term
debt obligations of such other bank or trust company have been assigned
short-term ratings of at least " " by [ ] and of at least "K" by [ ].
LIBOR Certificates: As specified in the Preliminary
Statement.
Liquidated Deficient Valuation Loss: As to any Liquidated
Deficient Valuation Mortgage Loan, the Net Realized Loss with
respect thereto.
Liquidated Deficient Valuation Mortgage Loan: Any Mortgage Loan that
became the subject of a Deficient Valuation after the Bankruptcy Coverage
Termination Date and subsequently became a Liquidated Mortgage Loan.
Liquidated Mortgage Loan: Any defaulted Mortgage Loan as to which the
Master Servicer has determined that all amounts which it expects to recover from
or on account of such Mortgage Loan have been recovered.
Liquidation Expenses: Expenses which are incurred by the Master
Servicer in connection with the liquidation of any defaulted Mortgage Loan and
not recovered by the Master Servicer under any Primary Insurance Policy or any
other insurance policy for reasons other than the Master Servicer's failure to
comply with Section 3.07, such expenses including, without limitation, legal
fees and expenses, any unreimbursed amount expended by the Master Servicer
pursuant to Section 3.08(a) (to the extent such amount is reimbursable under the
terms of Section 3.08(a)) respecting the related Mortgage Loan and any related
and unreim-bursed expenditures for real estate property taxes or for property
restoration or preservation.
I-18
Liquidation Period: The period beginning on the date of adoption by the
Residual Certificateholders of a plan of complete liquidation of the Pool and
ending on the day that is 90 days after the date such plan is adopted.
Liquidation Proceeds: Cash (including Insurance Proceeds and any REO
Proceeds) received in connection with the liquidation of defaulted Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise.
Loan-to-Value Ratio: As of any date, the fraction, expressed as a
percentage, the numerator of which is the current principal balance of the
related Mortgage Loan at the date of determination and the denominator of which
is the Appraised Value of the related Mortgaged Property.
[Maintenance: With respect to any Cooperative Unit, the
rent paid by the Mortgagor to the Cooperative Corporation
pursuant to the Proprietary Lease.]
Master Servicer: Headlands Mortgage Company, or its
successor in interest, or any successor servicer appointed as
herein provided.
Master Servicer's Certificate: A certificate completed by
and executed on behalf of the Master Servicer in accordance with
Section 4.01.
Master Servicing Fee: The amount payable to the Master
Servicer pursuant to Section 3.12 hereof.
Master Servicing Fee Rate: As to any Mortgage Loan, [ ]%
per annum.
[Maximum Rate: With respect to each Mortgage Loan, the
maximum rate of interest set forth as such in the related
Mortgage Note.]
Mezzanine Certificates: As specified in the Preliminary
Statement.
[Minimum Rate: With respect to each Mortgage Loan, the
minimum rate of interest set forth in the related Mortgage Note.]
Monthly Advance: As to any Distribution Date, the aggregate of the
advances made by the Master Servicer pursuant to Section 4.02, the amount of any
such Monthly Advance being equal to the Delinquent Installments on the Mortgage
Loans for the month during which such Distribution Date occurs, to the extent
that the Master Servicer determines that such Monthly Advance will not be a
Nonrecoverable Advance.
I-19
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
thereto.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on a Mortgaged Property securing a Mortgage Note or creating a first
lien on a leasehold interest.
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 Interest Rate: As to any Mortgage Loan, the per annum rate of
interest at which interest accrues on the principal balance of such Mortgage
Loan in accordance with the terms of the related Mortgage Note.
Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to Section 2.01 as from time to time are held as a part of
the Pool, including any Substitute Mortgage Loans and REO Mortgage Loans, the
Mortgage Loans originally so held being identified in the Mortgage Loan
Schedule.
Mortgage Loan Schedule: As of any date of determination, the schedule
of Mortgage Loans included in the Pool. The initial schedule of such Mortgage
Loans as of the Cut-Off Date is attached hereto as Exhibit F, such schedule
setting forth the following information as to each such Mortgage Loan: (i) the
Mortgage Loan identifying number; (ii) the Mortgagor's name; (iii) the street
address of the Mortgaged Property, including the state; (iv) the property type
of the related Mortgaged Property; (v) the original number of months to
maturity; (vi) the Loan-to-Value Ratio as of the Cut-Off Date; (vii) the
Mortgage Interest Rate as of the date of origination; (viii) the scheduled
amount of the monthly installment of principal and interest; (ix) the original
principal amount; (x) the Cut-Off Date Principal Balance; and (xi) the related
Servicing Fee Rate and Master Servicing Fee Rate.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with all riders thereto and amendments thereof.
Mortgaged Property: The property subject to a Mortgage[,
which, with respect to a Cooperative Loan, is the related Coop
Shares and Proprietary Lease].
Mortgagor: The obligor on a Mortgage Note.
I-20
Net Liquidation Proceeds: As to any Liquidated Mortgage
Loan, Liquidation Proceeds net of Liquidation Expenses.
Net Mortgage Interest Rate or NMR: As to any Mortgage Loan,
such Mortgage Loan's Mortgage Interest Rate reduced by the
related Expense Rate.
Net Prepayment Interest Shortfalls: As to any Distribution Date, the
amount by which the aggregate of Prepayment Interest Shortfalls during the
calendar month preceding the month of such Distribution Date exceeds the Master
Servicing Fee for such period.
Net Realized Loss: Any of the following:
(a) as to any Liquidated Mortgage Loan, the amount, if any, by
which (i) the Scheduled Principal Balance of such Liquidated Mortgage
Loan or the Reduced Scheduled Principal Balance if such Liquidated
Mortgage Loan is a Liquidated Deficient Valuation Mortgage Loan exceeds
(ii) the portion of Net Liquidation Proceeds realized thereon that is
applied to a reduction of the principal balance of such Mortgage Loan;
(b) as to any Mortgage Loan that is subject to a Debt Service
Reduction and as to any Determination Date, the lesser of (i) the
excess, if any, of (A) the principal component of the monthly
installment of principal and interest (without giving effect to the
Debt Service Reduction) over (B) the amount applied in reduction of the
principal balance of such Mortgage Loan on the related Due Date (from
Insurance Proceeds, Liquidation Proceeds or payments by the Mortgagor)
and (ii) the principal component of such Debt Service Reduction for
such Due Date; and
(c)(i) as to any Mortgage Loan that is a Liquidated Deficient
Valuation Mortgage Loan, the amount of the related Deficient Valuation
and (ii) as to any Mortgage Loan that experiences a Deficient Valuation
prior to the Bankruptcy Coverage Termination Date, the Deficient
Valuation with
respect thereto.
Net Special Hazard Losses: As to any Special Hazard ▇▇▇▇-
▇▇▇▇ Loan, the Net Realized Loss with respect thereto.
NMR: See definition of Net Mortgage Interest Rate.
Nonrecoverable Advance: Any Monthly Advance or any portion
of a Monthly Advance previously made or proposed to be made in
respect of a Mortgage Loan which has not been previously
reimbursed and which, in the good faith judgment of the Master
I-21
Servicer, will not or, in the case of a proposed Monthly Advance, would not be
ultimately recoverable from Liquidation Proceeds or other recoveries in respect
of the related Mortgage Loan. The determination by the Master Servicer that it
has made a Nonrecoverable Advance or that any proposed advance, if made, would
constitute a Nonrecoverable Advance, shall be evidenced by a certificate of a
Servicing Officer of the Master Servicer delivered to the Trustee and the
Sponsor and detailing the reasons for such determination.
Non-Delay Certificates: As specified in the Preliminary
Statement.
Non-U.S. Person: An individual, corporation, partnership or
other person other than a citizen or resident of the United
States, a corporation, partnership or other entity created or
organized in or under the laws of the United States or any
political subdivision thereof, or an estate or trust that is
subject to U.S. federal income tax regardless of the source of
its income.
Notional Amount: [As to any Distribution Date, the Pool
Scheduled Principal Balance].
Notional Amount Certificates: As specified in the
Preliminary Statement.
Offered Certificates: As specified in the Preliminary
Statement.
Officers' Certificate: A certificate signed by the Chairman of the
Board, Vice Chairman of the Board, President, a Vice President [and by] the
Treasurer, the Secretary or one of the Assistant Treasurers or Assistant
Secretaries, or any other duly authorized officer of the Sponsor or the Master
Servicer, as the case may be, and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee, who may be counsel for the Sponsor or the Master Servicer[, except that
any opinion of counsel relating to the qualification of the Trust Fund as a
REMIC or compliance with the REMIC Provisions must be an opinion of Independent
counsel.]
[Original Applicable Credit Support Percentage: With
respect to each of the following Classes of Subordinate
Certificates, the corresponding percentage described below, as of
the Closing Date:
Class M-1 ______%
Class B-1 ______%
Class B-2 ______%]
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Original Mortgage Loans: The Mortgage Loans identified in Exhibit F
hereto, and conveyed, transferred, sold and assigned to, and deposited with, the
Trustee pursuant to Section 2.01 hereof on the Closing Date.
Original Subordinate Certificate Balance: $__________.
[Outside Reference Date: As to any Interest Accrual Period
for the COFI Certificates, the close of business on the tenth day
thereof.]
Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan which
was not the subject of a Principal Prepayment in Full prior to such Due Date,
which did not become a Liquidated Mortgage Loan prior to such Due Date and which
was not purchased prior to such Due Date pursuant to Section 2.02 or 2.03.
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.
Pass-Through Rate: As to each Class of Regular Certifi-
▇▇▇▇▇, the per annum rate set forth or described below:
Class of Certificates Pass-Through Rate
A-1: ____%
X ____%
M-1 ____%
B-1: ____%
B-2: ____%
Paying Agent: ___________________________________ or such other
successor paying agent appointed by the Trustee which is authorized to make
distributions with respect to the Certificates on behalf of the Trustee, and
authorized to exercise corporate trust powers under the laws of its jurisdiction
of organization.
Percentage Interest: As to any Certificate, the percentage interest set
forth on the face thereof or equal to the percentage obtained by dividing the
Denomination of such Certificate by the aggregate of the Denominations of all
Certificates of the same Class.
Periodic Rate Cap: The provision in each Mortgage Note that limits
permissible increases and decreases in the Mortgage Rate on any Adjustment Date
to not more than one percentage point.
Permitted Investments: One or more of the following:
I-23
(i) Direct obligations of, and obligations fully guaranteed as
to timely payment of principal and interest by, the United States,
FHLMC, FNMA, the Farm Credit Banks (but only if acceptable to the
Rating Agencies), the Student Loan Marketing Association (but only with
respect to obligations backed by letters of credit or senior
obligations) or any agency or instrumentality of the United States the
obligations of which are backed by the full faith and credit of the
United States; provided, however, that no instrument or security
evidences a right to receive only interest payments or the right to
receive principal and interest payments derived from the underlying
investment which provides a yield to maturity in excess of 120% of the
yield to maturity at par of such underlying instrument;
(ii) Repurchase agreements with an entity whose unsecured
obligations are rated not less than " " by [ ] and " " by [ ] with
respect to any security described in clause (i) above or any other
security issued or guaranteed by an agency or instrumentality of the
United States, the obligations of which are backed by the full faith
and credit of the United States;
(iii) Federal funds, certificates of deposit, time deposit and
bankers' acceptances of any U.S. bank or trust company incorporated
under the laws of the United States or any state, provided that the
unsecured short term debt obligations of such bank or trust company
(or, in the case of the principal bank in a bank holding company
system, debt obligations of the bank holding company) at the date of
acquisition thereof have a rating of not less than " " from [ ] and " "
from [ ]; and money market funds investing exclusively in any of the
investments discussed in this definition of Permitted Investments;
(iv) Any demand or time deposit or certificate of
deposit which is fully insured by the FDIC; and
(v) Commercial paper of any corporation incorporated under the
laws of the United States or any state thereof which on the date of
acquisition has a rating of not less than " " from [ ] and " " from [
].
Permitted Transferee: Any Person other than (i) the United States, or
any State or any political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives described
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in Code section 521), (iv) rural electric and telephone cooperatives described
in Code section 1381(a)(2)(C), (v) any Non-U.S. Person and (vi) any other Person
so designated by the Master Servicer based on an Opinion of Counsel to the
effect that any transfer to such Person may cause the Pool or any other Holder
of a Residual Certificate to incur tax liability that would not be imposed other
than on account of such transfer. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Code section
7701 or successor provisions.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Physical Certificates: As specified in the Preliminary
Statement.
Planned Principal Classes: As specified in the Preliminary
Statement.
Pool or Trust Fund: The corpus of the trust created by this Agreement,
to the extent described herein, consisting of the Mortgage Loans, such assets as
shall from time to time be identified as deposited in the Certificate Account,
in accordance with this Agreement, property which secured a Mortgage Loan and
which has been acquired by foreclosure or deed in lieu of foreclosure or
otherwise, the Primary Insurance Policies, and any Required Insurance Policy.
[Pool Insurance Policy: ].
[Pool Insurer: ].
Pool Scheduled Principal Balance: As to any Distribution Date, the
aggregate Scheduled Principal Balances of each Mortgage Loan that was an
Outstanding Mortgage Loan on the Due Date in the applicable month as to which
such determination is being made.
Prepayment Interest Shortfall: As to any Mortgage Loan and Principal
Prepayment, and as to any Liquidated Mortgage Loan, the amount by which one
month's interest at the related Net Mortgage Interest Rate on such Principal
Prepayment or the Scheduled Principal Balance of such Liquidated Mortgage Loan,
as the case may be, exceeds the amount of interest paid in connection with such
Principal Prepayments or interest at the related Net Mortgage Interest Rate for
the number of days in the month prior to the date such Liquidated Mortgage Loan
was liquidated, as the case may be.
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Primary Insurance Policy: Each primary policy of mortgage guaranty
insurance issued by a Qualified Insurer or any replacement policy therefor
referred to in Section 2.03(a)(viii).
Principal Only Certificates: As specified in the
Preliminary Statement.
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan (other than Liquidation Proceeds) which is received in advance of
its scheduled Due Date and is not accompanied by an amount as to interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment in Full: Any Principal Prepayment of
the entire principal balance of a Mortgage Loan.
Private Certificates: As specified in the Preliminary
Statement.
Proprietary Lease: With respect to any Cooperative Unit,
means a lease or occupancy agreement between a Cooperative
Corporation and a holder of related Coop Shares.
Prospectus: The Prospectus Supplement together with the
related Prospectus dated _____________, 199_.
Prospectus Supplement: The Prospectus Supplement, dated
________, 199_, relating to the offering of the Senior Certif-
icates and the Mezzanine Certificates.
Purchase Price: As to any Defective Mortgage Loan repurchased on any
date pursuant to Section 2.02, 2.03 or 2.08, an amount equal to the sum of (i)
the unpaid principal balance thereof and (ii) the unpaid accrued interest
thereon at the applicable Mortgage Interest Rate from the Due Date to which
interest was last paid by the Mortgagor to the first day of the month following
the month in which such Mortgage Loan became eligible to be repurchased;
provided, however, that if at the time of repurchase the Seller is the Master
Servicer, the amount described in clause (ii) shall be computed at the Mortgage
Interest Rate net of the Master Servicing Fee Rate.
Qualified Insurer: A mortgage guaranty insurance company duly qualified
as such under the laws of the state of its principal place of business and each
state having jurisdiction over such insurer in connection with the insurance
policy issued by such insurer, duly authorized and licensed in such states to
transact a mortgage guaranty insurance business in such states and to write the
insurance provided by the insurance policy issued by it, approved as a
FNMA-approved mortgage insurer and
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having a claims paying ability rating of at least " " by [ ]. Any replacement
insurer with respect to a Mortgage Loan must have at least as high a claims
paying ability rating by [ ] and [ ] as the insurer it replaces had on the
Closing Date.
Rating Agency: Each of the Rating Agencies specified in the Preliminary
Statement. If either such organization or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, as is designated by the Sponsor,
notice of which designation shall be given to the Trustee. References herein to
a given rating or rating category of a Rating Agency shall mean such rating
category without giving effect to any modifiers.
Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the Cooperative Corporation and the originator of such
Mortgage Loan, to establish the rights of such originator in the Cooperative
Property.
Record Date: The last day of the month (or if such last day is not a
Business Day, the Business Day immediately preceding such last day) next
preceding the month of the related Distribution Date.
Reduced Scheduled Principal Balance: As to any Liquidated
Deficient Valuation Mortgage Loan, the Scheduled Principal Balance thereof
reduced by any Deficient Valuation at the time of the related Deficient
Valuation.
Reference Date: As defined in Section 5.09.
Regular Certificate: As specified in the Preliminary
Statement.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
Relief Act Reductions: With respect to any Distribution Date, for any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Relief Act, the amount, if any, by which (i) interest
collectible on such Mortgage Loan for the most recently ended calendar month is
less than (ii) interest accrued pursuant to the Mortgage Note on the same
principal amount and for the same period as the interest collectible on such
Mortgage Loan for the most recently ended calendar month.
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Remaining Liquidated Amount: As to any Distribution Date and Mortgage
Loan which became a Liquidated Mortgage Loan during the preceding calendar
month, the lesser of (a) Subordinate Percentage of the applicable Core
Percentage of the Scheduled Principal Balance of such Liquidated Mortgage Loan
and (b) the applicable Core Percentage of Net Liquidation Proceeds applied to
the reduction of the principal balance of such Liquidated Mortgage Loan, reduced
by the Senior Liquidated Amount for such Mortgage Loan without giving effect to
any reduction pursuant to clause (B) of the definition thereof.
REMIC: A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
REMIC Certificate Maturity Date: The "latest possible maturity date" of
the Regular Certificates as that term is defined in Section 2.07.
REMIC Change of Law: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to the REMIC and the REMIC Provisions issued after the
Closing Date.
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 promulgated thereunder, as the foregoing may be in effect from time
to time.
REO Mortgage Loan: Any defaulted Mortgage Loan which is not a
Liquidated Mortgage Loan and as to which the related Mortgaged Property is held
as part of the Pool.
REO Proceeds: Proceeds, net of any related expenses of the Master
Servicer, received in respect of any REO Mortgage Loan (including, without
limitation, proceeds from the rental of the related Mortgaged Property) which
are received prior to the final liquidation of such Mortgaged Property.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement in respect of such Mortgage Loan.
Residual Certificates: The Certificates signed by the
Sponsor and countersigned by the Trustee, substantially in the
form of Exhibits B and E.
Responsible Officer: When used with respect to the Trustee,
any officer in its corporate trust department or successor group.
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S&P: Standard & Poor's Ratings Group.
Scheduled Principal Balance: As to any Mortgage Loan and Due Date, the
unpaid principal balance of such Mortgage Loan as of the Due Date as specified
in the amortization schedule at the time relating thereto (before any adjustment
to such amortization schedule by reason of any moratorium or similar waiver or
grace period) after giving effect to any previous Curtailments and to the
payment of principal due on such Due Date and irrespective of any delinquency in
payment by the related Mortgagor. For purposes of calculating the Allocated
Amounts, the Scheduled Principal Balance of a Mortgage Loan shall be zero
immediately following the Due Date in the month such Mortgage Loan becomes a
Liquidated Mortgage Loan or is required to be repurchased pursuant to Section
2.02 or 2.03.
Seller: [ ], as seller of the
Mortgage Loans under the Seller's Agreement as the context
requires.
Seller's Agreement: The Seller's Agreement dated as of
__________, 199_, between the Seller and Sponsor, as purchaser
with respect to the sale of the Mortgage Loans.
Senior Certificate: Any one of the Class A-1 and Class X Certificates
signed by the Sponsor and countersigned by the Trustee, substantially in the
form of Exhibits A and E, hereto.
[Senior Certificate Balance: As to any Distribution Date,
the aggregate of the Class Certificate Balances of all Classes of
Senior Certificates on such Distribution Date.]
Senior Percentage: With respect to any Distribution Date, the lesser of
(i) 100% and (ii) the percentage carried six places rounded up, obtained by
dividing the Class Certificate Balance of the Class A-1 Certificates,
immediately prior to such Distribution Date by the aggregate of the Scheduled
Principal Balances of the Mortgage Loans immediately prior to the Due Date in
the month of any such Distribution Date.
Senior Prepayment Percentage: [For any Distribution Date occurring
during the first five years beginning on the first Distribution Date shall be,
except as provided herein, equal to 100%. The Senior Prepayment Percentage for
any Distribution Date occurring on or after the fifth anniversary of the first
Distribution Date will be as follows: for any Distribution Date in the first
year thereafter the Senior Percentage for such Distribution Date plus 70% of the
Subordinate Percentage for such Distribution Date; for any Distribution Date in
the second year thereafter, the Senior Percentage for such Distribution Date
plus 60% of the Subordinate Percentage for such Distribution Date; in the third
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year thereafter, the Senior Percentage for such Distribution Date plus 40% of
the Subordinate Percentage for such Distribution Date; in the fourth year
thereafter, the Senior Percentage for such Distribution Date plus 20% of the
Subordinate Percentage for such Distribution Date; and for any Distribution Date
thereafter, the Senior Percentage for such Distribution Date (unless on any of
the foregoing Distribution Dates the Senior Percentage exceeds the initial
Senior Percentage, in which case the Senior Prepayment Percentage for such
Distribution Date will once again equal 100%). Notwithstanding the foregoing, no
reduction to the Senior Prepayment Percentage will occur if (i) as of the first
Distribution Date as to which any such reduction applies, the dollar amount of
all monthly payments on the Mortgage Loans due in each of the preceding six
months that are delinquent 60 days or more exceeds a monthly average of % of all
monthly payments due in such month (including for this purpose any Mortgage
Loans in foreclosure and Mortgage Loans with respect to which the related
Mortgaged Property has been acquired by the Trust Fund) and (ii) cumulative
Realized Losses with respect to the Mortgage Loans exceed (a) with respect to
the Distribution Date in on the fifth anniversary of the first Distribution Date
% of the Original Subordinate Certificate Balance, (b) with respect to the
Distribution Date on the sixth anniversary of the first Distribution Date, % of
the Original Subordinate Certificate Balance, (c) with respect to the
Distribution Date on the seventh anniversary of the first Distribution Date, %
of the Original Subordinate Certificate Balance, (d) with respect to the
Distribution Date on the eighth anniversary of the first Distribution Date, % of
the Original Subordinate Certificate Balance, and (e) with respect to the
Distribution Date on the ninth anniversary of the first Distribution Date, % of
the Original Subordinate Certificate Balance.]
Senior Principal Distribution Amount: As to any Distribution Date and
the Class A-1 Certificates, the sum of (a) the Senior Percentage of (i) all
scheduled payments of principal due on each Outstanding Mortgage Loan on the Due
Date for such Mortgage Loan in the month in which such Distribution Date occurs,
(ii) the Scheduled Principal Balance of each Mortgage Loan that was repurchased
by the Seller or another person on the related Certificate Account Deposit Date
pursuant to Sections 2.02 or 2.03, (iii) the Substitution Adjustment Amount in
connection with any substitution of the Mortgage Loans on the related
Certificate Account Deposit Date pursuant to Section 2.04, (iv) Liquidation
Proceeds received during such preceding calendar month and allocable to
recoveries of principal of Mortgage Loans that are not yet Liquidated Mortgage
Loans, and (v) the Scheduled Principal Balance of each Mortgage Loan that became
a Liquidated Mortgage Loan during the month preceding the month of such
Distribution Date and (b) the Senior Prepayment
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Percentage of all Curtailments and all Principal Prepayments in Full for such
Distribution Date.
Servicer: Any Person with which the Master Servicer has
entered into a Servicing Agreement and which satisfies the
requirements set forth therein.
Servicing Fee: The amount payable to the Servicers pursuant
to Section 3.12 hereof.
Servicing Fee Rate: With respect to any Mortgage Loan, the
rate specified as such on the Mortgage Loan Schedule.
Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished to the Trustee by the
Master Servicer, as such list may from time to time be amended.
Special Hazard Coverage Termination Date: The point of time
at which the Special Hazard Loss Coverage Amount is reduced to
zero.
Special Hazard Event: As to a Mortgaged Property, any loss on account
of direct physical loss, exclusive of (i) any loss covered by a hazard policy or
a flood insurance policy maintained in respect of such Mortgaged Property
pursuant to Section 3.11 and (ii) any loss caused by or resulting from:
(a) (i) wear and tear, deterioration, rust or
corrosion, mold, wet or dry rot; inherent vice or latent
defect; animals, birds, vermin, insects;
(ii) settling, subsidence, cracking, shrinkage,
building or expansion of pavements, foundations, walls,
floors, roofs or ceilings.
(b) errors in design, faulty workmanship or
faulty materials, unless the collapse of the property
or a part thereof ensues and then only for the ensuing
loss;
(c) nuclear or chemical reaction or nuclear radiation
or radioactive or chemical contamination, all whether
controlled or uncontrolled, and whether such loss is direct or
indirect, proximate or remote or be in whole or in part caused
by, contributed to or aggravated by a peril insured against in
the Special Hazard Insurance Policy; and
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(d) (i) hostile or warlike action in time of peace or
war, including action in hindering, combating or defending
against an actual, impending or expected attack (a) by any
government or sovereign power (de jure or de facto), or by any
authority maintaining or using military, naval or air forces;
or (b) by military, naval or air forces; or (c) by an agent of
any such government, power, authority or forces;
(ii) any weapon or war or facility for producing
same employing atomic fission, radioactive force or chemical
or biological contaminants, whether in time of peace or war;
(iii) insurrection, rebellion, revolution, civil
war, usurped power or action taken by governmental authority
in hindering, combating or defending against such an
occurrence, seizure or destruction under quarantine or customs
regulations, confiscation by order of any government or public
authority, or risks of contraband or illegal transportation or
trade.
Special Hazard Fee: As to any Distribution Date and Mortgage Loan,
one-twelfth of the Special Hazard Fee Rate on the Scheduled Principal Balance of
such Mortgage Loan on the first day of the month preceding such Distribution
Date.
Special Hazard Fee Rate: With respect to any Mortgage Loan,
-----%.
Special Hazard Insurance Policy: The Special Hazard Insurance Policy
issued by the Special Hazard Insurer insuring the Mortgage Loans and all
amendments or endorsements thereto, or any replacement policy obtained by the
Master Servicer pursuant to Section 3.20 hereof.
Special Hazard Insurer: [ ], or any successor
thereto or the named insurer in any replacement policy obtained
by the Master Servicer pursuant to Section 3.20 hereof.
Special Hazard Loss Coverage Amount: [As to any Distribution Date, the
lesser of (a) the greatest of (i) 1% of the aggregate principal balance of the
Mortgage Loans, (ii) twice the principal balance of the largest Mortgage Loan,
and (iii) the aggregate principal balance of all Mortgage Loans secured by the
Mortgage Properties located in the single [State] postal zip code having the
highest aggregate principal balance of any zip code area, all principal balances
to be calculated as of the first day of the month preceding such Distribution
Date after giving effect to scheduled installments of principal and interest on
the Mortgage Loans then due, whether or not paid and (b) $__________,
reduced (but not below zero) by the amount of Net Realized Losses in respect of
Special Hazard Mortgage Loans previously incurred during the period from the
Cut-Off Date through the last day of the month preceding the month of such
Distribution Date.] The
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Special Hazard Loss Coverage Amount may be further reduced from time to time
below the amounts specified above with the written consent of the Rating
Agencies and without resulting in a downgrading to the then current rating of
the Certificates.
Special Hazard Mortgage Loan: Any Liquidated Mortgage Loan
as to which the ability to recover thereon was substantially
impaired by reason of a Special Hazard Event.
Splinter Loss: A Net Realized Loss (x) with respect to a Special Hazard
Mortgage Loan or a Fraud Loan or (y) specified in subclauses (b) and (c) of the
definition of Net Realized Loss.
Subordinate Certificate: Any one of the Class M-1, Class B-1 or Class
B-2 Certificates signed by the Sponsor and countersigned by the Trustee,
substantially in the form of Exhibits D and E, hereto.
Subordinate Percentage: As of any Distribution Date, 100% minus the
Senior Percentage for such Distribution Date.
Subordinate Percentage Allocation: For any Distribution Date and Class
of Subordinate Certificates, a fraction, the numerator of which is the related
Class Certificate Balance immediately prior to such date and the denominator of
which is the aggregate of the Class Certificate Balances of all Subordinate
Certificates immediately prior to such date.
Subordinate Prepayment Percentage: As to any Distribution
Date, 100% minus the Senior Prepayment Percentage for such
Distribution Date.
Subordinate Prepayment Percentage Allocation: As to any Distribution
Date and any Class of Subordinate Certificates, the portion of the Subordinate
Prepayment Percentage allocated to such Class equal to the Subordinate
Prepayment Percentage for such Distribution Date multiplied by a fraction the
numerator of which is the Class Certificate Balance of any such Class and the
denominator of which is the aggregate Class Certificate Balance of the
Subordinate Certificates.
Subordinate Principal Distribution Amount: As to any Distribution Date
and each Class of Subordinate Certificates, the sum of (a) the Subordinate
Percentage Allocation of the sum of (i) all scheduled payments of principal due
on each Outstanding Mortgage Loan on the Due Date for such Mortgage Loan in the
month in which such Distribution Date occurs, (ii) the Scheduled Prin-
cipal Balance of each Mortgage Loan that was repurchased by the Seller or
another person on the related Certificate Account Deposit Date pursuant to
Section 2.02 or 2.03, (iii) the Substitution Adjustment Amount in connection
with any substitution of
I-33
Mortgage Loans on the related Certificate Account Deposit Date pursuant to
Section 2.04, (iv) Liquidation Proceeds received during such preceding calendar
month and allocable to recoveries of principal of Mortgage Loans that are not
yet Liquidated Mortgage Loans, and (v) the Scheduled Principal Balance of each
Mortgage Loan that became a Liquidated Mortgage Loan during the month preceding
the month of such Distribution Date and (b) the Subordinate Prepayment
Percentage Allocation of all Curtailments and all Principal Prepayments in Full
for such Distribution Date.
Substitute Mortgage Loan: A Mortgage Loan delivered to the Trustee on a
Substitution Date pursuant to Section 2.04 hereof for which all payments of
principal and interest due on or before the Substitution Date have been received
and which has the following characteristics:
(a) (i) a Mortgage Interest Rate at least equal to and not
more than 2% greater than that of the Mortgage Loan for which it is
being substituted and (ii) Loan-to-Value Ratio not greater than that of
the Mortgage Loan for which it is being substituted;
(b) a date of maturity no later than, and no more than one
year prior to, that of the Mortgage Loan or Mortgage Loans for which it
is being substituted; and
(c) an original term to maturity equal to that of the Mortgage
Loan or Mortgage Loans for which it is being substituted.
Any Substitute Mortgage Loan with a Mortgage Interest Rate greater but
not more than 2% greater than that of the Mortgage Loan for which it is being
substituted shall be treated for all purposes under this Agreement as though it
had the same Net Mortgage Interest Rate as the Mortgage Loan for which it is
being substituted.
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.04(b).
Substitution Date: The meaning ascribed to such term pursuant to
Section 2.04(b).
Supplemental Mortgage Loan Schedule: As defined in Section 2.04(b).
Targeted Principal Classes: As specified in the Preliminary Statement.
Tax Matters Person: The person designated as "tax matters person" in
the manner provided under Treasury regulations
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ss. 1.860F-4(d) and temporary Treasury regulation ss. 301.6231(a)(7)-IT.
Initially, the Tax Matters Person shall be ---------------.
Tax Matters Person Certificate: The Class R Certificate with a
denomination of __________.
Trust Fund or Pool: See definition of Pool.
Trustee Fee: The amount payable to the Trustee pursuant to an
agreement between the Trustee and the Master Servicer.
Trustee Fee Rate: With respect to any Mortgage Loan, the rate
specified in the agreement between the Trustee and the Master Servicer.
Underwriter: _____________ as underwriter of the public offering of
the Regular Certificates.
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to each Class of
Notional Amount Certificates, if any (such Voting Rights to be allocated among
the holders of Certificates of each such Class in accordance with their
respective Percentage Interests), and (b) the remaining Voting Rights (or 100%
of the Voting Rights if there is no Class of Notional Amount Certificates) shall
be allocated among Holders of the remaining Classes of Certificates in
proportion to the Certificate Balances of their respective Certificates on such
date.
Withdrawal Date: As to any Distribution Date, the Business Day
preceding such Distribution Date.
[Yield Maintenance Premium: The amount payable as a prepayment penalty
or yield maintenance premium by a Mortgagor in connection with the prepayment in
whole or in part of a Mortgage Loan.]
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ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates
Section 2.01. Conveyance of Mortgage Loans. (a) The Sponsor,
concurrently with the execution and delivery of this Agreement, does hereby
sell, transfer, assign, set over and otherwise convey to the Trustee without
recourse all the right, title and interest of the Sponsor in and to the Mortgage
Loans and the Mortgage Notes, including all interest and principal received on
or with respect to the Mortgage Loans (other than payments of principal and
interest due and payable on the Mortgage Loans on or before the Cut-Off Date)
together with the Sponsor's rights under the Seller's Agreement, the
representations and warranties of the Seller thereunder together with all rights
of the Sponsor to require the Seller to cure any breach thereof or to repurchase
or substitute for any affected Mortgage Loan in accordance with the Seller's
Agreement and any proceeds of the foregoing.
(b) In connection with the above transfer and assignment, the Sponsor
hereby deposits with the Trustee, with respect to each Mortgage Loan, (i) the
original Mortgage Note, endorsed without recourse to the order of the Trustee
and showing an unbroken chain of endorsements from the original payee thereof to
the Person endorsing it to the Trustee, (ii) the original Mortgage, which shall
have been recorded, with evidence of such recording indicated thereon, (iii) the
assignment (which may be in the form of a blanket assignment if permitted in the
jurisdiction in which the Mortgaged Property is located) to the Trustee of the
Mortgage, with evidence or recording with respect to each Mortgage Loan in the
name of the Trustee thereon, (iv) all intervening assignments of the Mortgage,
if any, to the extent available to the Sponsor with evidence of recording
thereon, (v) the original or a copy of the policy or certificate of primary
mortgage guaranty insurance, to the extent available, if any, (vi) the original
policy of title insurance or mortgagee's certificate of title insurance or
commitment or binder for title insurance and (vii) originals of all assumption
and modification agreements, if any; provided, however, that in lieu of the
foregoing, the Sponsor may deliver the following documents, under the
circumstances set forth below: (x) in lieu of the original policy of title
insurance, the Sponsor may deliver a binder or commitment therefor, or, in
California, a preliminary title report, or, in Iowa, an attorney's certificate;
(y) in lieu of the original Mortgage or intervening assignments thereof or
assumption or modification agreements which have been delivered or are being
delivered to recording offices for recording and have not been returned to the
Sponsor in time to permit their
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delivery as specified above, the Sponsor may deliver a true copy thereof with a
certification by Headlands or the title company issuing the commitment for title
insurance, on the face of such copy, substantially as follows: "Certified to be
a true and correct copy of the original, which has been transmitted for
recording"; and (z) in lieu of the Mortgage, assignment to the Trustee or
intervening assignments thereof or assumption or modification agreements, if the
original has been lost or the applicable jurisdiction retains the originals of
such documents (as evidenced by a certification from Headlands to such effect)
the Sponsor may deliver photocopies of such documents containing an original
certification by the judicial or other governmental authority of the
jurisdiction where such documents were recorded; and provided, further, however,
that in the case of Mortgage Loans which have been prepaid in full after the
Cut-Off Date and prior the Closing Date, the Sponsor, in lieu of delivering the
above documents, may deliver to the Trustee a certification of a Servicing
Officer to such effect and shall deposit all amounts paid in respect of such
Mortgage Loans in the Certificate Account on the Closing Date. The Sponsor shall
deliver such original documents (including any original documents as to which
certified copies had previously been delivered) or such certified copies
together with the original title insurance policy (or, if a master title policy
has been issued by the title insurer, a mortgagee's certificate of title
insurance) if a title insurance binder or commitment or other assurance of title
was originally deposited, to the Trustee promptly after they are received. The
Master Servicer shall cause, at its expense, the Mortgage and intervening
assignments, if any, and the assignment of the Mortgage to the Trustee to be
recorded not later than 270 days after the Closing Date.
Section 2.02. Acceptance by Trustee. The Trustee acknowledges receipt
of the documents referred to in Section 2.01 subject to the examination referred
to below, and declares that the Trustee holds and will hold such documents in
trust, upon the terms herein set forth, for the use and benefit of all present
and future Certificateholders. The Trustee agrees, for the benefit of
Certificateholders, to have the Custodian review each Mortgage File within 90
days after execution and delivery of this Agreement, to ascertain that all
required documents have been executed, received and recorded, if applicable, and
that such documents relate to the Mortgage Loans identified in Exhibit F hereto.
In performing such review, the Trustee may rely upon the purported genuineness
and due execution of any such document and on the purported genuineness of any
signature thereon. If in the course of such review the Trustee finds any
document or documents constituting a part of a Mortgage File to have been
omitted or be defective in any material respect, the Trustee shall promptly so
notify the Master Servicer, the Seller and the Sponsor. The Master Servicer
shall promptly request that the Seller correct or
II-2
cure such omission or defect within 90 days from the date the Seller was
notified of such omission or defect and, if the Seller does not correct or cure
such omission or defect within such period, the Seller shall purchase such
Mortgage Loan from the Trustee (i) on the Distribution Date in the month
following the month in which such 90-day period expired at the Purchase Price of
such Mortgage Loan or (ii) upon the expiration of such 90-day period if the
omission or defect would result in the related Mortgage Loan not being a
Qualified Mortgage Loan for purposes of Section 860G(a)(3) of the Code;
provided, however, that if such defect relates solely to the inability of Seller
to deliver the original Security Instrument or intervening assignments thereof
or assumption or modification agreement, or a certified copy because the
originals of such documents, or a certified copy have not been returned by the
applicable jurisdiction, Seller shall not be required to purchase such Mortgage
Loan if Seller delivers such original documents or certified copy promptly upon
receipt, but in no event later than 270 days after the Closing Date. The
Purchase Price for the purchased Mortgage Loan shall be deposited in the
Certificate Account no later than the related Certificate Account Deposit Date
and, upon receipt by the Trustee of written notification of such deposit signed
by an officer of the Seller, the Trustee shall release to the applicable Seller
the related Mortgage File and the Trustee shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be necessary to vest in the Seller or its designee any Mortgage Loan released
pursuant hereto. It is understood and agreed that the obligation of the Seller
to purchase any Mortgage Loan as to which a material defect in or omission of a
constituent document exists shall constitute the sole remedy against the Seller
respecting such defect or omission available to Certificateholders or the
Trustee on behalf of Certificateholders. An Opinion of Counsel to the effect set
forth in Section 2.04(d) shall be delivered to the Trustee in connection with
any such repurchase.
Section 2.03. Representations and Warranties of the Seller, Headlands,
the Sponsor and the Trustee. (a) The Seller hereby represents and warrants to
the Trustee, as to the Mortgage Loans sold by it to the Sponsor, that:
(i) As of the Cut-Off Date, no Mortgage Loan is 30
days or more delinquent in payment of principal and interest
and no Mortgage Loan was 30 days;
(ii) The information set forth in Exhibit F hereto with
respect to each Mortgage Loan is true and correct in all material
respects at the date or dates respecting which such information is
furnished;
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(iii) As of the Closing Date, and prior to the transfer
of the Mortgage Loans to the Sponsor, the Seller had good title to the
Mortgage Loans and the Mortgage Notes were subject to no offsets,
defenses or counterclaims;
(iv) Each Mortgage Loan was originated by (a) an
institution which is a member of the Federal Reserve system or the
deposits of which are insured by the FDIC, or (b) an institution which
is an "approved mortgagee" by the Federal Housing Administration;
(v) Each Mortgage Loan was originated in compliance
with all applicable state and federal laws including usury, equal
credit opportunity, disclosure and recording laws;
(vi) Other than with respect to Mortgaged Property
underlying a Cooperative Loan, the Mortgage Loans are conventional,
[fixed rate], [adjustable rate] mortgage loans with original terms to
maturity of months; each Mortgage Note is payable in monthly
installments of principal and interest, with interest payable in
arrears on a monthly basis;
(vii) As of the Closing Date, the issuer of each Primary
Insurance Policy is a Qualified Insurer and each such policy is valid
and remains in full force and effect;
(viii) A lender's title policy (or preliminary report
(binder)) or opinion of title was issued on the date of the origination
of each Mortgage Loan and each such policy or other evidence of title
is valid and remains in full force and effect;
(ix) As of the Closing Date, [and any Mortgage Loan that
is not a Cooperative Loan,] each related Mortgage is a valid first lien
on the related Mortgaged Property (subject only to (a) liens for
current real property taxes and special assessments not yet due and
payable, (b) covenants, conditions and restrictions, rights of way,
easements and other matters of public record as of the date of
recording of such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally or specifically
reflected in the mortgage originator's appraisal, and (c) other matters
to which like properties are commonly subject which either individually
or in the aggregate do not materially interfere with the benefits of
the security intended to be provided by the Mortgage);
(x) As of the Closing Date, each Mortgaged Property
is free of damage and is in good repair;
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(xi) As of the Closing Date, there are no delinquent
tax or assessment liens against any Mortgaged Property;
(xii) Each Mortgage Property is a [single family]
[multifamily] residential property containing [no more than four units]
[five or more units];
(xiii) Each Mortgage Note has been endorsed to the Trustee
in a form and in a manner sufficient to convey to the Trustee all
right, title and interest therein of the Seller in all relevant
jurisdictions;
(xiv) Each Mortgage Loan is secured by a fee simple
interest in the related Mortgaged Property [and not by a
leasehold interest];
[(xv Each Cooperative Loan is secured by a valid,
subsisting and enforceable perfected first lien and security interest
in the related Mortgaged Property, subject only to (i) the rights of
the Cooperative Corporation to collect Maintenance and assessments from
the Mortgagor, (ii) the lien of the Blanket Mortgage, if any, on the
Cooperative Property and of real property taxes, water and sewer
charges, rents and assessments on the Cooperative Property not yet due
and payable, and (iii) other matters to which like Cooperative Units
are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Security
Agreement or the use, enjoyment, value or marketability of the
Cooperative Unit. Each original UCC financing statement, continuation
statement or other governmental filing or recordation necessary to
create or preserve the perfection and priority of the first priority
lien and security interest in the Coop Shares and Proprietary Lease has
been timely and properly made. Any security agreement, chattel mortgage
or equivalent document related to the Cooperative Loan and delivered to
the Sponsor or its designee establishes in the Seller a valid and
subsisting perfected first lien on and security interest in the
property described therein, and the Seller has full right to sell and
assign the same;] and
(xvi As of the Closing Date, all policies of insurance
covering the Seller or any Servicer, and required by this Agreement or
by a Servicing Agreement have been validly issued and remain in full
force and effect.
It is understood and agreed that the representations and warranties set
forth in this Section 2.03(a) shall survive delivery of the respective Mortgage
Files to the Trustee or any Custodian.
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Upon discovery by any of the Sponsor, the Master Servicer or the
Trustee of a breach of any of the representations and warran-ties set forth in
this Section 2.03(a) which materially and adversely affects the value of the
Mortgage Loans or the interests of the Certificateholders in the related
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties. Within 60 days of its discovery or its receipt of
notice of breach, or, with the prior written consent of a Responsible Officer of
the Trustee, such longer period specified in such consent, the Seller shall cure
such breach in all material respects or shall purchase the Mortgage Loan from
the Trustee. Any such purchase by the Seller shall, in the case of a breach of a
representation or warranty, be at the Purchase Price, and in each case shall be
accomplished in the manner set forth in Section 2.02. It is understood and
agreed that the obligation of the Seller to purchase any Mortgage Loan as to
which such a breach has occurred and is continuing shall constitute the sole
remedy against the Seller respecting such breach available to Certificateholders
or the Trustee on behalf of Certificateholders. An Officers' Certificate and
Opinion of Counsel to the effect set forth in Section 2.04(d) shall be delivered
to the Trustee in connection with any such repurchase.
(b) Pursuant to Section 2.01, the Sponsor has hereby assigned,
transferred and conveyed to the Trustee its rights under the Seller's Agreement,
including without limitation, the representations, warranties and covenants of
the Seller therein and set forth in Section 2.03(a), together with all rights of
the Sponsor to require the Seller to cure any breach thereof or to repurchase or
substitute for any affected Mortgage Loan in accordance with the Seller's
Agreement and the Trustee hereby accepts such assignment. It is understood and
agreed that the representations, warranties and covenants so assigned shall
survive delivery of the respective Mortgage Files to the Trustee.
(c) The Sponsor hereby represents and warrants to the Trustee as
follows:
(i) The Sponsor has entered into the Seller's Agree-
ment with the Seller from which it acquired the Mortgage Loans;
(ii) The Seller has made the foregoing representations,
warranties and covenants in the Seller's Agreement as to the Mortgage
Loans sold by it to the Sponsor and that such representations,
warranties and covenants run to and are for the benefit of the
Sponsor;
(iii) Pursuant to Section 2.01 and 2.03(b) of this
Agreement the Sponsor has transferred and assigned to the Trustee
all rights of the Sponsor to cause the Seller to
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repurchase a Mortgage Loan in the event of a breach of the foregoing
representations, warranties and covenants and that the each Seller has
agreed to repurchase a Mortgage Loan as to which there has occurred an
uncured breach of such representations, warranties and covenants in
accordance with the provisions of the Seller's Agreement;
(iv) Immediately prior to the delivery of the Mortgage
Loans to the Trustee on the Closing Date, the Sponsor will own
full legal and equitable title to each Mortgage Loan and will have
good and marketable title thereto free and clear of any equity, lien,
encumbrance, pledge, charge, security interest or other claim. Upon
endorsement and delivery to the Trustee of the executed original
Mortgage Notes and execution and delivery of the related assignments
of all of the Mortgages by the Sponsor in favor of the Trustee, all of
the Sponsor's right, title and interest in and to the Mortgage Loans
will be validly and effectively transferred to the Trustee free
and clear of any equity, lien, encumbrance, pledge, charge,
security interest or other claim; and
(v) Except as otherwise described in the
Prospectus Supplement, each Mortgage Loan was underwritten in
accordance with the applicable Seller's standards applicable at the
time the Sponsor acquired such Mortgage Loan, and that the
Seller meets all the requirements of an approved seller for the
loan purchase program and has complied with all the terms, conditions
and requirements for the sale for Mortgage Loans set forth in the
Seller's Agreement.
(d) The Trustee hereby represents and warrants to the
Master Servicer, as of the Closing Date, that:
(i) The Trustee is a [national] banking [association] in
good standing under the [federal] banking laws of [the United States];
(ii) The Trustee has full power, authority and legal
right to execute and deliver this Agreement and to authenticate the
Certificates and to perform its obligations under this Agreement and
the Certificates, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement and the
authentication and performance of the Certificates; and
(iii) To the best of the Trustee's knowledge, after
reasonable investigation, the execution and delivery by the Trustee of
this Agreement and the authentication of Certificates and the
performance by the Trustee of its obligations under this Agreement and
the Certificates will not violate any provision of any law or
regulation governing
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the Trustee or any order, writ, judgment or decree of any court,
arbitrator or governmental authority or agency applicable to the
Trustee or any of its assets. To the best of the Trustee's knowledge,
after reasonable investigation, such execution, delivery,
authentication and performance will not require the authorization,
consent or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action with respect to,
any governmental authority or agency regulating the activities of
national banking associations. To the best of the Trustee's knowledge,
after reasonable investigation, such execution, delivery,
authentication and performance will not conflict with, or result in a
breach or violation of, any material indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Trustee is
bound.
(e) Headlands, as Master Servicer and Seller, hereby represents and
warrants to the Trustee as of the Closing Date that:
(i) It is a corporation duly organized, validly
existing and in good standing under the laws of the state of its
incorporation and is in good standing as a foreign corporation in each
jurisdiction where such qualification is necessary and throughout the
term of this Agreement will remain a corporation duly organized,
validly existing and in good standing under the laws of the state of
its incorporation or any state of reincorporation and in good standing
as a foreign corporation in each jurisdiction where such qualification
is necessary (except, in the case of foreign corporation qualification
both on the date hereof and in the future, where the failure so to
qualify would not reasonably be expected to have a material adverse
effect on the Master Servicer's ability to enter into this Agreement or
to perform its obligations hereunder), and has the corporate power and
authority to perform its obligations under this Agreement;
(ii) The execution and delivery of this Agreement have
been duly authorized by all requisite corporate action;
(iii) This Agreement, assuming due authorization,
execution, and delivery by the other parties hereto, will constitute
its legal, valid and binding obligation, enforceable in accordance with
its terms, except only as such enforcement may be limited by applicable
Debtor Relief Laws and that certain equitable remedies may not be
available regardless of whether enforcement is sought in equity or at
law;
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(iv) Its execution and delivery of this Agreement and
its performance and compliance with the terms of this
Agreement will not (A) violate its certificate of incorporation or
bylaws (B) to its knowledge, violate any law or regulation, or any
administrative or judicial decree or order to which it is subject or
(C) constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the
breach of, any material contract, agreement or other instrument to
which it is a party or which may be applicable to it or any of its
assets;
(v) To its best knowledge, after reasonable
investigation, it is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default would reasonably be
expected to have consequences that would materially and adversely
affect its financial condition or operations or its performance
hereunder;
(vi) It 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 to be performed by it;
(vii) The consummation of the transactions contemplated
by this Agreement are in the ordinary course of its business;
(viii) No litigation is pending or, to its best knowledge,
threatened against it, which could be reasonably expected to materially
and adversely affect its entering into this Agreement or performing its
obligations under this Agreement or which would have a material adverse
effect on its financial condition; and
(ix) As to each Mortgage Loan, the Seller's Agreement
is in full force and effect.
Section 2.04. Substitution of Mortgage Loans. (a) On a Distribution
Date within two years following the Closing Date and which is on or before the
date on which the Seller would otherwise be required to repurchase a Mortgage
Loan under Section 2.01 or 2.02, the Seller may deliver to the Trustee one or
more Substitute Mortgage Loans in substitution for any one or more of the
Original Mortgage Loans which the Seller would otherwise be required to
repurchase pursuant to Sections 2.02 and 2.03; provided, however, that:
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(1) Substitute Mortgage Loans must have an aggregate
unpaid principal balance not greater than, nor more
than 30% less than the Scheduled Principal Balance of
the Original Mortgage Loans for which they will be
substituted; and
(2) Substitute Mortgage Loans will not have a scheduled
maturity date later than the latest maturity date of
any Mortgage Loan prior to any such substitution;
(b) The Seller shall notify the Master Servicer and the Trustee in
writing not less than five Business Days before the related Distribution Date
which is on or before the date of which the Seller would otherwise be required
to repurchase such Mortgage Loan pursuant to Section 2.02 or 2.03 of its
intention to effect a substitution under this Section. On such Distribution Date
(the "Substitution Date"), the Seller shall deliver to the Trustee (1) the
Substitute Mortgage Loans to be substituted for the Original Mortgage Loans, (2)
a list of the Original Mortgage Loans to be substituted for by such Substitute
Mortgage Loans, (3) an Officers' Certificate (A) stating that no failure by the
Master Servicer described in Section 8.01 shall have occurred and be continuing,
(B) stating that the aggregate principal balance of all Substitute Mortgage
Loans (determined with respect to each Substitute Mortgage Loan as of the
Distribution Date on which it was substituted) including the principal balance
of Substitute Mortgage Loans being substituted on such Distribution Date does
not exceed an amount equal to 5% of the aggregate principal balance of all
Mortgage Loans as of the Closing Date, (C) stating that all conditions precedent
to such substitution specified in subsection (a) have been satisfied and
attaching as an exhibit a supplemental Mortgage Loan schedule (the "Supplemental
Mortgage Loan Schedule") setting forth the same type of information as appears
on the Mortgage Loan Schedule and representing as to the accuracy thereof and
(D) confirming that the representations and warranties contained in Section 2.03
(excluding paragraph (ii) of Section 2.03(a)) are true and correct in all
material respects with respect to the Substitute Mortgage Loans on and as of
such Distribution Date, provided that remedies for the inaccuracy of such
representations are limited as set forth in Sections 2.02, 2.03 and this Section
2.04, (4) an Opinion of Counsel and Officers' Certificate to the effect set
forth below and (5) a certificate stating that cash in the amount by which the
aggregate unpaid principal balance of the Substitute Mortgage Loans is less than
the Scheduled Principal Balance of the Mortgage Loans for which they are being
substituted (which amount cannot be more than 15% of the Scheduled Principal
Balance of the Mortgage Loans for which they are being substituted) has been
deposited in the Certificate Account no later than the related Certificate
Account Deposit Date (such amount, the "Substitution Adjustment Amount").
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Upon receipt of the foregoing, the Trustee shall release such Original Mortgage
Loans to the Seller.
(c) Concurrently with the satisfaction of the conditions set forth in
Section 2.04(a) and (b) above and the grant of such Substitute Mortgage Loans to
the Trustee pursuant to Section 2.04(a) above, Exhibit F to this Agreement shall
be deemed to be amended to exclude all Mortgage Loans being replaced by such
Substitute Mortgage Loans and to include, the information set forth on the
Supplemental Mortgage Loan Schedule with respect to such Substitute Mortgage
Loans, and all references in this Agreement to Mortgage Loans shall include such
Substitute Mortgage Loans.
[(d) In connection with any Mortgage Loan that the Seller is required
to purchase or replace, the Seller shall deliver to the Trustee an Opinion of
Counsel to the effect that such purchase or substitution will not cause (x) any
federal tax to be imposed on the REMIC, including without limitation, any
Federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the start-up day" under Section 860G(d)(1) of
the Code or (y) any portion of the Trust Fund to fail to qualify as a REMIC at
any time that any Certificate is outstanding. In the event that such opinion or
certificate indicates that a repurchase or substitution will result in the
imposition of a prohibited transaction tax, give rise to net taxable income or
be deemed a contribution to the REMIC after the "start-up day", the Seller shall
not be required to repurchase or replace any such Mortgage Loan unless and until
the Master Servicer has determined there is an actual or imminent default with
respect thereto or that such defect or breach adversely affects the
enforceability of such Mortgage Loan.]
Section 2.05. Designation of Interests in REMIC. (a) The Regular
Certificates are hereby designated as the "regular interests" and the Residual
Certificates are hereby designated as the single "residual interest" in the
REMIC for purposes of the REMIC Provisions.
(b) The Holder of the Residual Certificate is hereby designated as "tax
matters person" with respect to the REMIC for purposes of the REMIC Provisions.
Section 2.06. Designation of Start-up Day. The Closing Date is hereby
designated as the "start-up day" of the REMIC within the meaning of Section
860G(a)(9) of the Code.
Section 2.07. REMIC Certificate Maturity Date. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of each
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Class of Regular Certificates is the Distribution Date in _________, 20__.
[Section 2.08. Purchase of Converted Mortgage Loans. On the Business
Day immediately preceding the Due Date on which a Convertible Mortgage Loan
becomes a Converted Mortgage Loan, the Master Servicer shall notify the Sponsor
and the Trustee in writing that such Mortgage Loan has become a Converted
Mortgage Loan. The [Seller] [Master Servicer] shall purchase such Converted
Mortgage Loan from the Trust Fund by paying to the [Master Servicer] [Trustee]
for the benefit of the Trustee the applicable Purchase Price on or before the
Certificate Account Deposit Date occurring in the month of such Due Date and the
Trustee shall enforce such obligation. The Purchase Price for such Converted
Mortgage Loan shall be deposited by the [Master Servicer] [Trustee] in the
Certificate Account and, upon receipt by the Trustee of written notification of
such deposit signed by a Servicing Officer, the Trustee shall release to the
[Seller] [Master Servicer] the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary to vest in the [Seller] [Master Servicer] or its
designee or assignee title to any Mortgage Loan released pursuant hereto. The
termination of the Master Servicer obligation as Master Servicer shall not
terminate its obligation to purchase Converted Mortgage Loans pursuant to
Section 2.05. [Any successor Master Servicer under this Agreement, including,
without limitation, the Trustee acting in such capacity, shall not be required
to purchase any Converted Mortgage Loan.] In the event the [Seller] [Master
Servicer] defaults upon its obligation to repurchase any Converted Mortgage
Loan, and such default remains unremedied for a period of ten Business Days
after written notice of such default shall have been given by the Trustee to the
[Seller] [Master Servicer], the Trustee shall use its best efforts to cause such
Converted Mortgage Loan to be sold at a price equal to the Purchase Price for
settlement as soon as practicable thereafter. Any such Converted Mortgage Loan
which is not purchased by the [Seller] [Master Servicer] and which the Trustee
is unable to sell at the Purchase Price shall remain in the Trust Fund.]
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ARTICLE III
Administration and Servicing
of Mortgage Loans
Section 3.01. The Master Servicer to Act as Servicer. The Master
Servicer shall service and administer the Mortgage Loans and shall have full
power and authority, acting alone and/or through Servicers, to do any and all
things in connection with such servicing and administration which it may deem
necessary or desirable in connection therewith. Without limiting the generality
of the foregoing, the Master Servicer in its own name is hereby authorized and
empowered by the Trustee, to execute and deliver, on behalf of the
Certificateholders and the Trustee or any of them, 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 with
respect to the properties subject to the Mortgages. The Trustee shall furnish
the Master Servicer with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Master Servicer to carry out its
servicing and administrative duties hereunder.
Unless otherwise specified herein with respect to specific obligations
of the Master Servicer, the Master Servicer shall service and administer the
Mortgage Loans in the best interests of and for the benefit of, the
Certificateholders, in accordance with prudent mortgage loan servicing standards
and procedures accepted in the mortgage banking industry and in accordance with
the Guide. The Master Servicer shall promptly notify the Trustee in writing of
any event, circumstance or occurrence which may adversely affect the ability of
the Master Servicer to service any Mortgage Loan or to otherwise perform and
carry out its duties, responsibilities and obligations under and in accordance
with this Agreement. The Master Servicer shall at all times maintain accurate
records and books of account and an adequate system of audit and internal
controls. All accounting and loan servicing records pertaining to each Mortgage
Loan shall be maintained in such manner as will permit the Trustee, or its duly
authorized representatives and designees to examine and audit and make legible
reproductions of records during reasonable business hours. [All such records
shall be maintained for the period required by the Guide or such longer period
as is required by law.]
[The Master Servicer intends to perform its servicing and
administration functions, as Master Servicer, pursuant to this Agreement through
its agent, the Servicing Agent. All actions by the Servicing Agent with respect
to the servicing and administration of the Mortgage Loans shall be treated as
though done by the
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Master Servicer itself. All documents, instruments or contracts executed by the
Servicing Agent on behalf of the Master Servicer shall be treated by the Trustee
as though executed by the Master Servicer itself.]
All costs incurred by the Master Servicer or by any Servicer in
effecting the timely payment of taxes and assessments on the properties subject
to the Mortgage Loans shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loan so
permit, and such costs shall be recoverable by the Master Servicer to the extent
permitted by Section 3.06.
[In the event that any tax is imposed on "prohibited transactions"
under Section 860F(a) of the Code or on "contributions after the start-up date"
under Section 860G(d) of the Code on the Trust Fund, such tax shall be charged
(i) to the Trustee pursuant to this Section 3.01, if such tax arises out of or
results from a breach by the Trustee of any of its obligations under this
Agreement, which breach constitutes gross negligence or willful misconduct of
the Trustee or (ii) to the Master Servicer pursuant to this Section 3.01, if
such tax arises out of or results from a breach by the Master Servicer of any of
its obligations under this Agreement or (iii) to the Sponsor pursuant to this
Section 3.01, if such tax arises out of or results from a breach by the Sponsor
of any of its obligations under this Agreement or (iv) to the Seller pursuant to
this Section 3.01, if such tax arises out of or results from a breach by the
Seller of any of its obligations under this agreement or (v) to the Residual
Certificates on a pro rata basis to the extent such taxes are not allocable
pursuant to clauses (i) through (iv) above. In no event will the Trustee be
liable to pay or advance the payment of any taxes referred to in this paragraph
other than as provided in clause (i) above. No taxes referred to in this
paragraph shall be paid from any assets constituting the Pool.]
Section 3.02. Servicing Agreements between Master Servicer and
Servicers; Enforcement of Servicer's and Seller's Obligations. (a) The Master
Servicer may enter into Servicing Agreements with Servicers for the servicing
and administration of certain of the Mortgage Loans. References in this
Agreement to actions taken or to be taken by the Master Servicer in servicing
the Mortgage Loans include actions taken or to be taken by a Servicer on behalf
of the Master Servicer. Each Servicing Agreement will be upon such terms and
conditions as are not inconsistent with this Agreement and as the Master
Servicer and the Servicer have agreed and as shall have been approved by the
Sponsor and shall be effective as of the date of conveyance of the Mortgage
Loans by the Sponsor to the Trustee. With the approval of the Master Servicer, a
Servicer may delegate its
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servicing obligations to third-party servicers, but such Servicers will remain
obligated under the related Servicing Agreement. The Master Servicer and the
Servicer may enter into amendments thereto; provided, however, that any such
amendments shall be consistent with and not violate the provisions of this
Agreement. [Each Servicer shall be either (i) an institution the accounts of
which are insured by the FDIC or (ii) another entity that engages in the
business of originating or servicing mortgage loans, and in either case shall be
authorized to transact business in the state or states in which the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Servicer to perform its obligations
hereunder and under the Servicing Agreement, and in either case shall be a FHLMC
or FNMA approved mortgage servicer. Any Servicing Agreement entered into by the
Master Servicer shall include the provision that such Agreement may be
immediately terminated (x) with cause and without any termination fee by any
Master Servicer hereunder other than Headlands or (y) without cause in which
case the Master Servicer shall be responsible for any termination fee or penalty
resulting therefrom.]
(b) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Trustee and the Certifi-cateholders, shall enforce the
obligations of each Servicer under the related Servicing Agreement and of the
Seller under the Seller's Agreement, including, without limitation, the
obligation to make advances in respect of delinquent payments as required by a
Servicing Agreement, to purchase a Mortgage Loan on account of defective
documentation, as described in Section 2.02, or on account of a breach of a
representation or warranty, as described in Section 2.03. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
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, but shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement only 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.
Section 3.03. Liability of the Master Servicer. Notwithstanding any
Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Master Servicer or a Servicer or
reference to actions taken through a Servicer or otherwise, the Master Servicer
shall remain obligated and liable to the Trustee and Certificateholders for the
servicing and administering of the Mortgage Loans in accor-
III-3
dance with the provisions of Section 3.01 without diminution of such obligation
or liability by virtue of such Servicing Agreements or arrangements or by virtue
of indemnification from the 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. For purposes of making distributions to
Certificateholders all amounts received by a Servicer in connection with the
Mortgage Loans shall be deemed to have been received by the Master Servicer, and
with respect to any successor Master Servicer from the time such successor
Master Servicer becomes the Master Servicer, whether or not such amounts are
actually remitted by the Servicer to the Master Servicer. The Master Servicer
shall be entitled to enter into any agreement with a Servicer or Seller for
indemnification of the Master Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
Section 3.04. Collection of Certain Mortgage Loan Payments; Certificate
Account; Distribution Account. (a) 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 of any related Primary Insurance Policy,
follow such collection procedures as it follows with respect to mortgage loans
comparable to the Mortgage Loans in its own servicing portfolio; provided,
however, that the Master Servicer agrees not to permit any modification with
respect to any Mortgage Loan that would change the Mortgage Interest Rate,
forgive any principal or interest, or change the terms of such Mortgage Note.
Consistent with the foregoing, the Master Servicer may in its discretion (i)
waive any late payment charge or any assumption fees or other fees which may be
collected in the ordinary course of servicing such Mortgage Loan and (ii)
arrange with a Mortgagor a schedule for the payment of principal and interest
due and unpaid for a period of not more than 120 days after the applicable Due
Date. Any arrangement of the sort described in clause (ii) above shall not
affect the amount or timing of any Monthly Advance which is required to be made
with respect to a Mortgage Loan pursuant to the then current amortization
schedule applicable to such Mortgage Loan.
In those cases where a Servicer is servicing Mortgage Loans pursuant to
a Servicing Agreement, the Master Servicer shall cause the Servicer, pursuant to
the Servicing Agreement, to establish and maintain one or more Servicing
Accounts, each of which shall be an Eligible Account. The Servicer will be
required under its Servicing Agreement to deposit into the Servicing Account on
a daily basis no later than the Business Day following receipt of all proceeds
of Mortgage Loans received by the Servicer, less its Servicing Fees and
unreimbursed Servicer Advances and expenses, to the extent permitted by the
Servicing
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Agreement. The Servicer shall not be required to deposit in the Servicing
Account payments or collections in the nature of pre- payment charges or late
charges.
(b) The Master Servicer shall establish and maintain a Certificate
Account into which the Master Servicer shall deposit or cause to be deposited on
a daily basis within one Business Day of receipt, except as otherwise
specifically provided herein, the following payments and collections remitted by
Servicers or received by it in respect of Mortgage Loans subsequent to the
Cut-off Date (other than in respect of principal and interest due on the
Mortgage Loans on or before the Cut-off Date) and the following amounts required
to be deposited hereunder:
(i) all payments on account of principal on the
Mortgage Loans, including Principal Prepayments [and
Balloon Payments] and the principal component of any
Servicer Advance;
(ii) all payments on account of interest on the Mortgage
Loans, net of the sum of the related Master Servicing Fee and
related Servicing Fee, and the interest component of any
Servicer Advance [and any Yield Maintenance Premiums];
(iii) all Insurance Proceeds and Liquidation Proceeds (net
of any related expenses of the related Servicer), other than
proceeds to be applied to the restoration or repair of the
Mortgaged Property or released to the Mortgagor in accordance
with the Master Servicer's normal servicing procedures;
(iv) any amount required to be deposited by the Master
Servicer pursuant to Section 3.04(d) in connection with any
losses on Permitted Investments;
(v) any amounts required to be deposited by the
Master Servicer pursuant to Sections 3.08 and 3.10
hereof;
(vi) all Purchase Prices from the Master Servicer
or Seller and all Substitution Adjustment Amounts;
(vii) all Advances made by the Master Servicer
pursuant to Section 4.02; and
(viii) any other amounts required to be deposited
hereunder.
The foregoing requirements for remittance by the Master Servicer shall
be exclusive, it being understood and agreed that,
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without limiting the generality of the foregoing, payments in the nature of
[prepayment penalties,] late payment charges or assumption fees, if collected,
need not be remitted by the Master Servicer. In the event that the Master
Servicer shall remit any amount not required to be remitted, it may at any time
withdraw or direct the institution maintaining the Certificate Account to
withdraw such amount from the Certificate Account, any provision herein to the
contrary notwithstanding. Such withdrawal or direction may be accomplished by
delivering written notice thereof to the Trustee or such other institution
maintaining the Certificate Account which describes the amounts deposited in
error in the Certificate Account. The Master Servicer shall maintain adequate
records with respect to all withdrawals made pursuant to this Section. All funds
deposited in the Certificate Account shall be held in trust for the
Certificateholders until withdrawn in accordance with Section 3.06.
(c) The Trustee shall establish and maintain, on behalf of
the Certificateholders, the Distribution Account. The Trustee
shall, promptly upon receipt, deposit in the Distribution Account
and retain therein the following:
(i) the aggregate amount remitted by the Master
Servicer to the Trustee pursuant to Section 3.06(vii);
(ii) any amount deposited by the Master Servicer
pursuant to Section 3.04(d) in connection with any losses on
Permitted Investments; and
(iii) any other amounts deposited hereunder which are
required to be deposited in the Distribution Account.
In the event that the Master Servicer shall remit any amount not
required to be remitted, it may at any time direct the Trustee to withdraw such
amount from the Distribution Account, any provision herein to the contrary
notwithstanding. Such direction may be accomplished by delivering an Officer's
Certificate to the Trustee which describes the amounts deposited in error in the
Distribution Account. All funds deposited in the Distribution Account shall be
held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or withdrawn in accordance with Section 3.06(b).
In no event shall the Trustee incur liability for withdrawals from the
Distribution Account at the direction of the Master Servicer.
(d) Each institution at which the Certificate Account or the
Distribution Account is maintained shall invest the funds therein as directed in
writing by the Master Servicer in Permitted Investments, which shall mature not
later than (i) in the case of the Certificate Account, the second Business Day
next preceding the related Certificate Account Deposit Date (except
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that if such Permitted Investment is an obligation of the institution that
maintains such account, then such Permitted Investment shall mature not later
than the Business Day next preceding such Certificate Account Deposit Date) and
(ii) in the case of the Distribution Account, the Business Day next preceding
the Distribution Date (except that if such Permitted Investment is an obligation
of the institution that maintains such account, then such Permitted Investment
shall mature not later than such Distribution Date) and, in each case, shall not
be sold or disposed of prior to its maturity. All such Permitted Investments
shall be made in the name of the Trustee, for the benefit of the
Certificateholders. All income and gain net of any losses realized from any such
investment shall be for the benefit of the Master Servicer as servicing
compensation and shall be remitted to it monthly as provided herein. The amount
of any realized losses in the Certificate Account or the Distribution Account
incurred in any such account in respect of any such investments shall promptly
be deposited by the Master Servicer in the Certificate Account or paid to the
Trustee for deposit into the Distribution Account, as applicable. The Trustee in
its fiduciary capacity shall not be liable for the amount of any loss incurred
in respect of any investment or lack of investment of funds held in the
Certificate Account or the Distribution Account and made in accordance with this
Section 3.04.
(e) The Master Servicer shall give notice to the Trustee, the Seller,
each Rating Agency and the Sponsor of any proposed change of the location of the
Certificate Account not more than 45 days but in no event not less than 30 days
prior to any change thereof. The Trustee shall give notice to the Master
Servicer, the Seller, each Rating Agency and the Sponsor of any proposed change
of the location of the Distribution Account not more than 45 days but in no
event not less than 30 days prior to any change thereof.
Section 3.05. Collection of Taxes, Assessments and Similar Items;
Master Servicing Accounts. (a) To the extent required by the related Mortgage
Note and not violative of current law, the Master Servicer shall cause each
Servicer to establish and maintain one or more accounts (each, an "Escrow
Account") and deposit and retain therein all collections from the Mortgagors (or
advances by the Servicer) for the payment of taxes, assessments, [replacement
reserves,] hazard insurance premiums or comparable items for the account of the
Mortgagors. Nothing herein shall require the Master Servicer or any Servicer to
compel a Mortgagor to establish an Escrow Account in violation of applicable
law.
(b) Withdrawals of amounts so collected from the Master Servicing
Accounts may be made only to effect timely payment of taxes, assessments, hazard
insurance premiums, Primary Insurance
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Policy premiums, if applicable, to repair or otherwise protect the Mortgaged
Property or comparable items, to reimburse the Master Servicer out of related
collections for any payment of taxes or assessments or any payments made
pursuant to Sections 3.07 (with respect to the Primary Insurance Policy) and
3.08 (with respect to hazard insurance), to refund to any Mortgagors any sums as
may be determined to be overages, to pay interest, if required, to Mortgagors on
balances in the Master Servicing Account or to clear and terminate the Master
Servicing Account at the termination of this Agreement in accordance with
Section 10.01.
Section 3.06. Permitted Withdrawals from the Certificate Account. (a)
The Master Servicer may, from time to time as provided herein, make withdrawals
from the Certificate Account of amounts on deposit therein attributable to the
Mortgage Loans for the following purposes:
(i) as reimbursement for previously unreimbursed
Monthly Advances made pursuant to Section 4.02, the right to withdraw
amounts pursuant to this subclause (i) being limited to amounts
received on particular Mortgage Loans (including, for this purpose,
Insurance Proceeds, Liquidation Proceeds and proceeds from the
repurchase of the Mortgage Loan pursuant to Sections 2.02 and 2.03)
which represent late recoveries of payments of principal and/or
interest with respect to which any such Monthly Advance was made;
(ii) to pay as servicing compensation that portion of
any payment as to interest as provided in Section 3.12;
(iii) to pay to itself or the Seller, as the case may be,
with respect to each Mortgage Loan or property acquired in respect
thereof that has been purchased pursuant to Section 2.02, 2.03, 2.08 or
10.01, all amounts received thereon following such purchase and not
distributed as of the date on which the related Scheduled Principal
Balance or Purchase Price is determined;
(iv) as reimbursement for any Nonrecoverable Advance
in the manner and to the extent provided below or for the
payment of taxes as permitted by the last paragraph of
Section 3.01;
(v) to pay, or reimburse itself for the payment of,
the Trustee Fee, [specify other fees];
(vi) as reimbursement for expenses incurred by and
reimbursable to it or the Sponsor pursuant to Section 7.03;
and
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(vii) on or prior to each Certificate Account Deposit
Date, to withdraw an amount equal to related Available Funds for such
Distribution Date, and remit such amount to the Trustee for deposit in
the Distribution Account.
Since, in connection with withdrawals pursuant to subclauses (i)
through (iii), inclusive, the Master Servicer's entitlement thereto is limited
to collections or other recoveries on the related Mortgage Loan, 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
Certificate Account pursuant to such subclauses (i) through (iii), inclusive.
The Master Servicer shall be entitled to reimburse itself for any
Monthly Advance made in respect of a Mortgage Loan that it determines to be a
Nonrecoverable Advance by withdrawal from the Certificate Account of amounts on
deposit therein attributable to the Mortgage Loans on the Business Day preceding
any Distribution Date first succeeding the date of such determination. The
Master Servicer's right of reimbursement in respect of a Nonrecoverable Advance
on any such Business Day shall be limited to an amount not exceeding the portion
of such Monthly Advance previously paid to Certificateholders (and not
thereto-fore reimbursed to the Master Servicer).
(b) The Trustee shall withdraw funds from the Distribution Account for
distributions to Certificateholders in the manner specified in this Agreement.
In addition, the Trustee may from time to time make withdrawals from the
Distribution Account for the following purposes:
(i) to pay to the Master Servicer as additional
servicing compensation earnings on or investment income with
respect to funds in the Distribution Account;
(ii) to withdraw and return to the Master Servicer
any amount deposited in the Distribution Account and not
required to be deposited therein; and
(iii) to clear and terminate the Distribution Account
upon termination of the Agreement pursuant to Section 9.01
hereof.
Section 3.07. Maintenance of the Primary Insurance Policies;
Collections Thereunder. The Master Servicer shall exercise its best reasonable
efforts to maintain and keep in full force and effect each Primary Insurance
Policy, with respect to each conventional Mortgage Loan as to which as of the
Cut-Off Date such a Primary Insurance Policy was in effect (or, in the case of a
substitute Mortgage Loan, the date of substitution) and the original principal
amount of the related Mortgage Note
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exceeded 80% of the Appraised Value, in an amount at least equal to the excess
of such original principal amount over 75% of such Appraised Value until the
principal amount of any such Mortgage Loan is reduced below 80% of the Appraised
Value or, based upon a new appraisal, the principal amount of such Mortgage Loan
represents less than 80% of the new appraised value. The Master Servicer and the
related Sub-Servicer shall have the power to substitute for any Primary
Insurance Policy another substantially equivalent policy issued by another
Qualified Insurer; provided that such substitution is subject to the condition,
to be evidenced by a writing from each Rating Agency, that it would not cause
the ratings on the Certificates to be downgraded or withdrawn. The Master
Servicer agrees to effect the timely payment of the premiums on each Primary
Insurance Policy, and such costs not otherwise recoverable shall be recoverable
by the Servicer from the related Liquidation Proceeds.
In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself, the
Trustee and Certificateholders, claims to the insurer under any Primary
Insurance Policies and, in this regard, to take such reasonable action as shall
be necessary to permit recovery under any Primary Insurance Policies respecting
defaulted Mortgage Loans. Pursuant to Section 3.04, any amounts collected by the
Master Servicer under any Primary Insurance Policies shall be deposited in the
Certificate Account, subject to withdrawal pursuant to Section 3.06.
Section 3.08. Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage. (a) The Master Servicer shall maintain and keep, with
respect to each Mortgage Loan, in full force and effect hazard insurance (fire
insurance with extended coverage) equal to at least the lesser of the
Outstanding Principal Balance of the Mortgage Loan or the current replacement
cost of the Mortgage Property, and containing a standard mortgagee clause;
provided, however, that the amount of hazard insurance may not be less than the
amount necessary to prevent loss due to the application of any co-insurance
provision of the related policy. Unless applicable state law requires a higher
deductible, the deductible on such hazard insurance policy may be no more than
$1,000 or 1% of the applicable amount of coverage, which ever is less. In the
case of a condominium unit or a unit in a planned unit development, the required
hazard insurance shall take the form of a multiperil policy covering the entire
condominium project or planned unit development, in an amount equal to at least
100% of the insurable value based on replacement cost.
(b) Any amounts collected by the Master Servicer under any
such hazard insurance policy (other than amounts to be applied to the
restoration or repair of the Mortgage Property or
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amounts released to the Mortgagor in accordance with the Master Servicer's
normal servicing procedures, the terms of the Mortgage Note, the Mortgage or
applicable law) shall be deposited in the Certificate Account.
(c) Any cost incurred by a Master Servicer in maintaining any
such hazard insurance policy shall not be added to the amount owing under the
Mortgage Loan for the purpose of calculating monthly distributions to
Certificateholders, notwithstanding that the terms of the Mortgage Loan so
permit. Such costs shall be recoverable by the Master Servicer or a Sub-Servicer
out of related late payments by the Mortgagor or out of Insurance Proceeds or
Liquidation Proceeds or by the Master Servicer from the Repurchase Price, to the
extent permitted by Section 3.06.
(d) No earthquake or other additional insurance is to be
required of any Mortgagor or maintained on property acquired with respect to a
Security Instrument other than pursuant to such applicable laws and regulations
as shall at any time be in force and shall require such additional insurance.
When, at the time of origination of the Mortgage Loan, the Mortgage Property is
located in a federally designated special flood hazard area, the Master Servicer
shall use its best reasonable efforts to cause with respect to the Mortgage
Loans, flood insurance (to the extent available and in accordance with mortgage
servicing industry practice) to be maintained. Such flood insurance shall cover
the Mortgaged Property, including all items taken into account in arriving at
the Appraised Value on which the Mortgage Loan was based, and shall be in an
amount equal to the lesser of (i) the Outstanding Principal Balance of the
related Mortgage Loan and (ii) the minimum amount required under the terms of
coverage to compensate for any damage or loss on a replacement cost basis, but
not more than the maximum amount of such insurance available for the related
Mortgaged Property under either the regular or emergency programs of the
National Flood Insurance Program (assuming that the area in which such Mortgaged
Property is located is participating in such program). Unless applicable state
law requires a higher deductible, the deductible on such flood insurance may not
exceed $1,000 or 1% of the applicable amount of coverage, whichever is less.
(e) If insurance has not been maintained complying with
Subsections 3.08(a) and (d) and there shall have been a loss which would have
been covered by such insurance had it been maintained, the Master Servicer shall
pay for any necessary repairs.
(f) The Master Servicer shall present claims under the related
hazard insurance or flood insurance policy.
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(g) The Master Servicer shall obtain and maintain at its own
expense and for the duration of this Agreement a blanket fidelity bond and shall
cause each Sub-Servicer to obtain and maintain an errors and omissions insurance
policy covering such Sub-Servicer's officers, employees and other persons acting
on its behalf in connection with its activities under this Agreement. The amount
of coverage shall be at least equal to the coverage maintained by the Master
Servicer acceptable to FNMA or FHLMC to service loans for it or otherwise in an
amount as is commercially available at a cost that is generally not regarded as
excessive by industry standards. The Master Servicer shall promptly notify the
Trustee of any material change in the terms of such bond or policy. The Master
Servicer shall provide annually to the trustee a certificate of insurance that
such bond and policy are in effect. If any such bond or policy ceases to be in
effect, the Master Servicer shall, to the extent possible, give the Trustee ten
days' notice prior to any such cessation and shall use its best efforts to
obtain an comparable replacement bond or policy, as the case may be. Any amounts
relating to the Mortgage Loans collected under such bond or policy shall be
remitted to the Certificate Account to the extent that such amounts have not
previously been paid to such account.
Section 3.09. Enforcement of Due-On-Sale Clauses; Assumption
Agreements. (a) In any case in which the Master Servicer is notified by any
Mortgagor that a Mortgaged Property relating to a Mortgage Loan has been or is
about to be conveyed by the Mortgagor, the Master Servicer shall enforce any
due-on-sale clause contained in the related Mortgage to the extent permitted
under the terms of the related Mortgage Note and by applicable law unless the
Master Servicer reasonably believes such enforcement is likely to result in
legal action by the Mortgagor. The Master Servicer may repurchase a Mortgage
Loan at the Purchase Price when the Master Servicer requires acceleration of the
Mortgage Loan, but only if the Master Servicer is satisfied, as evidenced by an
Officer's Certificate delivered to the Trustee, that either (i) such Mortgage
Loan is in default or default is reasonably foreseeable or (ii) if such Mortgage
Loan is not in default or default is not reasonably foreseeable, such repurchase
will have no adverse tax consequences for the Trust Fund or any
Certificateholder. If the Master Servicer reasonably believes that such
due-on-sale clause cannot be enforced under applicable law or if the Mortgage
Loan does not contain a due-on-sale clause, the Master Servicer is authorized to
consent to a conveyance subject to the lien of the Mortgage, and to take or
enter into an assumption agreement from or with the Person to whom such property
has been or is about to be conveyed, pursuant to which such Person becomes
liable under the related Mortgage Note and unless prohibited by applicable state
law, such Mortgagor remains liable thereon, on condition, however, that the
related Mortgage Loan shall continue to be covered (if so covered
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before the Master Servicer enters into such agreement) by any Primary Insurance
Policy. The Master Servicer shall notify the Trustee, whenever possible, before
the completion of such assumption agreement, and shall forward to the Trustee
the original copy of such assumption agreement, which copy shall be added by the
Trustee to the related Mortgage File and which 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. In connection with any
such assumption agreement, the interest rate on the related Mortgage Loan shall
not be changed and no other material alterations in the Mortgage Loan shall be
made unless such material alteration would not cause the REMIC Trust to fail to
qualify as a REMIC for federal income tax purposes, as evidenced by an Opinion
of Counsel. Any fee or additional interest collected by the Master Servicer for
consenting to any such conveyance or entering into any such assumption agreement
may be retained by the Master Servicer as additional servicing compensation.
(b) 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 any conveyance by the Mortgagor of the
related Mortgaged Property or assumption of a Mortgage Loan which the Master
Servicer reasonably believes it may be restricted by law from preventing, for
any reason whatsoever or if the exercise of such right would impair or threaten
to impair any recovery under any applicable Insurance Policy, or, in the Master
Servicer's judgment, be reasonably, likely to result in legal action by the
Mortgagor.
Section 3.10. Realization upon Defaulted Mortgage Loans. (a) The Master
Servicer shall foreclose upon or otherwise comparably convert the ownership of
properties securing any Mortgage Loans that come into and continue in default
and as to which no satisfactory arrangements can be made for collection of
delinquent payments pursuant to Section 3.04 except that the Master Servicer
shall not foreclose upon or otherwise comparably convert a Mortgaged Property if
there is evidence of toxic waste thereon and the Master Servicer determines it
would be imprudent to do so or not in accordance with appropriate servicing
standards. The Master Servicer can conclusively rely on results of third party
inspections from parties it reasonably believes are qualified to conduct such
inspections. In connection with such foreclosure or other conversion, the Master
Servicer shall use its best reasonable efforts to preserve REO Property and to
realize upon defaulted Mortgage Loans in such manner as to maximize the receipt
of principal and interest by the Certificateholders, taking into account, among
other things, the timing of foreclosure and the considerations set forth in
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Subsection 3.10(b). The foregoing is subject to the proviso that the Master
Servicer shall not be required to expend its own funds in connection with any
foreclosure or towards the restoration of an property unless it determines in
good faith (i) that such restoration or foreclosure will increase the proceeds
of liquidation of the Mortgage Loan to Certificateholders after reimbursement to
itself for such expenses and (ii) that such expenses will be recoverable to it
either through Liquidation Proceeds (respecting which it shall have priority for
purposes of reimbursements from the Certificate Account pursuant to Section
3.06) or through Insurance Proceeds (respecting which it shall have similar
priority). The Master Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof (as well as its normal servicing
compensation) to the extent that transfers or withdrawals from the Certificate
Account with respect thereto are permitted under Section 3.06. Any income from
or other funds (net of any income taxes) generated by REO Property shall be
deemed for purposes of this Agreement to be Insurance Proceeds.
(b) The Trust Fund shall not acquire any real property (or any personal
property incident to such real property) except in connection with a default or
imminent default of a Mortgage Loan. In the event that the Trust Fund acquires
any real property (or personal property incident to such real property) in
connection with a default or imminent default of a Mortgage Loan, such property
shall be disposed of by the Trust Fund within two years after its acquisition by
the Trust Fund unless the Trustee shall have received an Opinion of Counsel with
respect to such longer retention or the Master Servicer applies for and receives
an extension of the two-year period under Section 856(e)(3) of the Code, in
which case such two-year period will be extended by the period set forth in such
Opinion of Counsel or approved application, as the case may be. The Trustee
shall have no obligation to pay for such Opinion of Counsel.
The Master Servicer shall prepare or cause to be prepared and submit to
the Trustee, and the Trustee shall file or cause to be filed with the Internal
Revenue Service a report and the Master Servicer shall deliver such report to
the Mortgagor in the manner required by applicable law and such report shall
contain the information required to be reported regarding any Mortgaged Property
which is abandoned or which has been foreclosed. The Master Servicer shall
provide a copy of any such report to the Trustee. In connection with any
Mortgage Loan as to which the Master Servicer has accepted a deed in lieu of
foreclosure, the Master Servicer shall insure that, at all times, the related
property constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) and that such property is administered so
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that no tax on "net income from foreclosure property" within the meaning of Code
Section 860G(c) is imposed on the Trust Fund.
Section 3.11. Trustee to Cooperate; Release of Mortgage Files. (a) Upon
payment in full of any Mortgage Loan or the receipt by the Master Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, the Master Servicer will immediately notify the Trustee by a
certification signed by a Servicing Officer in the Form of Exhibit H (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 Certificate Account have been or will be so deposited in the
appropriate subaccount thereof) and shall request delivery to the Master
Servicer of the Mortgage File. Upon receipt of such certification and request,
the Trustee shall promptly release the related Mortgage File to the Master
Servicer and execute and deliver to the Master Servicer, without recourse, the
request for reconveyance, deed of reconveyance or release or satisfaction of
mortgage or such instrument releasing the lien of the Mortgage (furnished by the
Master Servicer), together with the Mortgage Note with written evidence of
cancellation thereon. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Certificate
Account.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan or collection under a Required Insurance
Policy, the Master Servicer shall deliver to the Trustee a Request for Release
signed by a Servicing Officer on behalf of the Master Servicer in substantially
the form attached as Exhibit H hereto. Upon receipt of the Request for Release,
the Trustee shall deliver the Mortgage File or any document therein to the
Master Servicer.
(c) The Master Servicer shall cause each Mortgage File or any document
therein released pursuant to Subsection 3.11(b) to be returned to the Trustee
when the need therefor no longer exists, and in any event within 21 days of the
Master Servicer's receipt thereof, unless the Mortgage Loan has become a
Liquidated Mortgage Loan and the Liquidation Proceeds relating to the Mortgage
Loan have been deposited in the Certificate Account or such Mortgage File is
being used to pursue foreclosure or other legal proceedings. Prior to return of
a Mortgage File or any document to the Trustee, the Master Servicer or the
related Insurer to whom such file or document was delivered shall retain such
file or document in its respective control unless 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, to initiate or pursue legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
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non-judicially, and the Master Servicer has delivered to the Trustee a
certificate of a Servicing Officer certifying as to 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. If a Mortgage Loan becomes a Liquidated
Mortgage Loan, the Trustee shall deliver the Request for Release with respect
thereto to the Master Servicer upon deposit of the related Liquidation Proceeds
in the Certificate Account.
(d) The Trustee shall execute and deliver to the Master Servicer any
court pleadings, requests for trustee's sale or other documents necessary to (i)
the foreclosure or trustee's sale with respect to a Mortgaged Property; (ii) any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Mortgage; (iii) obtain a deficiency judgment against the Mortgagor; or
(iv) enforce any other rights or remedies provided by the Mortgage Note or
Mortgage or otherwise available at law or equity. Together with such documents
or pleadings the Master Servicer shall deliver to the Trustee a certificate of a
Servicing Officer in which it requests the Trustee to execute the pleadings or
documents. The certificate shall certify and explain the reasons for which the
pleadings or documents are required. It shall further certify that the Trustee's
execution and delivery of the pleadings or documents will not invalidate any
insurance coverage under the Required Insurance Policies, affect the REMIC
status of the Trust or 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 3.12. Servicing and Other Compensation; Payment of Certain
Expenses by the Master Servicer. The Master Servicer, as compensation for its
activities hereunder, shall be entitled to receive on each Distribution Date an
amount with respect to each Mortgage Loan as to which a monthly installment of
principal and interest has been received equal to one-twelfth of the Master
Servicing Fee Rate for such Mortgage Loan multiplied by the principal balance on
which such installment of interest accrued. The Master Servicer is also entitled
to retain additional servicing compensation in the form of prepayment charges,
if any, assumption fees, tax service fees, fees for statement of account or
payoff, late payment charges, interest on amounts deposited in the Certificate
Account or Permitted Investments of such amounts, or otherwise. The Master
Servicer may retain, as additional servicing compensation, amounts in respect of
interest paid by borrowers in connection with any principal prepayment in full
received by the Master Servicer from the first day through the 15th day of each
month, other than the month of the Cut-off Date. The Master Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder (including payment of the fees of its counsel and all other fees and
expenses not expressly stated hereunder to be for the account
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of the Holders of Certificates) and shall not be entitled to reimbursement
therefor except as specifically provided herein.
As compensation for its activities under its Servicing Agreement, each
Servicer shall be entitled to an amount with respect to each Mortgage Loan as to
which a monthly installment of principal and interest has been received equal to
one-twelfth of the Servicing Fee Rate for such Mortgage Loan multiplied by the
principal balance on which such installment of interest accrued. Each Servicer
is required to pay all expenses incurred by it in connection with its servicing
activities under its Servicing Agreement (including payment of premiums for
Primary Mortgage Insurance Policies, if required) and shall not be entitled to
reimbursement therefor except as specifically provided in the Servicing
Agreement and not inconsistent with this Agreement.
The Master Servicing Fee for any month shall be reduced to the extent
described as follows. Not later than the Determination Date in each month that
follows a month in which a Mortgage Loan was prepaid in full or in part or a
final liquidation of a Mortgage Loan has occurred, the Master Servicer shall
determine for each such Mortgage Loan the amount, if any, by which (x) the
annual interest at the related Mortgage Interest Rate (net of the related Master
Servicing Fee Rate and related Servicing Fee Rate) on the prepaid or liquidated
principal balance of such Mortgage Loan divided by twelve exceeds (y) the
interest required to be paid by the Mortgagor from the due date of the last
scheduled payment of principal and interest on such Mortgage Loan to the date of
such prepayment [or final liquidation or receipt of proceeds under the related
Pool Insurance Policy or Special Hazard Policy (adjusted to the Mortgage
Interest Rate (net of the related Master Servicing Fee Rate and related
Servicing Fee Rate)]. Not later than the Advancing Date immediately succeeding
such Determination Date, the Master Servicer shall deposit in the Certificate
Account from its own funds the amount determined by aggregating, for each such
Mortgage Loan for which the amount determined pursuant to (x) above exceeds the
amount determined pursuant to (y) above, the amount of each such excess, but
only to the extent of (and in reduction of) the compensation payable to it
pursuant to this Section 3.12 for the calendar month in which such prepaid or
liquidated principal balance is received.
Section 3.13. Annual Statement as to Compliance. The Master Servicer,
at its expense, will deliver to each Rating Agency, the Trustee and the Sponsor,
[on or before of each year, beginning with in the year that begins not less than
three months after the Cut-Off Date,] [quarterly on each _______, _______,
_______, and ______, beginning ____________ ____, _____] an Officers'
Certificate stating that (a) a review of the activities of the Master
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Servicer during the preceding [calendar year] [quarter] and of its performance
under this Agreement has been made under such officers' supervision, and (b) to
the best of such officers' knowledge, based on such review, the Master Servicer
has fulfilled all its obligations under this Agreement throughout such [year]
[quarter], 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 and (c) to the best of such officer's knowledge, each
Servicer has fulfilled all its obligations under its Servicing 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 such statements shall be provided by the
Master Servicer to Holders of Certificates upon request or by the Trustee at the
expense of the Master Servicer should the Master Servicer fail to so provide
such copies.
Section 3.14. Annual Independent Public Accountants' Servicing Report.
On or before of each year, beginning with the first that occurs at least three
months after the Cut-Off Date, the Master Servicer at its expense shall cause a
firm of independent public accountants which is a member of the American
Institute of Certified Public Accountants to furnish a statement to each Rating
Agency, the Sponsor and the Trustee to the effect that such firm has examined
certain documents and records relating to the servicing of the mortgage loans
under pooling and servicing agreements substantially similar one to another
(such statement to have attached thereto a schedule setting forth the pooling
and servicing agreements covered thereby, including this Agreement) and that, on
the basis of such examination conducted substantially in compliance with the
Uniform Single Audit Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC, such servicing has been conducted in compliance
with such pooling and servicing agreements except for such significant
exceptions or errors in records that, in the opinion of such firm, the Uniform
Single Audit Program for Mortgage Bankers or the Audit Program for Mortgages
serviced for FHLMC requires it to report and which are set forth in such report.
Copies of the statement shall be provided by the Master Servicer to
Certificateholders, or by the Trustee at the Master Servicer's expense if the
Master Servicer fails to provide the requested copies.
Section 3.15. Access to Certain Documentation and Information Regarding
the Mortgage Loans. The Master Servicer shall provide to the Trustee, the Office
of Thrift Supervision, Certificateholders which are federally insured savings
and loan associations, the FDIC and the Supervisory Agents and examiners of such
board and such corporation and their agents and
III-18
accountants access to the documentation regarding the Mortgage Loans requested
by the Trustee, in case of access by it, or required by applicable regulations,
such access being afforded without charge but only upon reasonable request and
during normal business hours at the offices of the Master Servicer. Nothing in
this Section 3.15 shall derogate from the obligation of the Master Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Mortgagors and the failure of the Servicer to provide access as provided in this
Section 3.15 as a result of such obligation shall not constitute a breach of
this Section 3.15.
Section 3.16. Rights of the Sponsor in Respect of the Master Servicer.
The Master Servicer shall afford the Sponsor, upon reasonable notice, during
normal business hours access to all records maintained by the Master Servicer in
respect of its rights and obligations hereunder and access to officers of the
Master Servicer responsible for such obligations. Upon request, the original
Master Servicer shall furnish the Sponsor with its most recent financial
statements and such other information as the Master Servicer possesses regarding
its business, affairs, property and condition, financial or otherwise. Unless
there has been an Event of Default hereunder the Sponsor may, but is not
obligated to, enforce the obligations of the Master Servicer hereunder and may,
but is not obligated to, perform, or cause a designee to perform, any defaulted
obligation of the Master Servicer hereunder or exercise the rights of the Master
Servicer hereunder; provided that the Master Servicer shall not be relieved of
any of its obligations hereunder by virtue of such performance by the Sponsor or
its designee. The Sponsor shall not have any responsibility or liability for any
action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.
[Section 3.17. Bankruptcy Bond. The Master Servicer shall obtain a
Bankruptcy Bond from ____________ covering (i) certain losses resulting from
Deficient Valuations or Debt Service Reductions on a Mortgage Loan, (ii) the
unpaid interest on the amount of any principal reduction during the pendency of
a proceeding under the Bankruptcy Code and (iii) losses resulting from the
extension of the term of the Mortgage Loan by a bankruptcy court. As of the
Closing Date, the Bankruptcy Bond shall be in the amount of the Bankruptcy
Coverage Initial Amount and any time thereafter be in the amount of the Current
Bankruptcy Amount. The coverage under the Bankruptcy Bond may be canceled or
reduced to the extent permitted by the Rating Agencies rating the Certificates,
so long as such cancellation or reduction does not adversely affect the ratings
then assigned to the Certificates by the Rating Agencies. The Master Servicer
shall use its reasonable efforts to maintain such Bankruptcy Bond
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and to supervise the filing of claims with respect to such
Bankruptcy Bond.
In the event that the Bankruptcy Bond shall cease to be in effect or
________ or any successor thereto ceases to be a Qualified Insurer, the Master
Servicer shall exercise its reasonable efforts to obtain from a Qualified
Insurer, a comparable replacement policy or bond with a total coverage which is
equal to the previously existing coverage of the Bankruptcy Bond; provided,
however, that if the cost of any such replacement bond shall be greater than the
cost of the Bankruptcy Bond, the amount of coverage of such replacement bond
shall be reduced to a level such that the premium rate therefor shall not exceed
100% of the premium rate on the Bankruptcy Bond.
At any time, the Master Servicer may substitute a surety bond, letter
of credit, another insurance policy or other credit enhancement for the
Bankruptcy Bond or any substitute therefor to the extent permitted by each
Rating Agency without a downgrading of the then current rating of the
Certificates which shall be confirmed in writing to the Trustee by each Rating
Agency. [In addition, prior to any such substitution, the Trustee shall have
received an Opinion of Counsel to the effect that such new bond, letter of
credit, insurance policy or other arrangement is an enforceable obligation of
the issuer thereof and that such substitution will not adversely affect the
status of the Pool as a REMIC or otherwise give rise to any prohibited
transaction tax pursuant to Section 860F(a) of the Code or any tax on
contributions after the start-up date under Section 860G(a) of the Code.]
[Section 3.18. Maintenance of the Pool Insurance Policy. The Master
Servicer shall exercise its best reasonable efforts to maintain and keep the
Pool Insurance Policy in full force and effect throughout the term of this
Agreement, unless coverage thereunder has been exhausted through payment of
claims. The Master Servicer agrees to remit the premiums as provided in Section
3.06 for the Pool Insurance Policy on a timely basis. The Master Servicer shall
use its reasonable efforts to file claims with respect to the Pool Insurance
Policy. In the event that (i) the Pool Insurer shall cease to be a Qualified
Insurer because it shall not be qualified to transact a mortgage guaranty
insurance business or financial guaranty insurance business, as applicable,
under the laws of the state of its principal place of business or any other
state which has jurisdiction over such Pool Insurer in connection with the
related Pool Insurance Policy or (ii) the Pool Insurance Policy is cancelled or
terminated for any reason (other than the exhaustion of the total coverage), the
Master Servicer shall exercise its best reasonable efforts to obtain from
another Qualified Insurer a replacement policy comparable to such Pool Insurance
Policy with a total coverage
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which is equal to the then existing coverage of such Pool Insurance Policy;
provided, however, that if the cost of any such replacement policy shall be
greater than the cost of such Pool Insurance Policy, the amount of coverage of
such replacement policy shall be reduced to a level such that the premium rate
therefor shall not exceed 100% of the premium rate on such Pool Insurance
Policy. In the event that the Pool Insurer shall cease to be a Qualified Insurer
because it is no longer approved as an insurer by either FHLMC or FNMA or
because the rating assigned to the insurer by the Rating Agency has been reduced
below the rating category necessary to maintain the then current rating of the
Certificates assigned by such Rating Agency, the Master Servicer agrees to
review, not less often than quarterly, the financial condition of the Pool
Insurer with a view towards determining whether recoveries under the Pool
Insurance Policy are jeopardized for reasons related to the financial condition
of the Pool Insurer. If the Master Servicer determines that recoveries are so
jeopardized, the Master Servicer shall exercise its best reasonable efforts to
obtain from another Qualified Insurer a replacement insurance policy subject to
the cost limitation set forth above.
At any time, the Master Servicer may substitute a surety bond, letter
or credit, another mortgage guaranty pool insurance policy or other credit
enhancement for the Pool Insurance Policy or any substitute therefor to the
extent permitted by the Rating Agency without a downgrading of the then current
rating of the Certificates which shall be confirmed in writing to the Trustee by
the Rating Agency.]
[Section 3.19. Bankruptcy Reserve Fund. (a) The Master Servicer shall
establish and maintain with the Trustee a separate trust account to be
designated the "Bankruptcy Reserve Fund for the benefit of Holders of the
Mortgage Pass-Through Certificates Series 199_-_. Amounts on deposit in the
Bankruptcy Reserve Fund shall be withdrawn therefrom in accordance with this
Section in satisfaction of the Master Servicer's obligation to cover payment
deficiencies on the Certificates occasioned by Debt Service Reductions and/or
Deficient Valuations (the "Bankruptcy Support Obligation"). On the Closing Date,
the Master Servicer shall deposit the Initial Bankruptcy Coverage Amount in the
Bankruptcy Reserve Fund. Neither the Bankruptcy Reserve Fund nor any amounts
deposited therein shall constitute a part of the assets included in the Trust
Fund.
(b) The Master Servicer grants to the Trustee for the exclusive benefit
of the Certificateholders a valid and perfected first priority security interest
in and to all of its right, title and interest in the Bankruptcy Reserve Fund,
all amounts deposited therein and in the investments thereof and all proceeds of
the conversion, voluntary or involuntary, of any of the
III-21
foregoing to secure the obligations of the Master Servicer pursuant to the final
paragraph of Section 3.01; provided, however, that all income from the
investment of funds in the Bankruptcy Reserve Fund shall be excluded from such
grant. This grant is made in trust for the uses and purposes provided herein.
The Trustee acknowledges such grant and accepts the trusts under this Section in
accordance with the provisions hereof. The Trustee shall maintain the Bankruptcy
Reserve Fund, the amounts deposited therein and all investments thereof
continuously in the State of ___________________.
(c) The Master Servicer will cause a valid and perfected first priority
security interest under the Uniform Commercial Code as in effect in the State of
____________ from time to time to be maintained in the Bankruptcy Reserve Fund,
the amounts deposited therein and the investments thereof (other than any income
from the investment of funds in the Bankruptcy Reserve Fund) in favor of the
Trustee for the benefit of the Certificateholders in order to secure the full
and timely performance by the Master Servicer of its Bankruptcy Support
Obligation provided by Section 3.01. In that regard, the Master Servicer will
cause to be filed, if required to maintain a perfected first priority security
interest, on or before the Closing Date appropriate financing statements where
required to perfect such security interest.
(d) Amounts on deposit in the Bankruptcy Reserve Fund shall be invested
by the Trustee at the written direction of the Seller, in one or more Permitted
Investments in the name of the Trustee on behalf of the Certificateholders. The
amount of losses, if any, incurred in respect of any such investments of amounts
on deposit in the Bankruptcy Reserve Fund shall be deducted from the respective
amounts on deposit therein. The Trustee shall not be liable for any losses
realized on such investments made in accordance with this Section 3.19(d). Such
investments shall mature no later than the Business Day preceding the next
Distribution Date. On each Distribution Date the Trustee will withdraw from the
Bankruptcy Reserve Fund for remittance to the Seller the amount by which the
amount on deposit therein exceeds the Current Bankruptcy Amount. In addition, on
the Final Distribution Date the Trustee will withdraw from the Bankruptcy
Reserve Fund for remittance to the Seller the amount, if any, remaining on
deposit in the Bankruptcy Reserve Fund after distribution to the
Certificateholders on such Distribution Date.
(e) On each Certificate Account Deposit Date, the Trustee shall
withdraw from the Bankruptcy Reserve Fund and deposit into the Certificate
Account an amount equal to the lesser of (i) the Current Bankruptcy Amount for
such Distribution Date and (ii) the Bankruptcy Support Obligation for such
Distribution Date.
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(f) At any time, the Master Servicer may substitute a surety bond,
letter of credit, insurance policy or other credit enhancement for the
Bankruptcy Reserve Fund and amounts on deposit therein or any substitute
therefor to the extent permitted by the Rating Agency without a downgrading of
the then current rating of the Certificates which shall be confirmed in writing
to the Trustee by the Rating Agency.]
[Section 3.20. Maintenance of Special Hazard Policy. (a) The Master
Servicer shall obtain a Special Hazard Insurance Policy from the Special Hazard
Insurer covering (i) physical loss or damage to properties subject to defaulted
Mortgage Loans caused by certain hazards (including earthquakes, mud flows and
to a limited extent, floods) not insured against under customary standard forms
of fire and hazard insurance policies with extended coverage (or a flood
insurance policy if the related Mortgaged Property is in a federally designated
flood area), and (ii) losses on such Mortgage Loans caused by reason of the
application of the co-insurance clause typically contained in customary standard
hazard insurance policies. Aggregate claims under the Special Hazard Insurance
Policy for the Mortgage Loans will be limited to the Special Hazard Loss
Coverage Amount on the Closing Date. The Master Servicer shall use its
reasonable efforts to maintain such Special Hazard Insurance Policy and to file
claims with respect to such Special Hazard Insurance Policy. In the event that
the rating on the claims paying ability of the Special Hazard Insurer is reduced
below such rating that was assigned by the Rating Agency at the time the Special
Hazard Insurer became the Special Hazard Insurer, the Master Servicer shall
exercise reasonable efforts to obtain from another Qualified Insurer, acceptable
to the Rating Agency, a replacement policy comparable to such Special Hazard
Policy with total coverage which is equal to the then existing Special Hazard
Policy provided that the annual cost of such replacement policy shall not exceed
100% of the annual cost of the Special Hazard Policy.
In the event that the Special Hazard Insurance Policy shall cease to be
in effect, or the Special Hazard Insurer or any successor thereto ceases to be a
Qualified Insurer, the Master Servicer shall exercise its reasonable efforts to
obtain from a Qualified Insurer a comparable replacement policy with a total
coverage which is equal to the previously existing coverage as long as the
replacement policy can be obtained for the same premium. Any amounts collected
under any such policy (other than any amount to be applied to the restoration or
repair of the property encumbered by the related Mortgage Loan with respect to
which such amount was collected) shall be deposited in the Certificate Account
pursuant to Section 3.04 hereof.
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At any time, the Master Servicer may substitute a surety bond, letter
of credit, another special hazard insurance policy or other credit enhancement
for either Special Hazard Insurance Policy or any substitute therefor to the
extent permitted by each Rating Agency without a downgrading of the then current
rating of the Certificates which shall be confirmed in writing to the Trustee by
the Rating Agency.
(b) On or before the Closing Date, the Trustee shall establish and
thereafter shall maintain an account (the "Special Hazard Premium Account")
entitled "Special Hazard Premium Account, _______ in trust for _______." On each
Distribution Date, the Trustee will deposit to the Special Hazard Premium
Account an amount equal to the Special Hazard Fee from amounts withdrawn from
the Certificate Account pursuant to Section 3.06(v) hereof. Amounts on deposit
in the Special Hazard Premium Account shall be invested in accordance with the
instructions of the Seller in Permitted Investments which shall mature not later
than the Business Day preceding the next Distribution Date (except that if such
Permitted Investments are an obligation of the Trustee, then such Permitted
Investment shall mature not later than such Distribution Date on which the
Annual Special Hazard premium is due). Neither the Special Hazard Premium
Account nor any amounts deposited therein shall constitute a part of the assets
of any trust created under this Agreement. Annually, on the Distribution Date
occurring in commencing in 199_, so long as the Special Hazard Insurer is not in
default of amounts payable under the Special Hazard Policy the Trustee will
withdraw from the Special Hazard Premium Account and pay to the Special Hazard
Insurer the premium amount due for such annual period pursuant to the terms of
the Special Hazard Insurance Policy. Any amount remaining in the Special Hazard
Premium Account following the above described withdrawal shall be withdrawn from
the Special Hazard Premium Account and remitted to the Seller.]
III-24
ARTICLE IV
Master Servicer's Certificate; Monthly Advances
Section 4.01. Master Servicer's Certificate. Each month, not later than
12:00 noon Eastern time on the Business Day following each Determination Date,
but in no event later than the close of business on the 20th day of the month or
the preceding Business Day if such 20th day is not a Business Day, the Master
Servicer shall deliver to the Trustee, a Master Servicer's Certificate
substantially in the form of Exhibit K, certified by a Servicing Officer.
Such statement shall be provided by the Trustee to any Holder of a
Certificate upon request and shall also, to the extent available, include
information regarding delinquencies on Mortgage Loans, indicating the number and
aggregate principal amount of Mortgage Loans which are either one, two, three or
more than three months delinquent and the book value of any Mortgaged Property
acquired as part of the Pool through foreclosure, deed in lieu of foreclosure or
other exercise of a security interest in the Mortgaged Property.
Section 4.02. Monthly Advances. On or before 11:00 A.M. New York time
on the Advancing Date [occurring on or before the Certificate Account Deposit
Date in _________], the Master Servicer shall (a) either (i) deposit in the
Certificate Account from its own funds an amount equal to the Monthly Advance,
if any, or (ii) cause to be made an appropriate entry in the records of the
Certificate Account that all or a portion of the Amount Held for Future
Distribution has been, as permitted by this Section 4.02, used by the Master
Servicer in discharge of any such Monthly Advance or (iii) make advances in the
form of any combination of clauses (i) and (ii) above aggregating the amount of
such Monthly Advance or (b) in the event that the Master Servicer is unable to
make such Monthly Advance, notify the Trustee in order to enable the Trustee to
exercise its remedies hereunder, including but not limited to Section 8.01. The
obligation of the Master Servicer or any successor Master Servicer to make the
Monthly Advance required by this Section 4.02 is not a guaranty of payment on
the Certificates and is contingent upon the Master Servicer's determination that
such Monthly Advances are recoverable in accordance herewith. Any portion of the
Amount Held for Future Distribution so used shall be replaced by the Master
Servicer by deposit in the Certificate Account on or before 11:00 A.M. Eastern
time on any future Certificate Account Deposit Date to the extent that funds
attributable to the Mortgage Loans that are available in the Certificate Account
on such Certificate Account Deposit Date
IV-1
shall be less than payments to Certificateholders required to be made on the
following Distribution Date.
IV-2
ARTICLE V
Payments and Statements to
Certificateholders
Section 5.01. Distributions. On each Distribution Date, the Trustee
shall distribute out of the Distribution Account (i) to each Certificateholder
of record on the related Record Date (other than as provided in Section 10.01
respecting the final distribution) by check mailed to such Certificateholder
entitled to receive a distribution on such Distribution Date at the address
appearing in the Certificate Register, or upon written request by a Regular
Certificateholder (in the event such Certi-ficateholder owns of record Regular
Certificates of any Class having denominations aggregating at least $5,000,000),
by wire transfer or by such other means of payment as such Certifi-cateholder
and the Trustee shall agree upon, such Certificateholder's Percentage Interest
in, the amount to which the related Class of Certificates is entitled in
accordance with the priorities set forth below in Section 5.02.
Neither the Holders of any Class of Regular Certificates or the
Residual Certificates, the Master Servicer, nor the Trustee shall in any way be
responsible or liable to Holders of any Class of Certificates in respect of
amounts properly previously distributed on any Class of Regular Certificates.
Amounts distributed with respect to any Class of Regular Certificates
shall be applied first to the distribution of interest thereon and then to
principal thereon.
Section 5.02. Priorities of Distribution. (a) On each Distribution
Date, the Trustee shall withdraw the Available Funds from the Distribution
Account and apply such funds to distributions on the Certificates in the
following order of priority and to the extent of Available Funds:
(i) to each Class of Senior Certificates, an amount allocable
to interest equal to the related Class Optimum Interest
Distribution Amount for such Distribution Date, any shortfall
being allocated among such Classes in proportion to the amount
of the Class Optimum Interest Distribution Amount that would
have been distributed in the absence of such shortfall;
(ii) to the Class A-1 Certificates, an amount allocable to
principal equal to the Senior Principal Distribution Amount,
up to the Class Certificate Balance thereof;
V-1
(iii) subject to Section 5.02(d), to each Class of
Subordinate Certificates as follows:
(A) to the Class M-1 Certificates, an amount
allocable to interest equal to the Class Optimal
Interest Distribution Amount for such Class for such
Distribution Date;
(B) to Class M-1 Certificates, an amount allocable to
principal equal to the Subordinate Principal
Distribution Amount for such Class, up to the Class
Certificate Balance thereof;
(C) to the Class B-1 Certificates, an amount
allocable to interest equal to the Class Optimal
Interest Distribution Amount for such Class for such
Distribution Date;
(D) to Class B-1 Certificates, an amount allocable to
principal equal to the Subordinate Principal
Distribution Amount for such Class, up to the Class
Certificate Balance thereof;
(E) to the Class B-2 Certificates, an amount
allocable to interest equal to the Class Optimal
Interest Distribution Amount for such Class for such
Distribution Date; and
(F) to the Class B-2 Certificates, an amount
allocable to principal equal to the Subordinate
Principal Distribution Amount for such Class, up to
the Class Certificate Balance thereof; and
(iv) to the Residual Certificates any remaining
Available Funds.
(b) On each Distribution Date, the Class Optimum Interest Distribution
Amount for such Distribution Date for each interest-bearing Class of Regular
Certificates shall be reduced by (i) the related Class' pro rata share of Net
Prepayment Interest Shortfalls based on such Class' Class Optimum Interest
Distribution Amount without taking into account such Net Prepayment Interest
Shortfalls, (ii) after the Special Hazard Coverage Termination Date, with
respect to each Mortgage Loan that became a Special Hazard Mortgage Loan during
the preceding calendar month, the related Class' pro rata share (based on the
amount of interest such Class would otherwise have been entitled to receive in
respect of such Mortgage Loan) of one month's interest at the related Net
Mortgage Interest Rate on the Scheduled Principal Balance of such Mortgage Loan,
(iii) such Class' Allocable Share of (a) after the Bankruptcy Coverage
Termination Date, the
V-2
interest portion of Debt Service Reductions and Deficient Valuations and (b)
Relief Act Reductions during the preceding calendar month and (iv) after the
Fraud Coverage Termination Date, with respect to each Mortgage Loan that became
a Fraud Loan during the preceding calendar month, the related Class' pro rata
share (based on the amount of interest such Class would otherwise be entitled to
receive in respect of such Mortgage Loan) of one month's interest at the related
Net Mortgage Interest Rate on the Scheduled Principal Balance of such Mortgage
Loan.
(c) For any Distribution Date following the Special Hazard Coverage
Termination Date, Fraud Loss Coverage Termination Date and Bankruptcy Coverage
Termination Date, as the case may be, the amount the Regular Certificates in the
aggregate are entitled to receive shall be reduced in the aggregate by the
related Splinter Loss with respect to any such Special Hazard Mortgage Loan,
Fraud Loan and Mortgage Loan that was subject to a Bankruptcy Loss. Any such
reduction shall be allocated pro rata based on Class Certificate Balances.
[(d) Notwithstanding the priority and allocation contained in Section
5.02(a)(iii), if with respect to any Class of Subordinate Certificates on any
Distribution Date the sum of the related Class Subordination Percentages of all
Classes of Subordinate Certificates which have a lower relative priority in
right of distribution pursuant to Section 5.02(a)(iii) than such Class (the
"Applicable Credit Support Percentage") is less than the Original Applicable
Credit Support Percentage for such Class, no distribution of Principal
Prepayments will be made to any such Classes (the "Restricted Classes") having
lower relative priority in right of distribution pursuant to Section
5.02(a)(iii) than such Class and the amount of such Principal Prepayments
otherwise distributable to the Restricted Classes shall be allocated to such
Class and any Classes of Subordinate Certificates having a higher relative
priority in right of distribution pursuant to Section 5.02(a)(iii) than such
Class, pro rata, based on their respective Class Certificate Balances
immediately prior to such Distribution Date and shall be distributed in the
order provided in Section 5.02(a)(iii).]
Section 5.03. Allocation of Net Realized Losses. (a) On or prior to
each Determination Date, the Master Servicer shall determine the total amount of
Net Realized Losses, if any, that occurred during the preceding calendar month.
(b) Net Realized Losses shall be allocated as follows:
(i) Net Realized Losses (other than Splinter Losses),
first, sequentially, to the Class B-2, Class B-1 and Class M-1
Certificates in that order, until the Class
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Certificate Balance of each such Class is reduced to zero, and second,
to the Class A-1 Certificates.
(ii) Net Realized Losses that are Splinter Losses,
(a) prior to the Special Hazard Coverage Termination Date, the
Bankruptcy Loss Coverage Termination Date or the Fraud Loss Coverage
Termination Date, as applicable, first, sequentially, to the Class B-2,
Class B-1 and Class M-1 Certificates, in that order, until the Class
Certificate Balance of such Class is reduced to zero and second, to the
Class A-1 Certificates, until Class Certificate Balance is reduced to
zero and (b) after the Special Hazard Coverage Termination Date, the
Bankruptcy Loss Coverage Termination Date or Fraud Loss Coverage
Termination Date, as applicable, to the Senior Certificates and the
Subordinate Certificates then outstanding, pro rata on the basis of
their respective Class Certificate Balances.
Any Net Realized Losses allocated to a Class of Certificates shall be allocated
among the Certificates of such Class in proportion to the respective portion of
the Initial Class Certificate Balance represented by a Certificate.
(b) Any allocation of Net Realized Losses to a Certificate shall be
accomplished by reducing the Class Certificate Balance thereof immediately
following the related Distribution Date in accordance with the definition of
"Class Certificate Balance."
Section 5.04. Statements to Certificateholders. (a) Prior to the
Distribution Date in each month, based upon the information provided to the
Trustee on the Master Servicer's Certificate delivered to the Trustee pursuant
to Section 4.01, the Trustee shall determine the following information with
respect to the following Distribution Date:
(i) the amount received or deemed to have been received
by the Master Servicer as of the close of business on the preceding
Determination Date in respect of the Mortgage Loans, reduced by the sum
of the amounts specified in clauses (x)-(z), inclusive, of the
definition of Available Funds;
(ii) the aggregate Purchase Prices for any Defective
Mortgage Loans or Converted Mortgage Loans to be purchased on the
immediately succeeding Certificate Account Deposit Date pursuant to
Section 2.02, 2.03 or 2.08 and (b) the amount to be deposited in the
Certificate Account prior to the related Certificate Account Deposit
Date pursuant to Section 2.04 in respect of Substitute Mortgage Loans;
V-4
(iii) the amount, if any, required to be deposited in
the Certificate Account pursuant to Section 3.08(a);
(iv) the Available Funds for the following Distribu-
tion Date;
(v) the Class Optimum Interest Distribution Amount for
each Class of Regular Certificates for the following Distribution Date
and the amount to be distributed on account of interest on each Class
of Regular Certificates for the following Distribution Date;
(vi) the amount to be distributed and allocable to
principal for each Class of Regular Certificates (other than
the Notional Certificates) for the following Distribution
Date;
(vii) the aggregate amount of Net Realized Losses
indicating separately the amount of Net Special Hazard Losses, Fraud
Losses and Bankruptcy Losses during the preceding calendar month;
(viii) the amount of Bankruptcy Coverage Amount,
Special Hazard Loss Coverage and the Fraud Loss Coverage
Amount for the related Distribution Date;
(ix) the Senior Percentage for the following Distri-
bution Date;
(x) the Senior Prepayment Percentage for the
following Distribution Date;
(xi) the Subordinate Percentage and the Subordinate
Percentage Allocation on a Class by Class basis for the
following Distribution Date;
(xii) the Subordinate Prepayment Percentage and the
Subordinate Prepayment Percentage Allocation on a Class by
Class basis for the following Distribution Date;
(xiii) the Pool Scheduled Principal Balance for the
second following Distribution Date; and
(xiv) the Class Certificate Balance for each Class of
Regular Certificates after giving effect to the distribution to be made
on the following Distribution Date and any adjustments to the Class
Certificate Balances of such Certificates on such following
Distribution Date as a result of Net Realized Losses; and
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(b) No later than each Distribution Date, the Trustee, based upon
information supplied to it on the Master Servicer's Certificate, shall prepare
and mail to each Holder of a Certificate, each Rating Agency and the Master
Servicer a statement setting forth:
(i) (a) the amount of such distribution to Holders of
each Class of Regular Certificates allocable to interest, any Class
Unpaid Interest Shortfall for such Class included in such distribution
and any remaining Class Unpaid Interest Shortfall for such Class after
giving effect to such distribution and (b) the amounts of (v) Net
Prepayment Interest Shortfall; (w) the amount of Prepayment Interest
Shortfalls offset by the Master Servicing Fee; (x) the interest portion
of Net Special Hazard Losses and Fraud Losses; (y) the interest portion
of Debt Service Reductions and Deficient Valuations; and (z) Relief Act
Reductions, in each case allocated to each Class on such Distribution
Date;
(ii) the amount of such distribution to Holders of each
Class of Regular Certificates allocable to principal, separately
identifying the aggregate amount of any Principal Prepayments included
therein;
(iii) the amount of any Monthly Advance pursuant to
Section 4.02;
(iv) the Class Certificate Balance of each Class of
Regular Certificates on such Distribution Date after giving effect to
the distribution of principal and any adjustments to the Class
Certificate Balances of such Certificates as a result of Net Realized
Losses resulting from (a) Special Hazard Losses, (b) Deficient
Valuations or Debt Service Reductions, (c) Fraud Losses and (d) Net
Realized Losses not included in clauses (a) - (c) above, separately
listing the amounts of adjustments resulting from each such category;
(v) the Pool Scheduled Principal Balance of the
Mortgage Loans for the following Distribution Date;
(vi) the aggregate amount of Net Special Hazard Losses,
Bankruptcy Losses and Fraud Losses during the preceding calendar month
(separately stating the amount of principal reduction and interest
reduction pursuant to Sections 5.02(b) and 5.02(c)) and the Special
Hazard Loss Coverage Amount, Bankruptcy Coverage Amount and the Fraud
Loss Coverage Amount for the following Distribution Date;
(vii) the number and aggregate principal balances of
Mortgage Loans delinquent as of the end of the previous
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month (a) one month, (b) two months and (c) three or more
months and loans in foreclosure;
(viii) the book value (within the meaning of 12 C.F.R.
ss. 571.13 or comparable provision) of any real estate
acquired through foreclosure or grant of a deed in lieu of
foreclosure;
(ix) the amount of Net Realized Losses allocated to
each such Class;
(x) the Senior Percentage for the following
Distribution Date;
(xi) the Senior Prepayment Percentage for the
following Distribution Date; and
(xii) the Subordinate Percentage and the Subordinate
Percentage Allocation on a Class by Class basis for the
following Distribution Date; and
(xiii) the Subordinate Prepayment Percentage and the Subordinate
Prepayment Percentage Allocation on a Class by Class basis for the
following Distribution Date.
In the case of information furnished pursuant to subclauses (i), (ii)
and (ix) above, the amounts shall be expressed as a dollar amount or Notional
Amount, as the case may be, per Certificate with a $1,000 denomination.
[Within a reasonable period of time after the end of each calendar
year, the [Master Servicer] shall forward to the Trustee for mailing to each
Person who at any time during the calendar year was the Holder of a Regular
Certificate, or Residual Certificate a statement containing the information set
forth in subclauses (i) and (ii) above in the case of a Regular
Certifi-cateholder, in each case aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder. Such
obligation of the [Master Servicer] shall be deemed to have been satisfied to
the extent that substantially comparable information shall be provided by the
[Master Servicer] pursuant to any requirements of the Code as from time to time
in force.]
[The Master Servicer shall provide on an aggregate basis with respect
to each Class of Certificates to enable the Trustee to deliver to the Holders of
Certificates any reports or information the Trustee is required by this
Agreement or the Code, Treasury Regulations or REMIC Provisions to deliver to
the Holders of Certificates, and Master Servicer shall prepare and provide to
the Trustee, and the Trustee shall forward to
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Certificateholders in the form so provided (by mail, telephone, or publication
as may be permitted by applicable Treasury Regulations) as directed by the
Master Servicer, such other reasonable information as the Master Servicer deems
necessary or appropriate or is required by the Code, Treasury Regulations, and
the REMIC Provisions including, but not limited to, (i) information to be
reported to the Holders of the Residual Certificates for quarterly notices on
Schedule Q (Form 1066) (which information shall be forwarded to the Holders of
the Certificates by the Master Servicer), (ii) information to be provided to the
Holders of Certificates with respect to amounts which should be included as
interest and original issue discount in such Holders' gross income and (iii)
information to be provided to all Holders of Certificates setting forth the
percentage of the REMIC's assets, determined in accordance with Treasury
Regulations using a convention, not inconsistent with Treasury Regulations,
selected by the Master Servicer in its absolute discretion, that constitute
qualifying real property loans under Section 593 of the Code, real estate assets
under Section 856 of the Code, and assets described in Section 7701(a)(19)(C) of
the Code; provided, however, that in setting forth the percentage of such assets
of the REMIC, nothing contained in this Agreement, including without limitation
Section 7.03 hereof, shall be interpreted to require the Master Servicer
periodically to appraise the fair market values of the assets of the Pool or to
indemnify the Pool or any Certificateholders from any adverse federal, state or
local tax consequences associated with a change subsequently required to be made
in the Master Servicer's initial good faith determinations of such fair market
values (if subsequent determinations are required pursuant to the REMIC
Provisions) made from time to time.]
Section 5.05. Tax Returns and Reports to Certificate-holders. (a) For
federal income tax purposes, the Trust Fund shall have a calendar year taxable
year and shall maintain its books on the accrual method of accounting.
[(b) The Master Servicer shall prepare or cause to be prepared and
shall deliver to the Trustee for signature, and the Trustee shall file or cause
to be filed with the Internal Revenue Service and applicable state or local tax
authorities income tax information returns for each taxable year with respect to
the Trust Fund containing such information at the times and in the manner as may
be required by the Code or state or local tax laws, regulations, or rules, and
shall furnish or cause to be furnished to the Trust Fund and the
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby. Within thirty (30) days of the Closing
Date, the Trustee shall furnish or cause to be furnished to the Internal Revenue
Service, on Form 8811 or as otherwise required by the Code, the name, title,
address and telephone number of the
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person that Holders of the Certificates may contact for tax information relating
thereto, together with such additional information at the time or times and in
the manner required by the Code. Such federal, state, or local income tax or
information returns shall be signed by the Trustee, or such other Person as may
be required to sign such returns by the Code or state or local tax laws,
regulations, or rules.]
[(c) In the first federal income tax return of the Trust Fund for its
short taxable year ending December 31, 199 , REMIC status shall be elected for
such taxable year and all succeeding taxable years.]
[(d) The Trustee will maintain or cause to be maintained such records
relating to the Trust Fund, including but not limited to the income, expenses,
assets and liabilities of the Pool, and the fair market value and adjusted basis
of the Pool property and assets determined at such intervals as may be required
by the Code, as may be necessary to prepare the foregoing returns, schedules,
statements or information.]
[Section 5.06. Tax Matters Person. The Tax Matters Person shall have
the same duties with respect to the Trust Fund as those of a "tax matters
partner" under Subchapter C of Chapter 63 of Subtitle F of the Code.
[Section 5.07. Rights of the Tax Matters Person in Respect of the
Trustee. The Trustee shall afford the Tax Matters Person, 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 Tax Matters Person with its most recent statement of condition publicly
available. The Trustee shall make available to the Tax Matters Person such
books, documents or records relating to the Trustee's services hereunder as the
Tax Matters Person shall reasonably request. The Tax Matters Person shall not
have any responsibility or liability for any action or failure to act by the
Trustee and is not obligated to supervise the performance of the Trustee under
this Agreement or otherwise.]
[Section 5.08. REMIC Related Covenants. For as long as the
Pool shall exist, the Trustee shall act in accordance herewith to
assure continuing treatment of the Trust Fund as a REMIC and
avoid the imposition of tax on the Trust Fund. In particular:
(a) The Trustee shall not create, or permit the creation of,
any "interests" in the Trust Fund within the meaning of Code Section 860D(a)(2)
other than the interests represented
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by the Trust Fund, Regular Certificates and the Residual Certifi-
▇▇▇▇▇, respectively.
(b) Except as otherwise provided in the Code, the Sponsor and
the Master Servicer shall not grant and the Trustee shall not accept property
unless (i) substantially all of the property held in the Trust Fund constitutes
either "qualified mortgages" or "permitted investments" as defined in Code
Sections 860G(a)(3) and (5), respectively, and (ii) no property shall be
contributed to the Trust Fund after the start-up day unless such grant would not
subject the Pool to the 100% tax on contributions to a REMIC after the start-up
day of the REMIC imposed by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the Trust Fund
any fee or other compensation for services and shall not accept on behalf of the
Pool any income from assets other than those permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or
any portion of the Mortgage Loans (other than in accordance with Sections 2.02
or 2.03), unless such sale is pursuant to a "qualified liquidation" as defined
in Code Section 860F(a)(4)(A) and in accordance with Article X.
(e) The Trustee shall maintain books with respect to the Trust
Fund on a calendar year taxable year and on an accrual basis.
Neither the Master Servicer nor the Trustee shall engage in a
"prohibited transaction" (as defined in Code Section 860F(a)(2)), except that,
with the prior written consent of the Master Servicer and the Sponsor, the
Trustee may engage in the activities otherwise prohibited by the foregoing
clauses (b), (c) and (d), provided that the Master Servicer shall have delivered
to the Trustee an Opinion of Counsel to the effect that such transaction will
not result in the imposition of a tax on the Trust Fund and will not disqualify
the Trust Fund from treatment as a REMIC; and provided, that the Master Servicer
shall have demonstrated to the satisfaction of the Trustee that such action will
not adversely affect the rights of the holders of the Certificates and the
Trustee and that such action will not adversely impact the rating of the
Certificates.]
[SECTION 5.09. Determination of Pass-Through Rates for COFI
Certificates.
The Pass-Through Rate for each Class of COFI Certificates for each
Interest Accrual Period after the initial Interest Accrual Period shall be
determined by the Trustee as provided below on the basis of the Index and the
applicable formulae
V-10
appearing in footnotes corresponding to the COFI Certificates in (1) to the
table relating to the Certificates in the Preliminary Statement.
Except as provided below, with respect to each Interest Accrual Period
following the initial Interest Accrual Period, the Trustee shall not later than
two Business Days following the publication of the applicable Index determine
the Pass-Through Rate at which interest shall accrue in respect of the COFI
Certificates during the related Interest Accrual Period.
Except as provided below, the Index to be used in determining the
respective Pass-Through Rates for the COFI Certificates for a particular
Interest Accrual Period shall be COFI for the second calendar month preceding
such Interest Accrual Period. If at the Outside Reference Date for any Interest
Accrual Period, COFI for the second calendar month preceding such Interest
Accrual Period has not been published, the Trustee shall use COFI for the third
calendar month preceding such Interest Accrual Period. If COFI for neither the
second nor third calendar months preceding any Interest Accrual Period has been
published on or before the related Outside Reference Date, the Index for such
Interest Accrual Period and for all subsequent Interest Accrual Periods shall be
the National Cost of Funds Index for the third calendar month preceding such
Interest Accrual Period (or the fourth preceding calendar month if such National
Cost of Funds Index for the third preceding calendar month has not been
published by such Outside Reference Date). In the event that the National Cost
of Funds Index for neither the third nor fourth calendar months preceding an
Interest Accrual Period has been published on or before the related Outside
Reference Date, then for such Interest Accrual Period and for each succeeding
Interest Accrual Period, the Index shall be LIBOR, determined in the manner set
forth below.
On each Interest Determination Date so long as the COFI Certificates
are outstanding and the applicable Index therefor is LIBOR, the Trustee shall
either (i) request each Reference Bank to inform the Trustee of the quotation
offered by its principal London office for making one-month United States dollar
deposits in leading banks in the London interbank market, as of 11:00 a.m.
(London time) on such Interest Determination Date or (ii) in lieu of making any
such request, rely on such Reference Bank quotations that appear at such time on
the Reuters Screen LIBO Page (as defined in the International Swap Dealers
Association Inc. Code of Standard Wording, Assumptions and Provisions for Swaps,
1986 Edition), to the extent available.
With respect to any Interest Accrual Period for which the applicable
Index is LIBOR, LIBOR for such Interest Accrual Period
V-11
will be established by the Trustee on the related Interest
Determination Date as follows:
(a) If on any Interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the next
Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounding such arithmetic mean upwards if necessary to the
nearest whole multiple of 1/32%).
(b) If on any Interest Determination Date only one or none of
the Reference Banks provides such offered quotations, LIBOR for the
next Interest Accrual Period shall be whichever is the higher of (i)
LIBOR as determined on the previous Interest Determination Date or (ii)
the Reserve Interest Rate. The "Reserve Interest Rate" shall be the
rate per annum which the Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/32%) of the one-month United States dollar lending rates
that New York City banks selected by the Trustee are quoting, on the
relevant Interest Determination Date, to the principal London offices
of at least two of the Reference Banks to which such quotations are, in
the opinion of the Trustee, being so made, or (ii) in the event that
the Trustee can determine no such arithmetic mean, the lowest one-month
United States dollar lending rate which New York City banks selected by
the Trustee are quoting on such Interest Determination Date to leading
European banks.
From such time as the applicable Index becomes LIBOR until all of the
COFI Certificates are paid in full, the Trustee will at all times retain at
least four Reference Banks for the purposes of determining LIBOR with respect to
each interest Determination Date. The Master Servicer initially shall designate
the Reference Banks. Each "Reference Bank" shall be a leading bank engaged in
transactions in Eurodollar deposits in the international Eurocurrency market,
shall not control, be controlled by, or be under common control with, the
Trustee and shall have an established place of business in London. If any such
Reference Bank should be unwilling or unable to act as such or if the Master
Servicer should terminate its appointment as Reference Bank, the Trustee shall
promptly appoint or cause to be appointed another Reference Bank. The Trustee
shall have no liability or responsibility to any Person for (i) the selection of
any Reference Bank for purposes of determining LIBOR or (ii) any inability to
retain at least four Reference Banks which is caused by circumstances beyond its
reasonable control.
In determining LIBOR and any Pass-Through Rate for the COFI
Certificates or any Reserve Interest Rate, the Trustee may
V-12
conclusively rely and shall be protected in relying upon the offered quotations
(whether written, oral or on the Reuters Screen) from the Reference Banks or the
New York City banks as to LIBOR or the Reserve Interest Rate, as appropriate, in
effect from time to time. The Trustee shall not have any liability or
responsibility to any Person for (i) the Trustee's selection of New York City
banks for purposes of determining any Reserve Interest Rate or (ii) its
inability, following a good-faith reasonable effort, to obtain such quotations
from the Reference Banks or the New York City banks or to determine such
arithmetic mean, all as provided for in this Section 4.05.
The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be final,
conclusive and binding upon each Holder of a Certificate and the Trustee.]
[SECTION 5.10. Determination of Pass-Through Rates for
LIBOR Certificates.
On each Interest Determination Date so long as the LIBOR Certificates
are outstanding, the Trustee shall either (i) request each Reference Bank to
inform the Trustee of the quotation offered by its principal London office for
making one month United States dollar deposits in leading banks in the London
interbank market, as of 11:00 a.m. (London time) on such Interest Determination
Date or (ii) in lieu of making any such request, rely on such Reference Bank
quotations that appear at such time on the Reuters Screen LIBO Page (as defined
in the International Swap Dealers Association Inc. Code of Standard Wording,
Assumptions and provisions for Swaps, 1986 Edition), to the extent available.
LIBOR for the next Interest Accrual Period will be established by the
Trustee on each interest Determination Date as follows:
(a) If on any interest Determination Date two or more
Reference Banks provide such offered quotations, LIBOR for the next
Interest Accrual Period shall be the arithmetic mean of such offered
quotations (rounding such arithmetic mean upwards if necessary to the
nearest whole multiple of 1/32%).
(b) If on any Interest Determination Date only one or none of
the Reference Banks provides such offered quotations, LIBOR for the
next Interest Accrual Period shall be whichever is the higher of (i)
LIBOR as determined on the previous Interest Determination Date or (ii)
the Reserve Interest Rate. The "Reserve Interest Rate" shall be the
rate per annum which the Trustee determines to be either (i)
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the arithmetic mean (rounded upwards if necessary to the nearest whole
multiple of 1/32) of the one-month United States dollar lending rates
that New York City banks selected by the Trustee are quoting, on the
relevant Interest Determination Date, to the principal London offices
of at least two of the Reference Banks to which such quotations are, in
the opinion of the Trustee, being so made, or (ii) in the event that
the Trustee can determine no such arithmetic mean, the lowest one-month
United States dollar lending rate which New York City banks selected by
the Trustee are quoting on such Interest Determination Date to leading
European banks.
(c) If on any interest Determination Date the trustee is
required but is unable to determine the Reserve Interest Rate in the
manner provided in paragraph (b) above, LIBOR shall be LIBOR as
determined on the preceding Interest Determination Date, or, in the
case of the first Interest Determination Date, the Initial LIBOR Rate.
Until all of the LIBOR Certificates are paid in full, the Trustee will
at all times retain at least four Reference Banks for the purpose of determining
LIBOR with respect to each Interest Determination Date. The Master Servicer
initially shall designate the Reference Banks. Each "Reference Bank" shall be a
leading bank engaged in transactions in Eurodollar deposits in the international
Eurocurrency market, shall not control, be controlled by, or be under common
control with, the Trustee and shall have an established place of business in
London. If any such Reference Bank should be unwilling or unable to act as such
or if the Master Servicer should terminate its appointment as Reference Bank,
the Trustee shall promptly appoint or cause to be appointed another Reference
Bank. The Trustee shall have no liability or responsibility to any Person for
(i) the selection of any Reference Bank for purposes of determining LIBOR or
(ii) any inability to retain at least four Reference Banks which is caused by
circumstances beyond its reasonable control.
The Pass-Through Rate for each Class of LIBOR Certificates for each
Interest Accrual Period shall be determined by the Trustee on each Interest
Determination Date so long as the LIBOR Certificates are outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes corresponding
to the LIBOR Certificates in the table relating to the Certificates in the
Preliminary Statement.
In determining LIBOR, any Pass-Through Rate for the LIBOR Certificates
or any Reserve Interest Rate, the Trustee may conclusively rely and shall be
protected in relying upon the offered quotations (whether written, oral or on
the Reuters Screen) from the Reference Banks or the New York City banks as to
V-14
LIBOR or the Reserve Interest Rate, as appropriate, in effect from time to time.
The Trustee shall not have any liability or responsibility to any Person for (i)
the Trustee's selection of New York City banks for purposes of determining any
Reserve Interest Rate or (ii) its inability, following a good-faith reasonable
effort, to obtain such quotations from the Reference Banks or the New York City
banks or to determine such arithmetic mean, all as provided for in this Section
5.10.
The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be final,
conclusive and binding upon each Holder of a Certificate and the Trustee.]
V-15
ARTICLE VI
The Certificates
Section 6.01. The Certificates. The Classes of Senior Certificates, the
Residual Certificates and the Subordinate Certificates shall be substantially in
the forms set forth in Exhibits A, B, D and E (reverse of all Certificates) and
shall, on original issue, be executed by the Sponsor and shall be countersigned
and delivered by the Trustee to or upon the order of the Sponsor upon receipt by
the Trustee of the documents specified in Section 2.01. The Senior Certificates
shall be available to investors in interests representing minimum dollar
Certificate Balances of $[ ] and integral multiples of $[ ] in excess thereof.
The Subordinate Certificates shall be available to investors in fully registered
form in interests representing minimum dollar Certificate Balances of $[ ] and
integral dollar multiples of $[ ] in excess thereof (except one Certificate of
such Class may be issued with a Certificate Balance in any amount in excess of
the minimum denomination).
The Residual Certificates shall be in fully registered form in minimum
Percentage Interests of 10% and integral multiples of 10% in excess thereof
(except one Residual Certificate may be available in a Percentage Interest which
is equal to 0.001%).
The Certificates shall be executed by manual or facsimile signature on
behalf of the Sponsor by an authorized officer or signatory. 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 Sponsor
shall bind the Sponsor, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the execution and delivery of such
Certificates or did not hold such offices or positions 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 countersigned by the Trustee substantially in the form provided for
herein, and such countersignature 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 countersignature.
Section 6.02. Registration of Transfer and Exchange of Certificates.
The Trustee shall cause to be kept at an office or agency in the city in which
the Corporate Trust Office of the Trustee is located a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The
VI-1
Trustee shall initially serve as Certificate Registrar for the purpose of
registering Certificates and transfers and exchanges of Certificates as herein
provided.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates of authorized denominations of a like Class, tenor and
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Sponsor shall execute and the Trustee shall
authenticate, countersign and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for 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 in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder thereof or his attorney duly
authorized in writing.
No transfer of a Private Certificate shall be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws or is made in accordance with
said Act and laws. In the event of any such transfer, (i) unless such transfer
is made in reliance upon Rule 144A under the 1933 Act, the Trustee or the
Sponsor may 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 Sponsor that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from said Act and
laws or is being made pursuant to said Act and laws, which Opinion of Counsel
shall not be an expense of the Trustee or the Sponsor and (ii) the Trustee shall
require the transferee to execute an investment letter (in substantially the
form attached hereto as Exhibit J) acceptable to and in form and substance
reasonably satisfactory to the Sponsor and the Trustee certifying to the Sponsor
and the Trustee the facts surrounding such transfer, which investment letter
shall not be an expense of the Trustee or the Sponsor. The Holder of a Private
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee and the Sponsor 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.
Except as provided 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 the 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 Book-Entry Certificates;
VI-2
(iii) ownership and transfers of registration of the Book-Entry 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
deal with the Depository, Depository Participants and indirect participating
firms as representatives of the Certificate Owners of the Book-Entry
Certificates for purposes of exercising the rights of Holders under this
Agreement, and requests and directions for and votes of such representatives
shall not be deemed to be inconsistent if they are made with respect to
different Certificate Owners; and (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.
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 Owner. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
If (x) (i) the Depository or the Sponsor advises the Trustee in writing
that the Depository is no longer willing or able to properly discharge its
responsibilities as Depository, and (ii) the Trustee or the Sponsor is unable to
locate a qualified successor, (y) the Sponsor at its option advises the Trustee
in writing that it elects to terminate the book-entry system through the
Depository or (z) after the occurrence of an Event of Default, Certificate
Owners representing at least 51% of the Class Certificate Balance of the
Book-Entry Certificates together advise the Trustee and the Depository through
the Depository Participants in writing that the continuation of a book-entry
system through the Depository is no longer in the best interests of the
Certificate Owners, the Trustee shall notify all Certificate Owners, through the
Depository, of the occurrence of any such event and of the availability of
definitive, fully registered Certificates (the "Definitive Certificates") to
Certificate Owners requesting the same. Upon surrender to the Trustee of the
related Class of Certificates by the Depository, accompanied by the instructions
from the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Master Servicer, the Sponsor nor the Trustee shall be
liable for any delay in delivery of such instruction and may conclusively rely
on, and shall be protected in relying on, such instructions. The Master Servicer
shall provide the Trustee with an adequate
VI-3
inventory of certificates to facilitate the issuance and transfer of Definitive
Certificates. Upon the issuance of Definitive Certificates all references herein
to obligations imposed upon or to be performed by the Depository shall be deemed
to be imposed upon and performed by the Trustee, to the extent applicable with
respect to such Definitive Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certifi-cateholders hereunder.
No transfer of a ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Master Servicer, to the effect that such
trans-feree is not an employee benefit plan subject to Section 406 of ERISA, nor
a person acting on behalf of any such plan, which representation letter shall
not be an expense of the Trustee or the Master Servicer, or (ii) in the case of
any ERISA Restricted Certificate presented for registration in the name of an
employee benefit plan subject to ERISA, and Section 4975 of the Code (or
comparable provisions of any subsequent enactments), or a trustee of any such
plan, an Opinion of Counsel satisfactory to the Trustee and the Master Servicer
to the effect that the purchase or holding of such ERISA Restricted Certificate
will not result in the assets of the Trust Fund being deemed to be "plan assets"
and subject to the prohibited transaction provisions of ERISA and the Code and
will not subject the Trustee or the Master Servicer to any obligation in
addition to those undertaken in this Agreement, which opinion of counsel shall
not be an expense of the Trustee or the Master Servicer.
Each Person who has or who acquires any Ownership Interest in a
Residual 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 Sponsor 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 Residual Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership
Interest in a Residual 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
Residual Certificate unless such Ownership Interest is a pro rata
undivided interest.
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(iii) No Ownership Interest in a Residual Certificate may
be transferred without the express written consent of the Trustee. In
connection with any proposed transfer of any Ownership Interest in a
Residual Certificate, the Trustee shall as a condition to such consent,
require delivery to it, in form and substance satisfactory to it, of
each of the following:
A. an affidavit in the form of Exhibit I 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 Residual 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 Residual Certificates.
(iv) Any attempted or purported transfer of any
Ownership Interest in a Residual Certificate in violation of the
provisions of this Section 6.02 shall be absolutely null and void and
shall vest no rights in the purported trans-feree. If any purported
transferee shall, in violation of the provisions of this Section 6.02,
become a Holder of a Residual Certificate, then the prior Holder of
such Residual Certificate that is a Permitted Transferee shall, upon
discovery that the registration of transfer of such Residual
Certificate was not in fact permitted by this Section 6.02, be restored
to all rights as Holder thereof retroactive to the date of registration
of transfer of such Residual Certificate. The Trustee shall be under no
liability to any Person for any registration of transfer of a Residual
Certificate that is in fact not permitted by this Section 6.02 or for
making any distributions due on such Residual Certificate to the Holder
thereof or taking any other action with respect to such Holder under
the provisions of the Agreement so long as the transfer was not
registered upon the express written consent of the Trustee. The Trustee
shall be entitled to recover from any Holder of a Residual Certificate
that was in fact not a Permitted Transferee at the time such
distributions were made all distributions made on such Residual
Certificate. Any such distributions so recovered by the Trustee shall
be distributed and delivered by the Trustee to the prior Holder of such
Residual Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee
acquires any Ownership Interest in a Residual Certificate in
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violation of the restrictions in this Section 6.02, then the Trustee
shall have the right but not the obligation, without notice to the
Holder of such Residual Certificate or any other Person having an
Ownership Interest therein, to notify the Underwriter to arrange for
the sale of such Residual Certificate. The proceeds of such sale, net
of commissions (which may include commissions payable to the Trustee or
its affiliates), expenses and taxes due, if any, will be remitted by
the Trustee to the previous Holder of such Residual Certificate that is
a Permitted Transferee, except that in the event that the Trustee
determines that the Holder of such Residual Certificate may be liable
for any amount due under this Section 6.02 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 Residual 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 Residual Certificate in violation
of the restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Master Servicer will provide
to the Internal Revenue Service, and to the persons specified in
Section 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.
The foregoing provisions of Section 6.02 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 6.02 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 Trust Fund to fail to qualify as a
REMIC.
No service charge shall be imposed for any transfer or exchange of
Certificates of any Class, but the Trustee 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 transfer and exchange shall be
destroyed by the Certificate Registrar.
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Section 6.03. 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 Sponsor and the Certificate Registrar such security or indemnity reasonably
satisfactory to each, to save each of them harmless, then, in the absence of
actual notice to the Trustee or the Certificate Registrar that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall countersign and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor, Class and Percentage
Interest but bearing a number not contemporaneously outstanding. Upon the
issuance of any new Certificate under this Section, the Trustee 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) connected therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the Pool, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Sponsor, the Master Servicer, the
Trustee, the Certificate Registrar and any agent of the Sponsor, the Master
Servicer, the Trustee or the Certificate Registrar may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 5.01 and for all other
purposes whatsoever, and neither the Sponsor, the Master Servicer, the Trustee,
the Certificate Registrar nor any agent of the Master Servicer, the Trustee or
the Certificate Registrar shall be affected by notice to the contrary.
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ARTICLE VII
The Sponsor and the Master Servicer
Section 7.01. Respective Liabilities of the Sponsor and the Master
Servicer. The Sponsor and the Master Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by the Sponsor and the Master Servicer herein. By
way of illustration and not limitation, the Sponsor is not liable for the
servicing and administration of the Mortgage Loans, nor is it obligated by
Section 3.16 or Section 8.01 to assume any obligations of the Master Servicer or
to appoint a designee to assume such obligations, nor is it liable for any other
obligation hereunder that it may, but is not obligated to, assume unless it
elects to assume such obligation in accordance herewith.
Section 7.02. Merger or Consolidation of the Sponsor or the Master
Servicer. The Sponsor and the Master Servicer will each keep in full effect its
existence, rights and franchises as a corporation under the laws of the state of
its incorporation, and will each obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
Any Person into which the Sponsor or the Master Servicer may be merged
or consolidated, or any corporation resulting from any merger or consolidation
to which the Sponsor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Sponsor or the Master Servicer, shall be the
successor of the Sponsor or the Master Servicer, 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 or surviving Person to the Master Servicer
shall be qualified to service mortgage loans on behalf of FNMA or FHLMC.
Section 7.03. Limitation on Liability of the Sponsor, the Master
Servicer and Others. Neither the Sponsor, the Master Servicer nor any of the
directors, officers, employees or agents of the Sponsor or of the Master
Servicer shall be under any liability to the Pool or the Certificateholders for
any action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Sponsor, the Master Servicer or any such
person against any breach of warranties or representations made herein or any
VII-1
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Sponsor, the Master Servicer
and any director, officer, employee or agent of the Sponsor or 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 Sponsor, the Master Servicer and any director, officer, employee or agent of
the Sponsor or the Master Servicer shall be indemnified by the Pool 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 willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Sponsor nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
which is not incidental to its respective duties under this Agreement and which
in its opinion may involve it in any expense or liability; provided, however,
that the Sponsor or the Master Servicer may in its discretion undertake any such
action which it may deem necessary or desirable in respect to this Agreement and
the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Pool, and the Sponsor and the Master Servicer shall be
entitled to be reimbursed therefor out of amounts attributable to the Mortgage
Loans on deposit in the Certificate Account as provided by Section 3.06.
Section 7.04. Sponsor and Master Servicer Not to Resign. Subject to the
provisions of Section 7.02, neither the Sponsor nor the Master Servicer shall
resign from its respective obligations and duties hereby imposed on it except
upon determination that its duties hereunder are no longer permissible under
applicable law. Any such determination permitting the resignation of the Sponsor
or the Master Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee. No such resignation by the Master Servicer
shall become effective until the Trustee or a successor servicer shall have
assumed the Master Servicer's responsibilities and obligations in accordance
with Section 8.02 hereof.
VII-2
ARTICLE VIII
Default
Section 8.01. Events of Default. If any one of the follow-
ing events ("Events of Default") shall occur and be continuing:
(i) Any failure by the Master Servicer to deposit
amounts in the Certificate Account in the amount and manner provided
herein so as to enable the Trustee to distribute to Holders of
Certificates any payment required to be made under the terms of such
Certificates and this Agreement which continues unremedied for a period
of five (5) days; or
(ii) Failure on the part of the Master Servicer duly to
observe or perform in any material respect any other covenants or
agreements of the Master Servicer set forth in the Certificates or in
this Agreement, which covenants and agreements continue unremedied for
a period of 60 days after the date 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 Master Servicer and the
Trustee by the Holders of Certificates evidencing Voting Rights
aggregating not less than 25% of all Voting Rights; or
(iii) The entry of a decree or order by a court or agency
or supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings against the Master Servicer, or for the winding up or
liquidation of the Master Servicer's affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60
consecutive days; or
(iv) The consent by the Master Servicer to the
appointment of a conservator or receiver or liquidator 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 substantially all of its property; 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 failure of the Master Servicer to remit the
Monthly Advance required to be remitted pursuant to Section
VIII-1
4.02 which failure continues unremedied for a period of two Business
Days after the date upon which notice of such failure shall have been
given to the Master Servicer by the Trustee.
then, and in each and every such case, so long as an Event of Default shall not
have been remedied by the Master Servicer, either the Trustee or the Holders of
Certificates evidencing not less than 51% of all Voting Rights may by notice
then given in writing to the Master Servicer, terminate all of the rights and
obligations of the Master Servicer as servicer under this Agreement. If an Event
of Default described in clause (v) hereof shall occur, the Trustee shall, by
notice to the Master Servicer, terminate all of the rights and obligations of
the Master Servicer under this Agreement and in and to the Mortgage Loans and
proceeds thereof and shall, as successor Master Servicer, shall make the Monthly
Advance which the Master Servicer failed to make. On or after the receipt by the
Master Servicer 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 pursuant
to and under this Section 8.01, and, without limitation, the Trustee 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 the Mortgage Loans and related
documents, or otherwise, including, without limitation, the recordation of the
assignments of the Mortgage Loans to it. The Master Servicer agrees to cooperate
with the Trustee in effecting the termination of the responsibilities and rights
of the Master Servicer hereunder, including, without limitation, the transfer to
the Trustee for the administration by it of all cash amounts that have been
deposited by the Master Servicer in the Certificate Account or thereafter
received by the Master Servicer with respect to the Mortgage Loans. Upon
obtaining notice or knowledge of the occurrence of any Event of Default, the
Person obtaining such notice or knowledge shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register and to the Rating Agency.
Section 8.02. Remedies of Trustee. During the continuance of any Event
of Default, so long as such Event of Default shall not have been remedied, the
Trustee, in addition to the rights specified in Section 8.01, shall have the
right, in its own name as trustee of an express trust, to take all actions now
or hereafter existing at law, in equity or by statute to enforce its rights and
remedies and to protect the interests, and enforce its rights and remedies, of
the Certificateholders (including the
VIII-2
institution and prosecution of all judicial, administrative and other
proceedings and the filing of proofs of claim and debt in connection therewith).
Except as otherwise expressly provided in this Agreement, no remedy provided for
by this Agreement shall be exclusive of any other remedy, and each and every
remedy shall be cumulative and in addition to any other remedy and no delay or
omission to exercise any right or remedy shall impair any such right or remedy
or shall be deemed to be a waiver of any Event of Default.
Section 8.03. Directions by Certificateholders and Duties of Trustee
During Event of Default. During the continuance of any Event of Default, Holders
of Certificates evidencing Voting Rights aggregating not less than 25% of all
Voting Rights may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred upon the Trustee under this Agreement, provided, however, that the
Trustee shall be under no obligation to pursue any such remedy, or to exercise
any of the trusts or powers vested in it by this Agreement (including, without
limitation, (a) the conducting or defending of any administrative action or
litigation hereunder or in relation hereto, and (b) the terminating of the
Master Servicer or any successor servicer from its rights and duties as servicer
hereunder) at the request, order or direction of any of the Certificateholders,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby and, provided further, that, subject to the
provisions of Section 9.01, the Trustee shall have the right to decline to
follow any such direction if the Trustee, in accordance with an Opinion of
Counsel, determines that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith determines that the action or
proceeding so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Certificateholders.
Section 8.04. Action upon Certain Failures of the Master Servicer and
upon Event of Default. In the event that the Trustee shall have knowledge of any
failure of the Master Servicer specified in Section 8.01(i) or (ii) which would
become an Event of Default upon the Master Servicer's failure to remedy the same
after notice, the Trustee may, but need not if the Trustee deems it not in the
Certificateholder's best interest, give notice thereof to the Master Servicer.
In the event that the Trustee shall have knowledge of an Event of Default, the
Trustee shall give prompt written notice thereof to the Certifi-cateholders.
Section 8.05. Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice
VIII-3
of termination pursuant to Section 8.01, the Trustee 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.
Notwithstanding anything provided herein to the contrary, under no circumstances
shall any provision of this Agreement, including but not limited to Section 4.02
herein, be construed to require the Trustee, acting in its capacity as successor
to the Master Servicer in its obligation to make Monthly Advances, to advance,
expend or risk its own funds or otherwise incur any financial liability in the
performance of its duties hereunder if it shall have reasonable grounds for
believing that such funds are nonrecoverable. As compensation therefor, the
Trustee 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.
Notwithstanding the above, the Trustee may, if it shall be unwilling so to act,
or shall, if it is legally unable so to act, appoint, or petition a court of
competent jurisdiction to appoint, any established housing and home finance
institution having a net worth of not less than $10,000,000 as the successor to
the Master Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Master Servicer hereunder;
provided, however, that any such institution appointed as successor Master
Servicer shall not as evidenced in writing by the Rating Agency adversely affect
the then current rating of any Class of Certificates immediately prior to the
termination of the Master Servicer. 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 Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Master Servicer hereunder.
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
servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder and (ii) 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 3.08.
Section 8.06. Notification to Certificateholders. Upon any
termination or appointment of a successor to the Master Servicer
pursuant to this Article VIII, the Trustee shall give prompt
VIII-4
written notice thereof to Certificateholders at their respective addresses
appearing in the Certificate Register and to each Rating Agency.
VIII-5
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. (a) The Trustee, except during the
continuance of a default by (a) the Seller or (b) the occurrence of one or more
of the events specified in Section 8.01, undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement. In case of
default or the occurrence of any such event as specified above, 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 investor
would exercise or use under the circumstances in the conduct of such investor's
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 are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such certificate,
statement, opinion, report, or other order or instrument furnished by the Master
Servicer or the Sponsor to the Trustee pursuant to this Agreement.
(b) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligent action, its own gross
negligent failure to act or its own willful misconduct; provided, however, that:
(i) This paragraph shall not be construed to
limit the effect of paragraph (a) of this Section 9.01;
(ii) The Trustee and co-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
Certificateholders as provided in Section 8.03 hereof;
(iii) For all purposes under this Agreement, the Trustee
shall not be deemed to have notice, of any event described in Section
8.01(ii) through (v) unless a Responsible Officer assigned to and
working in the Trustee's corporate trust division has actual knowledge
thereof or unless written notice of any event is received at the
Corporate Trust Office, and such notice references the Certificates and
this Agreement; and
IX-1
(iv) No provision of this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
Section 9.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 9.01:
(i) The Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditor or any other certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or
parties;
(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 and any co-trustee shall not be
personally liable for any action taken, suffered or omitted by it in
good faith and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement;
(iv) Unless a default in respect of the Mortgage Loans
or an event specified in Section 8.01 shall have occurred and be
continuing and, in each case is known to a Responsible Officer of the
Trustee, 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 document, unless requested in writing to do so
by Holders of Certificates evidencing not less than 50% of all Voting
Rights; 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 expense or liability or payment of
such estimated expenses as a condition to proceeding. The reasonable
expense of every such examination shall be an expense of the Pool; and
IX-2
(v) The Trustee and any co-trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Trustee and any
co-trustee shall not be responsible for any willful misconduct or gross
negligence on the part of any agent or attorney appointed with due care
by it hereunder.
Section 9.03. Trustee Not Liable for Certificates. The Trustee makes no
representations as to the validity or sufficiency of this Agreement or of the
Certificates save that the Trustee represents that, assuming due execution and
delivery by the other parties hereto, this Agreement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other laws affecting the rights of creditors generally, and to
general principles of equity and the discretion of the court (regardless of
whether enforcement of such remedies is considered in a proceeding in equity or
at law). The Trustee shall not be accountable for the use or application by the
Sponsor of funds paid to the Sponsor in consideration of the assignment of the
Mortgage Loans hereunder by the Sponsor, or for the use or application of any
funds paid to Servicers or the Master Servicer in respect of the Mortgage Loans
or deposited into the Certificate Account by the Master Servicer.
Section 9.04. 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 it would have if it were not Trustee and may otherwise deal
with the Master Servicer, any Servicer or any of their respective affiliates
with the same right it would have if it were not the Trustee.
Section 9.05. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (i) an institution the deposits of which are
fully insured by the FDIC and (ii) a corporation or national banking association
organized and doing business under the laws of the United States of America or
of any State, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of not less than $30,000,000 and subject
to supervision or examination by Federal or State authority and, with respect to
every successor trustee hereunder except as pursuant to Section 9.08 (iii)
either an institution (a) the long-term unsecured debt obligations of which are
rated at least "[ ]" by [ ] or (b) whose serving as Trustee hereunder would not
result in the lowering of the ratings originally assigned to any Class of
Certificates. The Trustee shall not be an affiliate of the Sponsor or the Master
Servicer. If such corporation or national banking association publishes
IX-3
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 9.05, the combined capital and surplus of such corporation or
national banking association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provision of this Section 9.05, the Trustee shall resign immediately in the
manner and with the effect specified in Section 9.06.
Section 9.06. Resignation and Removal of Trustee. The Trustee may at
any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Master Servicer and mailing a copy of such notice
to all Holders of record. The Trustee shall also mail a copy of such notice of
resignation to each Rating Agency. Upon receiving such notice of resignation,
the Master Servicer shall use its best efforts to promptly appoint a successor
trustee 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 shall have 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 provision of Section 9.05 and shall fail to resign after written
request therefor by the Master Servicer, or if at any time the Trustee shall
become incapable of acting, 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 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
Master Servicer may remove the Trustee and appoint a successor trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor.
The Holders of Certificates evidencing not less than 50% of all Voting
Rights may at any time remove the Trustee by written instrument or instruments
delivered to the Master Servicer and the Trustee; the Master Servicer 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
IX-4
Section 9.06 shall become effective upon acceptance of appointment by the
successor trustee as provided in Section 9.07.
Section 9.07. Successor Trustee. Any successor trustee appointed as
provided in Section 9.06 shall execute, acknowledge and deliver to 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 herein. The predecessor trustee shall duly assign, transfer,
deliver and pay over to the successor trustee the whole of the Mortgage Files
and related documents and statements held by it hereunder, together with all
necessary instruments of transfer and assignment or other documents properly
executed necessary to effect such transfer and such of the records or copies
thereof maintained by the predecessor trustee in the administration hereof as
may be requested by the successor trustee and shall thereupon be discharged from
all duties and responsibilities under this Agreement.
No successor trustee shall accept appointment as provided in this
Section 9.07 unless at the time of such appointment such successor trustee shall
be eligible under the provisions of Section 9.05.
Upon acceptance of appointment by a successor trustee as provided in
this Section 9.07, the Master Servicer shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to the Rating Agency. If the Master
Servicer fails to mail such notice within 10 days after acceptance of
appointment by the successor trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
Section 9.08. Merger or Consolidation of Trustee. Any corporation or
national banking association into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation or national banking
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or national banking association
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 9.05, 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.
IX-5
Section 9.09. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any of the provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any Mortgaged
Property may at the time be located or for any other reason, the Master Servicer
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,
or separate trustee or separate trustees, of all or any part of the Pool, and to
vest in such Person or Persons, in such capacity, such title to the Pool, or any
part thereof, and, subject to the other provision of this Section 9.09, such
powers, duties, obligations, rights and trusts as the Master Servicer and the
Trustee may consider necessary or desirable. If the Master Servicer shall not
have joined in such appointment within 10 days after the receipt by it of a
request to do so, 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 9.05
hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 9.07
hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.09, 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, 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 Pool or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustee and co-trustee,
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 IX. 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.
IX-6
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 become incapable of acting, resign or be removed, or shall be adjudged a
bankrupt or insolvent, or a receiver of its property shall be appointed, or any
public officer shall take charge or control of such trustee or co-trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation, 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.
Section 9.10. Authenticating Agents. The Trustee may appoint one or
more authenticating agents ("Authenticating Agents") which shall be authorized
to act on behalf of the Trustee in authenticating or countersigning
Certificates. Wherever reference is made in this Agreement to the authentication
or countersigning of Certificates by the Trustee or the Trustee's certificate of
authentication or countersigning, such reference shall be deemed to include
authentication or countersigning on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication or countersignature executed on behalf
of the Trustee by an Authenticating Agent. Each Authenticating Agent must be
acceptable to the Master Servicer and must be a corporation or national banking
association organized and doing business under the laws of the United States of
America or of any State, having a principal office and place of business in [ ],
having a combined capital and surplus of at least $15,000,000, authorized under
such laws to do a trust business and subject to supervision or examination by
Federal or State authorities.
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, conversion or consolidation to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Master
Servicer. The Trustee may at any time terminate the agency of
any Authenticating Agent by giving written notice of termination
to such Authenticating Agent and to the Master Servicer. Upon
IX-7
receiving a notice of resignation or upon such a termination, or in case, at any
time any Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 9.10, the Trustee may appoint a successor
Authenticating Agent, shall give written notice of such appointment to the
Master Servicer and shall mail notice of such appointment to all
Certificate-holders. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent.
Section 9.11. Trustee's Fees and Expenses. The Trustee, as compensation
for its activities hereunder, shall be entitled to receive on each Distribution
Date an amount equal to the Trustee Fee for such Distribution Date. The Trustee
and any director, officer, employee or agent of the Trustee shall be indemnified
by the Master Servicer and held harmless against any loss, liability or expense
(including reasonable attorney's fees) (i) incurred in connection with any claim
or legal action relating to (a) this Agreement, (b) the Certificates, or (c) the
performance of any of the Trustee's duties hereunder, other than any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of any of the Trustee's duties hereunder and (ii)
resulting from any error in any tax or information return prepared by the Master
Servicer. Such indemnity shall survive the termination of this Agreement or the
resignation or removal of the Trustee hereunder. Without limiting the foregoing,
the Master Servicer covenants and agrees, except as otherwise agreed upon in
writing by the Sponsor and the Trustee, and except for any such expense,
disbursement or advance as may arise from the Trustee's negligence, bad faith or
willful misconduct, to pay or reimburse the Trustee, for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any of the provisions of this Agreement with respect to (A) the
reasonable compensation and the expenses and disbursements of its counsel not
associated with the closing of the issuance of the Certificates, (B) the
reasonable compensation, expenses and disbursements of any accountant, engineer
or appraiser that is not regularly employed by the Trustee, to the extent that
the Trustee must engage such persons to perform acts or services hereunder and
(C) printing and engraving expenses in connection with preparing any Definitive
Certificates). Except as otherwise provided herein, the Trustee shall not be
entitled to payment or reimbursement for any routine ongoing expenses incurred
by the Trustee in the ordinary course of its duties as Trustee, Certificate
Registrar, Tax Matter's Person or Paying Agent hereunder or for any other
expenses.
IX-8
Section 9.12. Tax Returns. The Trustee will prepare any
federal, state and local income tax or information returns of the
Pool and shall file or cause to be filed such returns.
IX-9
ARTICLE X
Termination
Section 10.01. Termination upon Purchase by the Master Servicer or
Liquidation of All Mortgage Loans. Subject to Section 10.02, the respective
obligations and responsibilities of the Seller, the Sponsor, the Master Servicer
and the Trustee created hereby (other than the obligation of Trustee to make
certain payments to Certificateholders after the Final Distribution Date, the
obligations of the Master Servicer to send certain notices as hereinafter set
forth and pursuant to Sections 9.11 and 9.12 hereof and the obligation of the [
] pursuant to Section 5.05(b)) shall terminate upon the last action required to
be taken by the Trustee on the Final Distribution Date pursuant to this Article
X following the earlier of (a) the purchase by the Master Servicer of all
Mortgage Loans and all property acquired in respect of any Mortgage Loan
remaining in the Pool at a price equal to the sum of (A) 100% of the Scheduled
Principal Balance of each Mortgage Loan (other than any Mortgage Loan as to
which title to the underlying Mortgaged Property has been acquired and whose
fair market value is included pursuant to clause (B) below) and (B) the fair
market value of such acquired property (as determined by the Master Servicer as
of the close of business on the third Business Day next preceding the date upon
which notice of any such termination is furnished to Certificateholders pursuant
to the third paragraph of this Article X), plus any Class Unpaid Interest
Shortfall for any Class of Certificates as well as one month's interest at the
related Mortgage Interest Rate (net of the related Master Servicing Fee Rate and
the related Servicing Fee Rate) on the Scheduled Principal Balance of each
Mortgage Loan (including any Mortgage Loan as to which title to the underlying
Mortgaged Property has been acquired) or (b) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Pool or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan; provided,
however, that in no event shall the trust created hereby continue beyond the
earlier of (a) the expiration of 21 years from the death of the last survivor of
the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United States
to the Court of St. ▇▇▇▇▇, living on the date hereof and (b) the Distribution
Date in _____________.
The right of the Master Servicer to repurchase all Mortgage Loans
pursuant to (a) above is conditioned upon the Pool Scheduled Principal Balance
as of the Final Distribution Date being less than __ percent of the Cut-Off Date
Pool Principal Balance. If such right is exercised, the Master Servicer shall
provide to the Trustee the certification required by Section 3.11
X-1
and the Trustee shall, promptly following payment of the purchase price, release
to the purchaser the Mortgage Files pertaining to the Mortgage Loans being
purchased.
Notice of any termination, specifying the Final 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 for cancellation, shall be given promptly
by the Master Servicer (if exercising its right to purchase the assets of the
Pool) or by the Trustee (in any other case) by letter to Certifi-cateholders
mailed not earlier than the 15th day and not later than the 25th day of the
month next preceding the month of such final distribution specifying (A) the
Final Distribution Date upon which final payment of the Certificates will be
made upon presentation and surrender of Certificates at the office or agency of
the Trustee therein designated, (B) the amount of any such final payment and (C)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. If the
Master Servicer is obligated to give notice to Certificateholders as aforesaid,
it shall give such notice to the Trustee and the Certificate Registrar at the
time such notice is given to Certificateholders. In the event such notice is
given by the Master Servicer, the Master Servicer shall deposit in the
Certificate Account on or before the Final Distribution Date in immediately
available funds an amount equal to the amount necessary to make the amount, if
any, on deposit in the Certificate Account on the Final Distribution Date equal
to the purchase price for the assets of the Pool computed as above provided
together with a statement as to the amount to be distributed on each Class of
Certificates pursuant to the next succeeding paragraph.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class, in the order set
forth in Section 5.02 hereof, on the final Distribution Date and in proportion
to their respective Percentage Interests, with respect to Certificateholders of
the same Class, an amount equal to (i) as to each Class of Regular Certificates,
the Class Certificate Balance thereof plus accrued interest thereon (or on their
Notional Amount, if applicable) in the case of an interest bearing Certificate
and (ii) as to the Residual Certificates, the amount, if any, which remains on
deposit in the Distribution Account (other than the amounts retained to meet
claims) after application pursuant to clause (i) above.
X-2
In the event that all of the Certificateholders shall not surrender
their Certificates for final payment cancellation on or before the Final
Distribution Date, the Trustee shall on such date cause all funds in the Trustee
Certificate Account not distributed in final distribution to Certificateholders
to continue to be held by the Trustee in an Eligible Account for the benefit of
such Certificateholders and the Master Servicer (if it exercised its right to
purchase the assets of the Pool) 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 one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificate-holders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds on deposit in such Eligible
Account.
[Section 10.02. Additional Termination Requirements. (a) In the event
the Master Servicer exercises its purchase option as provided in Section 10.01
the Trust Fund shall be terminated in accordance with the following additional
requirements, unless the Trustee has received an Opinion of Counsel to the
effect that the failure of the Trust Fund to comply with the requirements of
this Section 10.02 will not (i) result in the imposition of taxes on "prohibited
transactions" of the Trust Fund as defined in Section 860F of the Code, or (ii)
cause 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
set forth in the notice given by the Master Servicer under Section
10.01, the holders of 100% of the aggregate Percentage Interests
evidenced by the Residual Certificates shall adopt a plan of complete
liquidation of the Trust Fund; and
(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 Fund to the
Master Servicer for cash.
(b) By their acceptance of the Residual Certificates, the Holders
thereof hereby agree to adopt such a plan of complete liquidation upon the
written request of the Master Servicer and to take such other action in
connection therewith as may be reasonably requested by the Master Servicer.]
X-3
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment. This Agreement may be amended from time to
time by the Sponsor, the Seller, the Master Servicer and the Trustee, without
the consent of any of the Certificate-holders, (i) to cure any ambiguity, (ii)
to correct or supplement any provisions herein or therein which may be defective
or inconsistent with any other provisions herein or therein, as the case may be,
(iii) to modify, eliminate or add to any of its provisions to such extent as
shall be necessary to maintain the qualification of the Trust Fund as a REMIC or
(iv) to add any other provisions with respect to matters or questions arising
under this Agreement which shall not be inconsistent with the provisions of this
Agreement; provided, however, that (x) as evidenced by an Opinion of Counsel in
each case such action shall not, adversely affect in any material respect the
interests of any Certificateholder, (y) in each case, such action is necessary
or desirable to maintain the qualification of the Trust Fund as a REMIC or shall
not adversely affect such qualification and (z) if the opinion called for in
clause (x) cannot be delivered with regard to an amendment pursuant to clause
(iii) above, such amendment is necessary to maintain the qualification of the
Trust Fund as a REMIC; and provided, further, that the amendment shall not be
deemed to adversely affect in any material respect the interests of the
Certificateholders and no Opinion of Counsel to that effect shall be required if
the Person requesting the amendment obtains a letter from the Rating Agency
stating that the amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates.
This Agreement may also be amended from time to time by the Sponsor,
the Seller, the Master Servicer and the Trustee, with the consent of the Holders
of Certificates of each Class of Certificates which is affected by such
amendment, evidencing not less than 66-2/3% of all Voting Rights, 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 such Certificates; provided, however, that no such amendment
shall (a) reduce in any manner the amount of, or delay the timing of,
collections of payments on Mortgage Loans or distributions which are required to
be made on any Certificate without the consent of the Holder of such Certificate
or (b) reduce the aforesaid percentage required to consent to any such
amendment, without the consent of the Holders of all Certificates then
Outstanding.
XI-1
Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of the Trust Fund as a REMIC and notice
of the conclusion expressed in such Opinion of Counsel shall be included with
any such solicitation. An amendment made with the consent of all
Certificateholders and executed in accordance with this Section 11.01 shall be
permitted or authorized by this Agreement notwithstanding that such Opinion of
Counsel may conclude that such amendment would adversely affect the
qualification of the Trust Fund as a REMIC.
Promptly after the execution of any such amendment or consent the
Trustee shall furnish written notification of the substance of or a copy of such
amendment to each Certificateholder and to the Rating Agency.
It shall not be necessary for the consent of Certificate-holders under
this Section 11.01 to approve the particular form of any proposed amendment, but
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
requirements as the Trustee may prescribe.
Section 11.02. Recordation of Agreement. 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 and at its expense on direction by the Trustee, who will act at
the direction of Holders of Certificates evidencing not less than 50% of all
Voting Rights but only upon direction of the Trustee accompanied by an Opinion
of Counsel to the effect that such recordation materially and beneficially
affects the interests of 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 constitute but one and
the same instrument.
Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Pool, nor entitle such Certificateholder's legal
representatives or heirs to claim an
B XI-2
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Pool, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Pool, 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 or by availing
itself of any provisions 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 evidencing not less than 25% of all 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 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being 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 or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Certificate-holders. For the protection and enforcement of the provisions of
this Section 11.03, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
Section 11.04. Governing Law. 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.
XI-3
Section 11.05. Notices. All demands, notices and communications
required to be delivered hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered at or mailed by certified mail,
return receipt requested, (provided, however, that notices to the Trustee shall
be deemed effective upon receipt) to (a) in the case of the Sponsor, Headlands
Mortgage Securities, Inc., Attention: [ ], (b) in the case of the Master
Servicer and Seller, Headlands Mortgage Company, Attention: [ ], (d) in the case
of the Trustee, [ ] Attention: [ ], or, as to each party, at such other address
as shall be designated by such party in a written notice to each other party,
(e) in the case of Moody's, ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Residential Pass-Through Monitoring, (f) in the
case of S&P, Standard & Poor's Ratings Group, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage Surveillance, (g) in the case of
Duff & ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇ Credit Rating Co., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: MBS Monitoring, and (h) in the case of Fitch,
Fitch Investors Service, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attn: Residential Mortgage Surveillance Group. 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. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever 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 11.07. Certificates Nonassessable and Fully Paid. It is the
intention of the Trustee that Certificateholders shall not be personally liable
for obligations of the Pool, that the beneficial ownership interests represented
by the Certificates shall be nonassessable for any losses or expenses of the
Pool or for any reason whatsoever, and that Certificates upon execution,
countersignature and delivery thereof by the Trustee pursuant to Section 6.01
are and shall be deemed fully paid.
Section 11.08. Access to List of Certificateholders. The
Certificate Registrar will furnish or cause to be furnished to
XI-4
the Trustee, within 15 days after the receipt of a request by the Trustee in
writing, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Certifi-cateholders as of the most recent Record Date
for payment of distributions to Certificateholders.
If three or more Certificateholders (hereinafter referred to as
"applicants") apply in writing to the Trustee, and such application states that
the applicants desire to communicate with other Certificateholders with respect
to their rights under this Agreement or under the Certificates and is
accompanied by a copy of the communication which such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such applicants access during normal business hours to
the most recent list of Certificate-holders held by the Trustee. If such a list
is as of a date more than 90 days prior to the date of receipt of such
applicants' request, the Trustee shall promptly request from the Certificate
Registrar a current list as provided above, and shall afford such applicants
access to such list promptly upon receipt.
Every Certificateholder, by receiving and holding such list, agrees
with the Certificate Registrar and the Trustee that neither the Certificate
Registrar nor the Trustee shall be held accountable by reason of the disclosure
of any such information as to the names and addresses of the Certificateholders
hereunder, regardless of the source from which such information was derived.
XI-5
IN WITNESS WHEREOF, the Sponsor, the Master Servicer, the Seller and
the Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized to be hereunto affixed, all as of the day and
year first above written.
HEADLANDS MORTGAGE SECURITIES, INC.
as Sponsor
By
Title: Vice President
HEADLANDS MORTGAGE COMPANY
as Seller and Master Servicer
By
Title:
-----------------------------------
as Trustee
By
Title: Vice President
State of New York )
) ss.:
County of New York )
On the ______ day of ___________, 199_, before me, a notary
public in and for the State of New York, personally appeared
_________________________, known to me who, being by me duly sworn, did depose
and say that s/he is the _________________ of Headlands Mortgage Securities,
Inc., a Delaware corporation, one of the parties that executed the foregoing
instrument; and that s/he signed their name thereto by order of the Board of
Directors of such corporation.
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the _____ day of _______________, 199_, before me, a notary
public in and for the State of New York, personally appeared
_________________________, known to me who, being by me duly sworn, did depose
and say that s/he is an Authorized Signatory of __________________, one of the
parties that executed the foregoing instrument; and that s/he signed their name
thereto by order of the Board of Directors of said corporation.
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the _________ day of ________________, 199_, before me, a
notary public in and for the State of New York, personally appeared
_________________________, known to me who, being by me duly sworn, did depose
and say that s/he is a [ ] of ______________________________, one of the parties
that executed the foregoing instrument; and that s/he signed their name thereto
by order of the Board of Directors of said corporation.
Notary Public
[Notarial Seal]
EXHIBIT A
[FORM OF SENIOR CERTIFICATE]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE , OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF AN ENTITY REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
Certificate No. CUSIP No.:
Class [X] [A-] Certificate
Date of Pooling and Servicing Initial Weighted Average
Agreement and Cut-Off Date: Pass-Through Rate:
________________, 199__ %
First Distribution Date: Initial [Certificate
________________, 199__ Balance] [Notional Amount] of
all Class [A-][X] Certificates:
$
Last Scheduled Initial [Certificate Balance]
Distribution Date: [Notional Amount] of this
Certificate:
$
A-9
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199__-__
evidencing a percentage interest in the distributions allocable to the
Certificates specified above from payments on and proceeds of a pool (the
"Pool") of fixed rate, one- to four-family first mortgage loans formed and sold
by
HEADLANDS MORTGAGE SECURITIES, INC.
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by Headlands Mortgage Securities Inc., Headlands Mortgage
Company, or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
THIS CERTIFIES THAT _____________________ is the registered owner of
the pro rata share evidenced by this Certificate in certain monthly
distributions on the Certificates specified above from payments on and proceeds
of the assets contained in the Pool consisting of a pool of fixed rate one- to
four-family first mortgage loans (the "Mortgage Loans"). The Pool was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among Headlands Mortgage Securities, Inc., as sponsor (the
"Sponsor"), Headlands Mortgage Company, as master servicer and seller (in such
capacities, the "Master Servicer" and the "Seller"), and [ ], as Trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following such 25th day (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the Record
Date, of an amount equal to the pro rata share evidenced by this Certificate of
the aggregate amount required to be distributed to Holders of Certificates
specified above pursuant to the Agreement.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto at the address appearing in the
Certificate Register, or upon written request by the Certificateholder, by wire
transfer (in the case of any Holder of Certificates entitled to such form of
payment as provided in the Agreement) or by such other means of payment as such
Person and the
A-10
Trustee shall agree. Except as otherwise provided in the Agreement, the final
distribution on this Certificate will be made in the applicable manner described
above, after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
of the Trustee specified in such notice.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by any
authorized signatory of the Trustee.
A-11
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
HEADLANDS MORTGAGE SECURITIES,
INC.
By:__________________________
Name:
Title:
Countersigned:
By_______________________________
Authorized Signatory of the
Trustee, as defined herein
A-12
EXHIBIT B
[FORM OF RESIDUAL CERTIFICATE]
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE REGULAR
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE.
THIS CERTIFICATE IS NOT TREATED AS INDEBTEDNESS OF THE ISSUER FOR FEDERAL INCOME
TAX PURPOSES.
NO EMPLOYEE BENEFIT PLAN (A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (AN "ERISA PLAN"), NOR ANY INDIVIDUAL
RETIREMENT ACCOUNT (AN "ACCOUNT") OR ANY PLAN SUBJECT TO SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (A "SECTION 4975 PLAN"),
MAY PURCHASE OR INVEST IN THIS CERTIFICATE. THIS CERTIFICATE WILL NOT BE
ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS IT IS ACCOMPANIED BY EITHER (I) A
REPRESENTATION LETTER FROM THE PROPOSED TRANSFEREE, ACCEPTABLE TO THE TRUSTEE,
TO THE EFFECT THAT SUCH PROPOSED TRANSFEREE IS NOT AN ERISA PLAN, ACCOUNT OR
SECTION 4975 PLAN OR (II) IN THE CASE OF ANY SUCH PROPOSED TRANSFEREE WHICH IS A
PLAN, AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE MASTER SERVICER
TO THE EFFECT SET FORTH IN THE AGREEMENT.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT AND LAWS OR
IS SOLD OR TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT AND UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 6.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
[THIS CERTIFICATE REPRESENTS A "TAX MATTERS PERSON RESIDUAL INTEREST" ISSUED
UNDER THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN AND MAY NOT BE
TRANSFERRED TO ANY PERSON EXCEPT IN CONNECTION WITH THE ASSUMPTION BY THE
TRANSFEREE OF THE DUTIES OF THE MASTER SERVICER UNDER SUCH AGREEMENT.]
Certificate No. Percentage Interest of this
Residual Certificate: %
Residual Certificate
Date of Pooling and Servicing
Agreement and Cut-Off Date: First Distribution Date:
_________________, 199__ _________________, 199__
B-1
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199___-__
evidencing a percentage interest in the distributions allocable to the Class of
Certificates specified above from payments on and proceeds of a pool (the
"Pool") of fixed rate, one- to four-family first mortgage loans formed and sold
by
HEADLANDS MORTGAGE SECURITIES, INC.
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by Headlands Mortgage Securities Inc., Headlands Mortgage
Company, or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
THIS CERTIFIES THAT _____________________ is the registered owner of
the pro rata share evidenced by this Certificate in certain monthly
distributions on the Certificates specified above from payments on and proceeds
of the assets contained in the Pool consisting of a pool of fixed rate one- to
four-family first mortgage loans (the "Mortgage Loans"). The Pool was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among Headlands Mortgage Securities, Inc., as sponsor (the
"Sponsor"), Headlands Mortgage Company, as master servicer and seller (in such
capacities, the "Master Servicer" and the "Seller"), and [ ], as Trustee (the
"Trustee"). The Trust Fund will consist primarily of one asset pool, with
respect to which an election will be made to treat it as a real estate mortgage
investment conduit (a "REMIC") for federal income tax purposes. The Residual
Certificates will constitute "residual interests" in the Pool. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, a distribution will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following such 25th day (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the last
day (or if such last day is not a Business Day, the Business Day immediately
preceding such last day) of the month next preceding the month of such
distribution (the "Record Date"), in an amount equal to the pro rata share
evidenced by this Certificate of the aggregate amount required to be distributed
to Holders of Certificates of the Class specified above pursuant to the
Agreement.
Distributions, if any, on this Certificate will be made by the Trustee
by check mailed to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate
B-2
Register received by the Trustee five Business Days before a Record Date, by
wire transfer (in the case of any Holder of Certificates entitled to such form
of payment as provided in the Agreement) or by such other means of payment as
such Person and the Trustee shall agree. Except as otherwise provided in the
Agreement, the final distribution on this Certificate will be made in the
applicable manner described above, after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency of the Trustee specified in such notice.
No transfer of a Residual Certificate will be made unless such transfer
is exempt from the registration requirements of the Securities Act of 1933, as
amended, and any applicable state securities laws or is made in accordance with
said Act and laws. In the event of such a transfer, (i) the Trustee or the
Sponsor may require an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee and the Sponsor that such transfer is
exempt (describing the applicable exemption and the basis therefor) from or is
being made pursuant to the registration requirements of the Securities Act of
1933, as amended, and of any applicable statute of any state and (ii) the
Trustee shall require the transferee to execute an investment letter acceptable
to and in form and substance satisfactory to the Trustee and the Sponsor
certifying as to the fact surrounding such transfer. The Holder hereof desiring
to effect such transfer shall, and does hereby agree to, indemnify the Trustee
and the Sponsor 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 Residual Certificate shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate, acceptable to and in form and substance satisfactory to the
Trustee and the Master Servicer, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA, nor a person acting on
behalf of any such plan, or (ii) in the case of any such Residual Certificate
presented for registration in the name of an employee benefit plan subject to
ERISA, and Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan, an Opinion of Counsel satisfactory
to the Trustee and the Sponsor to the effect that the purchase or holding of
such Residual Certificate will not result in the assets of the pool being deemed
to be "plan assets" and subject to the prohibited transaction provisions of
ERISA and the Code and will not subject the Trustee or the Master Servicer to
any obligation in addition to those undertaken in the Agreement.
Neither this Certificate nor any Ownership Interest herein may be
transferred and any proposed transferee hereof shall not become the registered
Holder hereof, without the express written consent of the Trustee. In connection
with any proposed transfer of any Ownership Interest, the Trustee shall as a
condition to such
B-3
consent require delivery to it, and the proposed transferee shall deliver to the
Trustee, (i) an affidavit (a "Transfer Affidavit") of the proposed transferee
(in the form of Exhibit I to the Agreement) representing and warranting that
such transferee is a Permitted Transferee (as defined in the Agreement), that it
is not acquiring its Ownership Interest that is the subject of the proposed
transfer as a nominee, trustee or agent for any Person who is not a Permitted
Transferee and (ii) a covenant of the proposed transferee that it will abide by
the transfer restrictions applicable to the Residual Certificates set forth in
the Agreement.
A Permitted Transferee is any Person other than (i) the United States
or any State or any political subdivision of any of the foregoing, (ii) a
foreign government, international organization or any agency or instrumentality
of either of the foregoing, (iii) an organization which is exempt from tax
imposed by Chapter 1 of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income) (except certain farmers'
cooperatives described in Code Section 521)), (iv) rural electric and telephone
cooperatives described in Code Section 1381(a)(2)(C) and (v) any other Person so
designated by the Master Servicer based on an Opinion of Counsel to the effect
that any Transfer to such Person may cause the Pool or any other Holder of a
Residual Certificate to incur tax liability that would not be imposed other than
on account of such Transfer. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Code Section
7701 or successor provisions.
Any purported transfer of a Residual Certificate in violation of the
restriction on transfer will be null and void and vest no rights in the
purported transferee.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by any
authorized signatory of the Trustee.
B-4
IN WITNESS WHEREOF, the Sponsor has caused this Certificate to be duly
executed.
Dated:
HEADLANDS MORTGAGE SECURITIES,
INC.
By____________________________
Name:
Title:
Countersigned:
By_______________________________
Authorized Signatory of
the Trustee, as defined herein
B-5
EXHIBIT D
[FORM OF SUBORDINATED CERTIFICATE]
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN
OTHER CLASSES OF REGULAR CERTIFICATES AS DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT,"
AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D
OF THE INTERNAL REVENUE CODE.
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF THE AGREEMENT REFERRED TO HEREIN.
NO EMPLOYEE BENEFIT PLAN (A "PLAN") SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED (AN "ERISA PLAN"), NOR ANY INDIVIDUAL
RETIREMENT ACCOUNT (AN "ACCOUNT") OR ANY PLAN SUBJECT TO SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (A "SECTION 4975 PLAN"),
MAY PURCHASE OR INVEST IN THIS CERTIFICATE. THIS CERTIFICATE WILL NOT BE
ACCEPTED FOR REGISTRATION OF TRANSFER UNLESS IT IS ACCOMPANIED BY EITHER (I) A
REPRESENTATION LETTER FROM THE PROPOSED TRANSFEREE, ACCEPTABLE TO THE TRUSTEE,
TO THE EFFECT THAT SUCH PROPOSED TRANSFEREE IS NOT AN ERISA PLAN, ACCOUNT OR
SECTION 4975 PLAN OR (II) IN THE CASE OF ANY SUCH PROPOSED TRANSFEREE WHICH IS A
PLAN, AN OPINION OF COUNSEL SATISFACTORY TO THE TRUSTEE AND THE MASTER SERVICER
TO THE EFFECT SET FORTH IN THE AGREEMENT.
Certificate No. CUSIP No.:
Class [M-] [B-] Certificate
Date of Pooling and Servicing
Agreement and Cut-Off Date: Pass-Through Rate:
____________________, 199__ %
First Distribution Date: Initial Certificate
____________________, 199__ Balance of all Class [M-] [B-]
Certificates:
$
Last Scheduled Initial Certificate Balance
Distribution Date: of this Certificate:
$
D-1
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199__-__
evidencing a percentage interest in the distributions allocable to the
Certificates specified above from payments on and proceeds of a pool (the
"Pool") of fixed rate, one- to four-family first mortgage loans formed and sold
by
HEADLANDS MORTGAGE SECURITIES, INC.
This Certificate does not evidence an obligation of, or an interest in,
and is not guaranteed by Headlands Mortgage Securities Inc., Headlands Mortgage
Company, or the Trustee referred to below or any of their respective affiliates.
Neither this Certificate nor the underlying Mortgage Loans are guaranteed or
insured by any governmental agency or instrumentality.
THIS CERTIFIES THAT _____________________ is the registered owner of
the pro rata share evidenced by this Certificate in certain monthly
distributions on the Certificates specified above from payments on and proceeds
of the assets contained in the Pool consisting of a pool of fixed rate one- to
four-family first mortgage loans (the "Mortgage Loans"). The Pool was created
pursuant to a Pooling and Servicing Agreement dated as specified above (the
"Agreement") among Headlands Mortgage Securities, Inc., as sponsor (the
"Sponsor"), Headlands Mortgage Company, as master servicer and seller (in such
capacities, the "Master Servicer" and the "Seller"), and [ ], as Trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made on
the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following such 25th day (the "Distribution Date"),
commencing on the first Distribution Date specified above, to the Person in
whose name this Certificate is registered at the close of business on the Record
Date, of an amount equal to the pro rata share evidenced by this Certificate of
the aggregate amount required to be distributed to Holders of Certificates
specified above pursuant to the Agreement.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto at the address appearing in the
Certificate Register, or upon written request by the Certificateholder, by wire
transfer (in the case
D-2
of any Holder of Certificates entitled to such form of payment as provided in
the Agreement) or by such other means of payment as such Person and the Trustee
shall agree. Except as otherwise provided in the Agreement, the final
distribution on this Certificate will be made in the applicable manner described
above, after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
maintained for that purpose by the Trustee in [ ].
[No transfer of a Certificate of this Class shall be made unless such
transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under said Act and such laws. In the event that a
transfer is to be made in reliance upon an exemption from the Securities Act and
such laws, in order to assure compliance with the Securities Act and such laws,
the Certificateholder desiring to effect such transfer and such
Certificateholder's prospective transferee shall each certify to the Trustee in
writing the facts surrounding the transfer. In the event that such a transfer is
to be made within three years from the date of the initial issuance of
Certificates pursuant hereto, there shall also be delivered (except in the case
of a transfer pursuant to Rule 144A of the Securities Act) to the Trustee an
Opinion of Counsel that such transfer may be made pursuant to an exemption from
the Securities Act and such state securities laws, which Opinion of Counsel
shall not be obtained at the expense of the Trustee, the Seller, the Master
Servicer or the Depositor. The Holder hereof desiring to effect such transfer
shall, and doe 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 this Certificate shall be made unless the Trustee shall
have received either (i) a representation letter from the transferee of such
Certificate, acceptable to and in form and substance satisfactory to the Trustee
and the Master Servicer, to the effect that such transferee is not an employee
benefit plan subject to Section 406 of ERISA, nor a person acting on behalf of
any such plan, or (ii) in the case of any such this Certificate presented for
registration in the name of an employee benefit plan subject to ERISA, and
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan, an Opinion of Counsel satisfactory
to the Trustee and the Sponsor to the effect that the purchase or holding of
such this Certificate will not result in the assets of the
D-3
Pool being deemed to be "plan assets" and subject to the prohibited transaction
provisions of ERISA and the Code and will not subject the Trustee or the
Master Servicer to any obligation in addition to those undertaken in the
Agreement.
This Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose unless manually countersigned by any
authorized signatory of the Trustee.
D-4
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated:
HEADLANDS MORTGAGE SECURITIES,
INC.
By:__________________________
Name:
Title:
Countersigned:
By_______________________________
Authorized Signatory of the
Trustee, as defined herein
D-5
EXHIBIT E
MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199___-__
This Certificate is one of a duly authorized issue of Certificates
designated Mortgage Pass-Through Certificates (the "Certificates"), Series
199___-__, and representing a beneficial ownership interest in (i) the Mortgage
Loans, and the proceeds thereof, (ii) property acquired by the Pool by
foreclosure or deed in lieu of foreclosure or otherwise, and (iii) the interest
of the Certificateholders in any insurance policies in respect of the Mortgage
Loans.
The Certificates are limited in right of payment to certain payments
on, and collections in respect of, the Mortgage Loans, all as more specifically
set forth in the Agreement. Each Certificateholder, by its acceptance of this
Certificate, agrees that it will look solely to the funds on deposit in the
Certificate Account for payment hereunder and that the Trustee is not personally
liable to the Certificateholders for any amount payable under this Certificate
or the Agreement or, except as expressly provided in the Agreement, subject to
any liability under the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Sponsor, the Master Servicer, the Trustee and the Seller and the rights of the
Certificateholders under the Agreement at any time by the Sponsor, the Seller,
the Master Servicer and the Trustee with the consent of the Holders of
Certificates evidencing interests aggregating not less than 66-2/3% of all
Voting Rights. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is
E-1
registrable in the Certificate Register of the Trustee upon surrender of this
Certificate for registration of transfer at the office or agency of the Trustee
in [ ], accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Certificate Registrar duly executed by the holder hereof
or such holder's attorney duly authorized in writing, and thereupon one or
more new Certificates of authorized denominations evidencing the same aggregate
Percentage Interest in the Pool will be issued to the designated transferee or
trans-ferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of authorized denominations evidencing the
same aggregate Percentage Interest, as requested by the Holder surrendering the
same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Sponsor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Sponsor, the Master Servicer, the Trustee or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Sponsor, the
Master Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement and the
Pool created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon the earlier of (a) the
repurchase by the Master Servicer of all Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Pool at a price
determined as provided in the Agreement, (b) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Pool or the disposition of all property acquired upon
foreclosure or by deed in lieu of foreclosure of any Mortgage Loan, or (c) the
Distribution Date in ____________________. The exercise of the right of the
Master Servicer to repurchase all the Mortgage Loans and property in respect of
Mortgage Loans will result in early retirement of the Certificates, the right of
the Master Servicer to repurchase being subject to the Pool Scheduled Principal
Balance of the Mortgage Loans at the time of repurchase being less than [ ]
E-2
percent of the aggregate of the Cut-Off Date Pool Scheduled Principal Balance of
such Mortgage Loans.
This Certificate shall be governed by and construed in accordance with
the laws of the State of New York.
E-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto -------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
--------------------.
(Please print or typewrite name and address including postal zip
code of assignee)
the beneficial interest evidenced by the within Mortgage Pass-Through
Certificate and hereby authorizes the transfer of registration of such interest
to assignee on the Certificate Register of the Pool.
I (We) further direct the Certificate Registrar to issue a new Certificate of
a like denomination and Class, to the above named assignee and deliver such
Certificate to the following address:
----------------------------------------------------------------.
Dated:
-------------------------------------
Signature by or on behalf of assignor
-------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________
---------------------------------------------------------------.
for the account of______________________________________________
account number ______________, or, if mailed by check, to ______
---------------------------------------------------------------.
Applicable statements should be mailed to ______________________
---------------------------------------------------------------.
This information is provided by ____________________________, the assignee
named above, or __________________________________, as its agent.
E-4
EXHIBIT F
MORTGAGE LOAN SCHEDULE
F-1
EXHIBIT G
SELLER'S AGREEMENT FOR
MORTGAGE LOANS
Dated as of _____________, 199__
HEADLANDS MORTGAGE COMPANY
as Seller
and
HEADLANDS MORTGAGE SECURITIES, INC.
as Purchaser
G-1
CONTENTS
Section Page
Statement of the Transaction......................................... 1
ARTICLE I DEFINITIONS.......................................... 2
ARTICLE II CONVEYANCE OF THE MORTGAGE LOANS..................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES....................... 6
ARTICLE IV ACKNOWLEDGEMENTS..................................... 8
ARTICLE V MISCELLANEOUS........................................ 9
Schedule A - Mortgage Loan Schedule
G-i
Statement of the Transaction
Subject to the terms and conditions hereof, Headlands Mortgage
Company, (the "Seller") agrees to sell and transfer to Headlands Mortgage
Securities, Inc. (the "Purchaser") and the Purchaser hereby agrees to purchase
and accept from the Seller, those mortgage loans listed in the Mortgage Loan
Schedule attached hereto as Schedule A, having been identified thereon as being
sold by it (the "Mortgage Loans"), having aggregate Principal Balances on the
Cut-Off Date of approximately $___________ at the respective Mortgage Loan
Purchase Price.
Each Mortgage Loan will be serviced by the Master Servicer for
the related Master Servicing Fee indicated on Schedule A. The Mortgage Loans
will be serviced in accordance with the terms of the Pooling Agreement.
Simultaneously with the sale of the Mortgage Loans to the
Purchaser on the Closing Date, the Mortgage Loans will be sold to a trust in
exchange for the Mortgage Pass-Through Certificates, Series 199___-__ (the
"Certificates").
The Seller agrees to cooperate and use its best efforts to
facilitate the execution and delivery of the Pooling Agreement (as defined
herein) pursuant to which the Certificates will be issued.
The following sets forth the terms and conditions of the
contemplated transaction, to which the parties have agreed, as evidenced by the
execution of this Agreement.
G-1
ARTICLE I
DEFINITIONS
Section 1.01 Whenever used in the Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings (capitalized terms not otherwise defined herein are used
herein with the meanings assigned thereto in the Pooling Agreement):
Agreement: This Seller's Agreement for Mortgage Loans
including all schedules, amendments and supplements hereto.
Closing Date: _____________, 199__.
Mortgage File: As to each Mortgage Loan:
(a) the original Mortgage Note, endorsed without recourse to
the order of the Trustee and showing an unbroken chain of endorsements from the
original payee thereof to the Person endorsing it to the Trustee, (b) the
original Mortgage, which shall have been recorded, with evidence of such
recording indicated thereon, (c) the assignment (which may be in the form of a
blanket assignment if permitted in the jurisdiction in which the Mortgaged
Property is located) to the Trustee of the Mortgage, with evidence or recording
with respect to each Mortgage Loan in the name of the Trustee thereon, (d) all
intervening assignments of the Mortgage, if any, to the extent available to the
Sponsor with evidence of recording thereon, (e) the original or a copy of the
policy or certificate of primary mortgage guaranty insurance, to the extent
available, if any, (f) the original policy of title insurance or mortgagee's
certificate of title insurance or commitment or binder for title insurance and
(g) originals of all assumption and modification agreements, if any.
Mortgage Loan Purchase Price: $________________ plus
accrued interest from ____________, 199__ at the weighted average
Mortgage Interest Rate to, but not including, the Closing Date.
Mortgage Loans: Each Mortgage Loan identified on the
Mortgage Loan Schedule attached as Schedule A hereto.
Mortgage Loan Schedule: As of any date of determination, the
schedule of Mortgage Loans included in the Pool. The initial schedule of
Mortgage Loans attached hereto as Schedule A, which sets forth the following
information as to each Mortgage Loan: (i) the Mortgage Loan identifying number;
(ii) the Mort-gagor's name; (iii) the street address of the Mortgaged Property,
including the state; (iv) the property type of the related Mor-
G-2
tgaged Property; (v) the original number of months to maturity; (vi) the
Loan-to-Value Ratio as of the Cut-Off Date; (vii) the Mortgage Interest
Rate as of the date of origination; (viii) the scheduled amount of the monthly
installment of principal and interest; (ix) the original principal amount; (x)
the Cut-Off Date Principal Balance; (xi) identifying number of related Servicer,
and (xii) the related Servicing Fee Rate and the Master Servicing Rate.
Pooling Agreement: The Pooling and Servicing Agree-
ment, dated as of __________________, 199__ among the Purchaser,
as Sponsor, Headlands Mortgage Company, as Seller and Master
Servicer and the Trustee, as Trustee.
Person: Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Master Servicer: Headlands Mortgage Company
Trustee: [ ]
Underwriting Agreement: The Underwriting Agreement,
dated _______________________, 199__, between Headlands Mortgage
Securities, Inc. and [ ].
G-3
ARTICLE II
CONVEYANCE OF THE MORTGAGE LOANS
Section 2.01 Delivery and Examination of Mortgage
File.
Conveyance of Mortgage Loans. The Seller, concurrently with
the execution and delivery of this Agreement, does hereby sell, transfer,
assign, set over and otherwise convey to the Purchaser without recourse all the
right, title and interest of the Seller in and to the related Mortgage Loans and
the related Mortgage Notes, including all interest and principal received on or
with respect to such Mortgage Loans (other than payments of principal and
interest due and payable on the Mortgage Loans on or before the Cut-Off Date).
In connection with such transfer and assignment, the Seller
does hereby deliver to the Purchaser or the Trustee as the Purchaser's designee
the Mortgage File pertaining to each Mortgage Loan so transferred and assigned;
provided however, that in any instances where the original recorded Mortgage or
interim recorded assignments of Mortgage cannot be delivered by the Seller to
the Trustee prior to or concurrently with the execution and delivery of this
Agreement, due to a delay in connection with recording, the Seller may in lieu
of delivering such original recorded Mortgage or interim assignment, deliver to
the Purchaser or the Trustee a copy thereof, provided that the Seller certifies
that the original Mortgage or interim assignment has been delivered to a title
insurance company for recordation after receipt of its policy of title insurance
or binder therefor or to the appropriate public recording office in the
applicable jurisdiction. In all such instances, the Seller will deliver or cause
to be delivered the original recorded Mortgage or interim assignment to the
Trustee promptly upon receipt thereof. The Seller shall exercise its best
reasonable efforts to deliver or cause to be delivered to the Trustee within 180
days of the execution and delivery of this Agreement the original title
insurance policy with respect to each Mortgage Loan assigned to the Purchaser
pursuant to this Section 2.01.
In the case of Mortgage Loans which have been prepaid in full
after the Cut-Off Date and prior to the date of execution and delivery of this
Agreement, the Seller, in lieu of delivering the above documents to the
Purchaser or the Trustee, shall make the deposit required by Section 3.11 of the
Pooling Agreement and shall deliver to the Trustee a certification of a
Servicing Officer of the nature set forth in Section 3.11 of the Pooling
Agreement.
G-4
Section 2.02 Acceptance by Purchaser.
The Purchaser acknowledges receipt of the documents referred to in
Section 2.01.
Section 2.03 Closing.
On the Closing Date the Purchaser shall pay to the Seller the
applicable Mortgage Loan Purchase Price for the related Mortgage Loans by wire
transfer of immediately available funds or such other method of payment as the
parties hereto may agree.
Section 2.04 Survival of Representations and Warran-
ties, Repurchase Obligation of the
Seller.
It is understood and agreed that the representations and
warranties set forth in Article III are continuing representations and
warranties and shall survive delivery and release of the Mortgage Files to the
Purchaser or its designee and shall inure to the benefit of the Purchaser, the
Master Servicer, any holder of Certificates representing an undivided interest
in the Mortgage Loans, or the Trustee (referred to herein collectively as
"Interested Persons"), notwithstanding any restrictive or qualified endorsement
on any Mortgage Note or any examination of the Mortgage File.
G-5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the
Seller.
(a) The Seller hereby repeats and affirms the representations
and warranties made to the Purchaser in the Pooling Agreement as if
such representations and warranties were set forth herein;
(b) The Seller is a corporation, validly existing and in good
standing under the laws of California; the Seller has the power and
authority to execute, deliver and perform this Agreement; the
execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by
the Seller and the consummation of the transactions contemplated hereby
have been duly and validly authorized; this Agreement evidences the
valid, binding and enforceable obligation of the Seller; and all
requisite corporate action has been taken by the Seller to make this
Agreement valid and binding upon the Seller in accordance with its
terms.
(c) No approval of the transactions contemplated by this
Agreement from any federal or state regulatory authority having
jurisdiction over the Seller is required or, if required, such approval
has been or, prior to the Closing Date, will be obtained. There are no
actions or proceedings pending, or affecting the Seller which would
adversely affect its ability to perform hereunder.
(d) The consummation of the transactions contemplated by this
Agreement are in the ordinary course of business of the Seller and will
not result in the breach of any term or provision of the charter or
by-laws of the Seller 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 Seller or its
property is subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Seller or its
property is subject.
(e) Neither the Agreement nor any statement, report or other
document furnished or to be furnished pursuant to the Agreement or in
connection with the transaction contemplated hereby contains any untrue
statement of fact or omits to
G-6
state a fact necessary to make the statements contained therein not
misleading.
(f) The collection practices used by the Seller with respect
to each Mortgage Note and Mortgage have been in all respects legal,
proper, prudent and customary in the mortgage servicing business. With
respect to escrow deposits and payments, there exist no deficiencies in
connection therewith for which customary arrangements for repayment
thereof have not been made and no escrow deposits or payments or other
charges or payments due to the Seller have been capitalized under any
Mortgage or the related Mortgage Note.
[(g) The Seller has fully complied, and will continue to
maintain full compliance with the provisions of Section 13(e) of the
Federal Deposit Insurance Act (12 U.S.C.
ss. 1823(E)).]
The Seller agrees to comply with the provisions of Section
2.03 of the Pooling Agreement in respect of a breach of any of the
representations and warranties set forth in this Section 3.01.
G-7
ARTICLE IV
ACKNOWLEDGEMENTS
Section 4.01 Acknowledgement of the Purchaser.
The Purchaser hereby acknowledges the receipt of the Mortgage
Loans in consideration for the payment of the Mortgage Loan Purchase Price.
Section 4.02 Acknowledgement of the Seller.
The Seller hereby acknowledges the receipt of the respective
Mortgage Loan Purchase Price in consideration for the sale of the Mortgage
Loans.
G-8
ARTICLE V
MISCELLANEOUS
Section 5.01 Recordation of Agreement.
This Agreement or a memorandum hereof is subject to
recordation in all appropriate public offices for real property records in each
state and county or other comparable jurisdiction in which any of the Mortgaged
Property is situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by either the Seller and at the
Seller's expense, on direction by Purchaser, but only upon direction preceded or
accompanied by the advice of counsel to Purchaser to the effect that such
recordation is necessary to protect the interests of Purchaser in the Mortgage
Loans.
Section 5.02 Notices.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed by registered or
certified mail, return receipt requested, or, if by other means, when received
by the other party or at the address, in the case of the Seller: Headlands
Mortgage Company, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Attn: [ ]; in the case of the Purchaser: Headlands Mortgage Securities,
Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: [
], or such other address as may hereafter be furnished to the other party by
like notice. Any such demand, notice or communication hereunder shall be deemed
to have been given on the date delivered to the premises of the addressee (as
evidenced, in the case of registered or certified mail, by the date noted on the
return receipt).
Section 5.03 Separability Clause.
Any provision, representation or warranty of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unen-forceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereto waive any provision of law which
prohibits or renders unenforceable any provision hereof.
G-9
Section 5.04 Counterparts.
For the purpose of facilitating the proving 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 constitute but one and
the same instrument.
Section 5.05 Place of Delivery and Governing Law.
The Agreement shall be deemed in effect when a fully executed
counterpart thereof is received by Purchaser in [New York]. The 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.
Section 5.06 Remedies Cumulative; No Waiver.
All rights and remedies of the Purchaser or any assignee of
the Purchaser under the Agreement shall, to the extent permitted by law, be
deemed cumulative and not exclusive of any thereof or of any other rights and
remedies available to the Purchaser or such assignee to exercise any right or
power accruing upon any default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any such
default or an acquiescence therein; and every right and remedy arising under
this Agreement or by law to Purchaser or such assignee may be exercised from
time to time, and as often as shall be deemed expedient, by Purchaser or such
assignee.
Section 5.07 Miscellaneous.
This Agreement may be amended or supplemented from time to
time only with the written consent of both the Seller and the Purchaser or any
assignee of the Purchaser and the Rating Agency. This Agreement contains the
entire understanding and agreement of the parties and supersedes and
incorporates all prior negotiations, understandings and agreements which are
fully merged herein.
Section 5.08 Agreement of the Seller.
The Seller agrees to execute and deliver such instruments and
take such actions as Purchaser or any assignee of Purchaser may, from time to
time, reasonably request in order to effectuate the purpose and to carry out the
terms of this Agreement.
G-10
Section 5.09 Successors and Assigns.
This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, the Purchaser, and the respective successors and
assigns of the Seller, the Purchaser and any Purchaser's designee. The parties
hereto acknowledge that the Purchaser is acquiring the Mortgage Loans for the
purpose of contributing them to a trust that will issue Certificates
representing undivided interests in the Mortgage Loans. As an inducement to the
Purchaser to purchase the Mortgage Loans, the Seller acknowledges and consents
to the assignment to the Trustee by the Purchaser of all of the Purchaser's
rights against the Seller hereunder in respect of the Mortgage Loans sold by it
to the Purchaser and that the enforcement or exercise of any right or remedy
against the Seller hereunder by the Trustee or to the extent permitted under the
Pooling Agreement shall have the same force and effect as if enforced or
exercised by Purchaser directly.
G-11
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
their names to be signed hereto by their respective officers thereunto duly
authorized and their respective seals, duly attested, to be hereunto affixed,
all as of the day and year first above written.
Dated as of _______________, 199__
HEADLANDS MORTGAGE COMPANY
as Seller
By
Name:
Title:
HEADLANDS MORTGAGE SECURITIES, INC.
as Purchaser
By
Name:
Title:
G-12
State of [ ])
) ss.:
County of [ ])
On the [ ] day of _________________, 199__ before me, a notary
public in and for the State of ________________, personally appeared
___________________, known to me who, being by me duly sworn, did depose and say
that he is an Authorized Signatory of Headlands Mortgage Company, a California
corporation, one of the parties that executed the foregoing instrument; and that
s/he signed their name thereto by order of the Board of Directors of such
corporation.
Notary Public
[Notarial Seal]
G-13
State of [ ])
) ss.:
County of [ ])
On the [ ] day of _______________, 199__ before me, a notary
public in and for the State of [ ], personally appeared ___________________,
known to me who, being by me duly sworn, did depose and say that he is a [ ] of
Headlands Mortgage Securities, Inc., a Delaware corporation, one of the parties
that executed the foregoing instrument; and that s/he signed their name thereto
by order of the Board of Directors of such corporation.
Notary Public
[Notarial Seal]
G-14
Seller's Agreement
Schedule A
Mortgage Loan Schedule
Cut-Off Date: _____________, 199__
[The Mortgage Loan Schedule is attached as
Exhibit F to the Pooling and Servicing Agreement]
\ G-15
EXHIBIT H
REQUEST FOR RELEASE OF DOCUMENTS
--------------------------------------------------------------------------------
[ ]
[ ]
PARTICIPANT NAME AND ADDRESS DATE:
[ ]
--------------------------------------------------------------------------------
IN CONNECTION WITH THE ADMINISTRATION OF THE POOL OF MORTGAGES HELD BY YOU IN
CUSTODY FOR [ ], THE UNDERSIGNED PARTICIPANT REQUESTS THE RELEASE OF MORTGAGE
DOCUMENTS DESCRIBED BELOW FOR THE REASON INDICATED.
--------------------------------------------------------------------------------
MORTGAGOR'S NAME, ADDRESS AND ZIP CODE LOAN NO.
POOL ID
--------------------------------------------------------------------------------
ORIGINAL MORTGAGE AMOUNT............... $___________
DATE OF ORIGINAL MORTGAGE............... ___________
INITIAL INTEREST RATE................... ___________
PAID THROUGH DATE....................... ___________
--------------------------------------------------------------------------------
REASON FOR REQUESTING DOCUMENTS AMOUNT SETTLEMENT DATE
[ ] MORTGAGE PAID IN FULL $________ _______________
[ ] FORECLOSURE $________ _______________
[ ] EXHIBITS ATTACHED FOR SUBSTITUTION $________ _______________
[ ] OTHER (explain)___________________ $________ _______________
--------------------------------------------------------------------------------
WE CERTIFY THAT ALL AMOUNTS RECEIVED OR TO BE RECEIVED IN CONNECTION WITH SUCH
PAYMENT WHICH ARE REQUIRED TO BE CREDITED TO THE PROTECTED ACCOUNT OR DEPOSITED
TO THE CERTIFICATE ACCOUNT HAVE BEEN OR, WITHIN TWO BUSINESS DAYS, RECEIPT OF
SUCH PAYMENT WILL BE CREDITED OR DEPOSITED.
-------------------------------------------------- -------------------
SIGNATURE DATE
--------------------------------------------------
PARTICIPANT AUTHORIZED SIGNATURE
--------------------------------------------------
CUSTODIAN'S RELEASE AUTHORIZATION
-------------------------------------------------- --------------------
NAME AND TITLE SIGNATURE DATE
--------------------------------------------------------------------------------
TO CUSTODIAN: PLEASE ACKNOWLEDGE BELOW BY YOUR SIGNATURE THE EXECUTION OF THE
ABOVE REQUEST. YOU MUST RETAIN THIS FORM FOR YOUR FILES. A COPY OF THIS FORM,
SIGNED AND DATED BY YOU, SHALL BE FORWARDED TO: [ ]
H-2
DOCUMENT RETURNED TO CUSTODY:
----------------------------- -------------
SIGNATURE DATE
EXHIBIT I
TRANSFER AFFIDAVIT
STATE OF [ ])
:ss.:
COUNTY OF [ ])
The undersigned, being first duly sworn, deposes and says as follows:
1. The undersigned (the "Transferee") is acquiring a beneficial
ownership interest in Headlands Mortgage Securities, Inc., Mortgage Pass-Through
Certificates, Series 199__-__, Residual Certificates, issued pursuant to the
Pooling and Servicing Agreement, dated as of ____________, 199__ (the
"Agreement"), by and among Headlands Mortgage Securities, Inc., as Sponsor,
Headlands Mortgage Company, as Master Servicer and Seller, and [
], as Trustee. Capitalized terms used, but not defined herein,
shall have the meanings ascribed to such terms in the Agreement. The Transferee
has authorized the undersigned to make this affidavit on behalf of the
Transferee.
2. The Transferee is, as of the date hereof, and will be, as of the
date of any Transfer, a Permitted Transferee. The Transferee is acquiring the
Residual Certificates either (i) for its own account or (ii) as nominee, trustee
or agent for another Person and has attached hereto an affidavit from such
Person in substantially the same form as this affidavit. The Transferee has no
knowledge that any such affidavit is false.
3. The Transferee has been advised of, and understands that (i) a tax
shall be imposed on Transfers of Residual Certificates to Persons that are not
Permitted Transferees; (ii) such tax is imposed on the transferor, or, if such
Transfer is through an agent (which includes a broker, nominee or middleman) for
a Person that is not a Permitted Transferee, on the agent; and (iii) the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
subsequent Transferee furnished to such Person an affidavit that such subsequent
Transferee is a Permitted Transferee and, at the time of the Transfer, such
Person does not have actual knowledge that the affidavit is false.
4. The Transferee has been advised and understands that a tax shall be
imposed on a "pass-through entity" holding Residual Certificates if at any time
during the taxable year of the pass-through entity a Person that is not a
Permitted Transferee is the record holder of an interest in such entity. The
Transferee understands that no tax will be imposed for any period for which
I-1
the record holder furnishes to the pass-through entity an affidavit stating that
the record holder is a Permitted Trans- feree and the pass-through entity does
not have actual knowledge that such affidavit is false. (For this purpose, a
"pass-through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives and, except as may be provided in Treasury Regulations,
persons holding interests in pass-through entities as nominees for other
Persons.)
5. The Transferee has reviewed the provisions of Section 6.02 of the
Agreement, which is incorporated herein by reference, and understands the legal
consequences of the acquisition of the Residual Certificates including, without
limitations, the restrictions on subsequent Transfers and the provisions
regarding voiding the Transfer and mandatory sales. The Transferee expressly
agrees to be bound by and to abide by the provisions of Section 6.02 of the
Agreement. The Transferee understands and agrees that any breach of any of the
representations included herein shall render the Transfer to the Transferee
contemplated hereby null and void.
6. The Transferee does not have the intention to impede the assessment
or collection of any federal, state or local income taxes legally required to be
paid with respect to the Residual Certificate.
7. The Transferee agrees to require a Transfer Affidavit from any
Person to whom the Transferee attempts to make a Transfer and in connection with
any Transfer by a Person for whom the Transferee is acting as nominee, trustee
or agent, and the Transferee will not make any Transfer or cause any Transfer to
be made to any Person that the Transferee knows is not a Permitted Transferee.
8. The Transferee taxpayer identification number is
--------------.
I-2
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, by its duly authorized officer, this __th day of
_______, 199_.
By: ___________________________
Name:
Title:
I-3
EXHIBIT 1
Certain Definitions from Article I of the Agreement
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.
Permitted Transferee: Any Person other than (i) the United States, or
any State or any political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives described in Code section
521), (iv) rural electric and telephone cooperatives described in Code section
1381(a)(2)(C), (v) any Non-U.S. Person and (vi) any other Person so designated
by the Master Servicer based on an Opinion of Counsel to the effect that any
transfer to such Person may cause the Pool or any other Holder of a Residual
Certificate to incur tax liability that would not be imposed other than on
account of such transfer. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
I-4
EXHIBIT 2
Excerpt from Section 6.02 of the Agreement
Each Person who has or who acquires any Ownership Interest in a
Residual 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 Sponsor 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 Residual Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual 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 Residual
Certificate unless such Ownership Interest is a pro rata undivided
interest.
(iii) No Ownership Interest in a Residual Certificate may be
transferred without the express written consent of the Trustee. In
connection with any proposed transfer of any Ownership Interest in a
Residual Certificate, the Trustee shall as a condition to such consent,
require delivery to it, in form and substance satisfactory to it, each
of the following:
A. an affidavit in the form of Exhibit I 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 Residual 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 Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership Interest
in a Residual Certificate in violation of the provisions of this
Section 6.02 shall be absolutely null and
I-5
void and shall vest no rights in the purported transferee. If any
purported transferee shall, in violation of the pro visions of this
Section 6.02, become a Holder of a Residual Certificate, then
the prior Holder of such Certificate that is a Permitted
Transferee shall, upon discovery that the registration of transfer
of such Residual Certificate was not in fact permitted by this Section
6.02, be restored to all rights as Holder thereof retroactive to the
date of registration of transfer of such Residual Certificate. The
Trustee shall be under no liability to any Person for any
registration of transfer of a Residual Certificate that is in fact not
permitted by this Section 6.02 or for making any distributions due on
such Certificate to the Holder thereof or taking any other action with
respect to such Holder under the provisions of the Agreement so long as
the transfer was not registered upon the express written consent of the
Trustee. The Trustee shall be entitled to recover from any Holder of a
Residual Certificate that was in fact not a Permitted Transferee at the
time such distributions were made all distributions made on such
Residual Certificate. Any such distributions so recovered by the
Trustee shall be distributed and delivered by the Trustee to the prior
Holder of such Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the
right, without notice to the Holder of such Residual Certificate or any
other Person having an Ownership Interest therein, to notify the
Underwriter to arrange for the sale of such Residual Certificate to a
purchaser selected by the Trustee on such terms as the Trustee may
choose. Such purchaser may be the Trustee itself or any affiliate of
the Trustee. The proceeds of such sale, net of commissions (which may
include commissions payable to the Trustee or its affiliates), expenses
and taxes due, if any, will be remitted by the Trustee to the previous
Holder of such Residual Certificate that is a Permitted Transferee,
except that in the event that the Trustee determines that the Holder of
such Residual Certificate may be liable for any amount due under this
Section 6.02 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 Residual
Certificate as a result of its exercise of such discretion.
I-6
EXHIBIT J
[FOR CLASSES M-1, B-1 AND B-2]
INVESTMENT LETTER
_________________ __, 19__
[ ]
[Trustee]
Re: Purchase of Headlands Mortgage Securities, Inc.
Mortgage Pass-Through Certificates, Series 19__-__
Class M-1, B-1 and B-2 Certificates
Ladies and Gentlemen:
In connection with our purchase of $_____________ of the Class ___
Certificates (the "Certificates"), we hereby represent to the Trustee that we
are not an employee benefit plan within the meaning of, and subject to, Section
406 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), nor a person acting on behalf of any such plan.
Very truly yours,
[Transferee]
By:______________________
Authorized Officer
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[FOR CLASS B-1 AND B-2]
INVESTMENT LETTER
____________ __, 19__
[Trustee]
Re: Purchase of Headlands Mortgage Securities, Inc.
Mortgage Pass-Through Certificates, Series 199___-__
Class B-1 and B-2 Certificates
Ladies and Gentlemen:
In connection with our purchase of $_____________ of the Class [ ]
Certificates (the "Certificates") we confirm that (a) we understand that the
Certificates are not being registered under the Securities Act of 1933, as
amended (the "Act"), or any state securities laws ("Blue Sky Laws") and are
being sold to us in a transaction that is exempt from the registration
requirements of the Act and any such laws, (b) we are an "accredited investor",
as defined in Regulation D under the Act, and have such knowledge and experience
in financial and business matters that we are capable of evaluating the merits
and risks of investments such as the Certificates, (c) we confirm that we are
acquiring the Certificates for investment for our own account and not with a
view to any distribution of such Certificates (but without prejudice to our
right at all times to sell or otherwise dispose of the Certificates in
accordance with clause (f) below and otherwise in accordance with Section 6.02
of the Pooling and Servicing Agreement, dated as of ________________, 199__,
among Headlands Mortgage Securities, Inc. (the "Sponsor"), Headlands Mortgage
Company, as master servicer, and seller (in such capacities, the "Master
Servicer" and the "Seller"), and you, as Trustee, (the "Pooling Agreement"), (d)
we have discussed with our advisors, counsel and accountants the legal, tax and
financial implications of investment in the Certificates and have undertaken our
own independent analysis of the investment in the Certificates, and our decision
to invest in the Certificates is not based on any representation (other than
those contained in the Pooling Agreement, (e) we have not offered or sold any
Certificates to, or solicited offers to buy any Certificates from, any person,
or otherwise approached or negotiated with any person with respect thereto, or
taken any other action which would result in a violation of Section 5 of the Act
or any
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applicable Blue Sky Law, (f) we will not sell, transfer or otherwise dispose
of any Certificates unless (1) such sale, transfer or other disposition is
made pursuant to an effective registration statement under the Act and any
applicable Blue Sky Law or is exempt from such registration requirements, and
if requested we will at our expense provide an opinion of counsel satisfactory
to Trustee that such sale, transfer or other disposition may be made pursuant
to an exemption from the Act and any applicable Blue Sky Laws and (2) the
purchaser or transferee of such Certificate has executed and delivered to
you a letter to substantially the same effect as this letter, (g) none of the
Sponsor, the Seller or the Trustee shall be obligated to register the
Certificates under the Act or any Blue Sky Laws or to take any action not
otherwise required under the Pooling Agreement to permit the sale, transfer
or other disposition of the Certificates and (h) we have not relied upon the
Sponsor or the Master Servicer or upon any information or materials prepared
or furnished by [ ] or their agents or counsel in determining whether our
investment in the Certificates is legal for us under applicable federal
and/or state laws and regulations.
We hereby represent to, and covenant with, the Seller, the Master
Servicer and the Trustee that we are not an employee benefit plan within the
meaning of, and subject to, Section 406 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), nor a person acting on behalf of any
such plan.
Very truly yours,
[Transferee]
By:______________________
Authorized Officer
J-3
EXHIBIT K
[ ]
PRINCIPAL AND INTEREST DISTRIBUTION SUMMARY
---------------------- ---------------------
Trustee Cut-Off Date
---------------------- ---------------------
Address Reporting Month
---------------------- [ ]
City, State, Zip Code
---------------------- ---------------------
Attention (___) ___-____
---------------------------------------------------------------------------
REMITTANCE:
Principal $
Principal Curtailments $
Liquidation $
Adjustments $
Total Principal $
Interest Distribution
Class A-1 $
Class M-1 $
Class B-1 $
Class B-2 $
Total Interest Distribution Amount $
Principal Distribution
Class A-1 $
Class M-1 $
Class B-1 $
Class B-2 $
Total Principal & Interest Distribution Amount $
OUTSTANDING BALANCES: Security Balance
Beginning Security Balance
Less: Principal Payments, Curtailments & Adj.
Liquidation & Repurchase ____________________
Ending Security Balance ____________________
MORTGAGE LOANS: No. of Mortgage Loans P&I Constant
Beginning Balance
Less: Liquidation/Repurch
Rolls/Adjustments
Ending Balance
K-1
DELINQUENCIES: No. of Mortgage Loans Principal Amount
30 Days ( 0 to 30)
60 Days (31 to 60)
90+ Days (61 to 90+)
Foreclosure
Real Estate Owned
K-2
[ ] - SERIES 199___-__
TRUSTEE'S CERTIFICATE ACCOUNT STATEMENT
I Status of Certificate Account
As of the Determination Date $
Amount on deposit on Certificate Account
Deposit Date $
Deposits: $
Required deposit to Certificate Account pursuant
to Section 3.11(a) $
P & I $
Curtailments $
Liquidations (proceeds net of expenses) $
Repurchases $
Insurance proceeds $
Monthly Advances $
Fraud Losses $
Withdrawals: $
Payment to Special Hazard Insurer $
Payment to Trustee $
Payment to Pool Insurer $
Reimbursement for Advances (recoverable
and nonrecoverable) $
Total Servicing Compensation $
Reimbursement (for expenses) $
Repurchases (reimbursement)
II Distribution:
Principal $
Interest $
III Total Service Compensation $
Master Service Compensation $
Sub Service Compensation $
IV Security Balance $
V Percentage of Amount Available %
Amount Available $
Security Balance $
VI Percentage of Special Hazard Coverage %
Special Hazard Loss Coverage $
Bankruptcy Coverage Amount $
Fraud Loss Coverage $
Security Balance $
(VII) Amount Held for Future Distribution P/I $
(VIII) Proceeds from Permitted Investments held in
Investment Account $
[ ]
by ___________________________________
K-3
Schedule A
Listings of the following Mortgage Loans:
I. Special Hazard Mortgage Loans
II. Liquidated Deficient Valuation Mortgage Loans
III. Debt Service Reduction Mortgage Loans
IV. Total Fraud Loss - Liquidated Mortgage Loans
V. Liquidated Mortgage Loans (except for those included in I or II)
K-4
Schedule B
(I) Net Special Hazard Losses $
(II) Liquidated Deficient Valuation Losses $
(III) Net Realized Losses
(other than those included in I and II above) $
(IV) Total Fraud Loss - Liquidated Mortgage Loans $
No. of Mortgage Principal Amount
(V) Deficient Valuation
(VI) Debt Service Reduction
Net Prepayment Shortfalls $
Relief Act Reductions $
K-5
Schedule C
Amount to be deposited into Certificate Account $
Fraud Loss Coverage remaining $
Bankruptcy Loss Coverage Amount remaining $
Special Hazard Loss Coverage Amount $
K-6
EXHIBIT L
FORM OF OPINION OF COUNSEL PURSUANT TO SECTION 6.02
Such counsel is of the opinion that the transfer of the
Certificates from _____ to _____ [under the circumstances to
be described in such opinion] is not a transaction requiring
registration of the Certificates under the Securities Act of
1933, as amended, or under any applicable state securities
laws.
or
The Certificates have been registered under the Securities Act
of 1933, as amended, and no action is required to be taken
under applicable state securities laws or that such action has
been taken.
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