POOLING AND SERVICING AGREEMENT
Relating to
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-5
Among
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor,
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller,
ADVANTA MORTGAGE CORP., USA and
OPTION ONE MORTGAGE CORPORATION,
as Servicers
and
THE CHASE MANHATTAN BANK
as Trustee
Dated as of December 1, 1996
CONTENTS
Page
----
CONVEYANCE.......................................................................................... 1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION....................................... 2
Section 1.01 Definitions.............................................................. 2
Section 1.02 Use of Words and Phrases................................................. 34
Section 1.03 Captions; Table of Contents.............................................. 34
Section 1.04 Opinions................................................................. 34
ARTICLE II ESTABLISHMENT AND ORGANIZATION OF THE TRUST.............................. 35
Section 2.01 Establishment of the Trust............................................... 35
Section 2.02 Office................................................................... 35
Section 2.03 Purposes and Powers...................................................... 35
Section 2.04 Appointment of the Trustee; Declaration of Trust......................... 35
Section 2.05 Expenses of the Trust.................................................... 35
Section 2.06 Ownership of the Trust................................................... 36
Section 2.07 Situs of the Trust....................................................... 36
Section 2.08 Miscellaneous REMIC Provisions........................................... 36
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
DEPOSITOR, THE SERVICERS AND THE SELLER; COVENANT
OF SELLER TO CONVEY MORTGAGE LOANS....................................... 38
Section 3.01 Representations and Warranties of the Depositor.......................... 38
Section 3.02 Representations and Warranties of the Servicers.......................... 40
Section 3.03 Representations and Warranties of the Seller............................. 41
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to the
Mortgage Loans In Certain Situations..................................... 44
Section 3.05 Conveyance of the Mortgage Loans, Subsequent Mortgage Loans and
Qualified Replacement Mortgages.......................................... 46
Section 3.06 Acceptance by Trustee; Certain Substitutions of Mortgage Loans;
Certification by Trustee................................................. 49
Section 3.07 Conveyance of the Subsequent Mortgage Loans.............................. 50
ARTICLE IV ISSUANCE AND SALE OF CERTIFICATES........................................ 53
Section 4.01 Issuance of Certificates................................................. 53
Section 4.02 Sale of Certificates..................................................... 53
ARTICLE V CERTIFICATES AND TRANSFER OF INTERESTS................................... 54
Section 5.01 Terms.................................................................... 54
Section 5.02 Forms.................................................................... 54
Section 5.03 Execution, Authentication and Delivery................................... 54
Section 5.04 Registration and Transfer of Certificates................................ 55
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates........................ 57
Section 5.06 Persons Deemed Owners.................................................... 58
Section 5.07 Cancellation............................................................. 58
Section 5.08 Limitation on Transfer of Ownership Rights............................... 58
Section 5.09 Assignment of Rights..................................................... 59
ARTICLE VI COVENANTS................................................................................ 60
Section 6.01 Distributions............................................................ 60
Section 6.02 Money for Distributions to be Held in Trust; Withholding................. 60
Section 6.03 Protection of Trust Estate............................................... 61
Section 6.04 Performance of Obligations............................................... 62
Section 6.05 Negative Covenants....................................................... 62
Section 6.06 No Other Powers.......................................................... 62
Section 6.07 Limitation of Suits...................................................... 62
Section 6.08 Unconditional Rights of Owners to Receive Distributions.................. 63
Section 6.09 Rights and Remedies Cumulative........................................... 63
Section 6.10 Delay or Omission Not Waiver............................................. 64
Section 6.11 Control by Certificate Insurer and Owners................................ 64
Section 6.12 Access to Owners of Certificates' Names and Addresses.................... 64
ARTICLE VII ACCOUNTS, DISBURSEMENTS AND RELEASES.................................................... 65
Section 7.01 Collection of Money...................................................... 65
Section 7.02 Establishment of Accounts;............................................... 65
Section 7.03 Flow of Funds............................................................ 66
Section 7.04 Pre-Funding Account and Capitalized Interest Account..................... 71
Section 7.05 Investment of Accounts................................................... 72
Section 7.06 Reserved................................................................. 72
Section 7.07 Eligible Investments..................................................... 72
Section 7.08 Accounting and Directions by Trustee..................................... 74
Section 7.09 Reports by Trustee....................................................... 75
Section 7.10 Additional Reports by Trustee. ......................................... 78
Section 7.11 Preference Payments...................................................... 78
Section 7.12 Claims Upon the Policies................................................. 79
ARTICLE VIII SERVICING AND ADMINISTRATION OF MORTGAGE LOANS........................... 80
Section 8.01 Servicers and Subservicers............................................... 80
Section 8.02 Collection of Certain Mortgage Loan Payments............................. 81
Section 8.03 Subservicing Agreements Between Servicer and Subservicer................. 82
Section 8.04 Successor Subservicer.................................................... 82
Section 8.05 Liability of Servicer.................................................... 82
Section 8.06 No Contractual Relationship Between Subservicer and Trustee,
Certificate Insurer or the Owners........................................ 82
Section 8.07 Assumption or Termination of Subservicing Agreement by Trustee........... 82
Section 8.08 Principal and Interest Accounts; Escrow Accounts......................... 83
Section 8.09 Delinquency Advances, Servicing Advances and Compensating
Interest................................................................. 85
Section 8.10 Compensating Interest; Purchase of Mortgage Loans........................ 85
Section 8.11 Maintenance of Insurance................................................. 86
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.............. 87
Section 8.13 Realization Upon Defaulted Mortgage Loans................................ 88
Section 8.14 Trustee to Cooperate; Release of Files................................... 89
Section 8.15 Servicing Compensation................................................... 91
Section 8.16 Annual Statement as to Compliance........................................ 91
Section 8.17 Annual Independent Certified Public Accountants' Reports................. 91
Section 8.18 Access to Certain Documentation and Information Regarding the
Mortgage Loans........................................................... 91
Section 8.19 Assignment of Agreement.................................................. 92
Section 8.20 Events of Servicing Termination.......................................... 92
Section 8.21 Resignation of a Servicer and Appointment of Successor................... 94
Section 8.22 Waiver of Past Events of Servicing Termination........................... 97
Section 8.23 Assumption or Termination of Subservicing Agreement By the Trustee....... 97
Section 8.24 Powers and Duties of the Trustee as Successor Servicer................... 97
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Section 8.25 Liability of the Servicers............................................... 98
Section 8.26 Inspections by Certificate Insurer, Trustee and Seller; Errors and
Omissions Insurance...................................................... 98
Section 8.27 Merger, Conversion, Consolidation or Succession to Business of
Servicer................................................................. 99
Section 8.28 Notices of Material Events............................................... 99
Section 8.29 Monthly Servicing Report and Servicing Certificate....................... 99
Section 8.30 Indemnification by the Servicer..........................................101
Section 8.31 Reserved.................................................................102
Section 8.32 Servicing Standard.......................................................102
Section 8.33 No Solicitation..........................................................102
ARTICLE IX TERMINATION OF TRUST.....................................................103
Section 9.01 Termination of Trust.....................................................103
Section 9.02 Termination Upon Option of Owners of Class R Certificates; Servicer
Termination..............................................................103
Section 9.03 Termination Upon Loss of REMIC Status....................................105
Section 9.04 Disposition of Proceeds..................................................106
ARTICLE X THE TRUSTEE..............................................................107
Section 10.01 Certain Duties and Responsibilities......................................107
Section 10.02 Removal of Trustee for Cause.............................................108
Section 10.03 Certain Rights of the Trustee............................................109
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.................111
Section 10.05 May Hold Certificates....................................................111
Section 10.06 Money Held in Trust......................................................111
Section 10.07 Compensation and Reimbursement; No Lien for Fees.........................111
Section 10.08 Corporate Trustee Required; Eligibility..................................111
Section 10.09 Resignation and Removal; Appointment of Successor........................112
Section 10.10 Acceptance of Appointment by Successor Trustee...........................113
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the
Trustee..................................................................114
Section 10.12 Reporting; Withholding...................................................114
Section 10.13 Liability of the Trustee.................................................114
Section 10.14 Appointment of Co-Trustee or Separate Trustee............................115
Section 10.15 Appointment of Custodians................................................116
ARTICLE XI MISCELLANEOUS............................................................117
Section 11.01 Compliance Certificates and Opinions.....................................117
Section 11.02 Form of Documents Delivered to the Trustee...............................117
Section 11.03 Acts of Owners...........................................................118
Section 11.04 Notices, etc. to Trustee.................................................118
Section 11.05 Notices and Reports to Owners; Waiver of Notices.........................119
Section 11.06 Rules by Trustee.........................................................119
Section 11.07 Successors and Assigns...................................................119
Section 11.08 Severability.............................................................119
Section 11.09 Benefits of Agreement....................................................119
Section 11.10 Legal Holidays...........................................................120
Section 11.11 Governing Law; Submission to Jurisdiction................................120
Section 11.12 Counterparts.............................................................120
Section 11.13 Usury....................................................................121
Section 11.14 Amendment................................................................121
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Section 11.15 Paying Agent; Appointment and Acceptance of Duties.......................122
Section 11.16 REMIC Status.............................................................122
Section 11.17 Additional Limitation on Action and Imposition of Tax....................124
Section 11.18 Appointment of Tax Matters Person........................................124
Section 11.19 The Certificate Insurer..................................................125
Section 11.20 Reserved.................................................................125
Section 11.21 Third Party Rights.......................................................125
Section 11.22 Attorneys' Fees..........................................................125
Section 11.23 Notices..................................................................125
SCHEDULE I-A SCHEDULE OF GROUP I MORTGAGE LOANS
SCHEDULE I-B SCHEDULE OF GROUP II MORTGAGE LOANS
SCHEDULE II SCHEDULE OF CLASS S MORTGAGE LOANS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT A-6 FORM OF CLASS A-6 CERTIFICATE
EXHIBIT A-7 FORM OF CLASS A-7 CERTIFICATE
EXHIBIT A-8 FORM OF CLASS A-8 CERTIFICATE
EXHIBIT B-1 FORM OF CLASS S CERTIFICATES
EXHIBIT B-2 FORM OF CLASS R CERTIFICATE
EXHIBIT B-IO FORM OF CLASS B-1O CERTIFICATE
EXHIBIT C FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT D FORM OF CERTIFICATE RE: MORTGAGE LOANS PREPAID
IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF CUSTODIAN'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF SERVICER'S TRUST RECEIPT
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J FORM OF NOTICE
EXHIBIT K FORM OF LIQUIDATION REPORT
EXHIBIT L FORM OF CUSTODIAL AGREEMENT
iv
POOLING AND SERVICING AGREEMENT, relating to AMRESCO RESIDENTIAL
SECURITIES CORPORATION MORTGAGE LOAN TRUST 1996-5, dated as of December 1, 1996,
by and among AMRESCO RESIDENTIAL SECURITIES CORPORATION, a Delaware corporation,
in its capacity as Depositor (the "Depositor"), AMRESCO RESIDENTIAL CAPITAL
MARKETS, INC., a Delaware corporation, in its capacity as the Seller (the
"Seller"), ADVANTA MORTGAGE CORP. USA and OPTION ONE MORTGAGE CORPORATION as the
Servicers (the "Servicers") and THE CHASE MANHATTAN BANK, a New York banking
corporation, in its capacity as the trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish a trust and two subtrusts
and provide for the allocation and sale of the beneficial interests therein and
the maintenance and distribution of the Trust Estate;
WHEREAS, each of the Servicers have agreed to service a portion of the
Mortgage Loans, respectively, which constitute the principal assets of the Trust
Estate;
WHEREAS, all things necessary to make the Certificates, when executed
by the Depositor and authenticated by the Trustee valid instruments, and to make
this Agreement a valid agreement, in accordance with their and its terms, have
been done;
WHEREAS, The Chase Manhattan Bank is willing to serve in the capacity
of the Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation is intended to be a third-party
beneficiary of this Agreement and is hereby recognized by the parties hereto to
be a third-party beneficiary of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Seller, each Servicer and the
Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on
the Class A Certificates, the Class S Certificates, the Class B-1O Certificates
and the Class R Certificates in accordance with their terms, all of the sums
distributable under this Agreement with respect to the Certificates and the
performance of the covenants contained in this Agreement, the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Owners of the Certificates
and the Certificate Insurer, as their interests may appear, all of the
Depositor's right, title and interest in and to any and all benefits accruing to
the Depositor from (a) the Mortgage Loans (other than any principal and interest
payments due thereon on or prior to the Cut-Off Date on any Mortgage Loan that
is current as of the Cut-Off Date) listed in Schedules I-A and I-B to this
Agreement which the Depositor is causing to be delivered to the Trustee herewith
(and all substitutions therefor as provided by Section 3.03, 3.04, 3.05 and
3.06), together with the related Mortgage Loan documents and the Depositor's
interest in any Property which secured a Mortgage Loan but which has been
acquired by foreclosure or deed in lieu of foreclosure, and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of the foregoing; (b)
such amounts as may be held by the Trustee in the Certificate Account, the
Pre-Funding Account and the Capitalized Interest Account together with
investment earnings on such amounts and such amounts as may be held in the name
of the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided herein), whether in
the form of cash, instruments, securities or other properties (including any
Eligible Investments held by the Servicers); (c) the Certificate Insurance
Policies issued under the Insurance Agreement; (d) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the Mortgage
Loans, cash proceeds, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit accounts, rights to payment of any and every
kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Owners and the Certificate Insurer as specified herein;
and (e) certain of the Seller's rights under the Transfer Agreements that are
being assigned to the Trust hereunder ((a)-(e) above shall be collectively
referred to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein to
the best of its ability to the end that the interests of the Owners may be
adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accredited": Accredited Home Lenders, Inc., a California corporation
"Accrual Period": With respect to the Group I Certificates and any
Payment Date, the calendar month immediately preceding the month in which the
Payment Date occurs; a "calendar month" shall be deemed to be 30 days. With
respect to the Class A-8 Certificates and any Payment Date, the period
commencing on the preceding Payment Date (or on the Closing Date in the case of
the first Payment Date) and ending on the day immediately preceding the current
Payment Date. All calculations of interest on the Group I Certificates will be
made on the basis of a 360-day year assumed to consist of twelve 30 day months
and calculations of interest on the Class A-8 Certificates will be made on the
basis of the actual number of days elapsed in the related Accrual Period and a
year of 360 days.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Trust for inclusion in Group I or Group II pursuant to Section 3.07
hereof, notice given in accordance with Section 3.07(b)(i) regarding the
Depositor's designation of Subsequent Mortgage Loans to be sold to the Trust for
inclusion in Group I or Group II and the aggregate Loan Balance of such
Subsequent Mortgage Loans with respect to each such Group.
"Adjusted Pass-Through Rate": A rate equal to the sum of (a)(i) the
Group I Weighted Average Pass-Through Rate in the case of Mortgage Loans in
Group I or (ii) the Class A-8 Pass-Through Rate in the case of Mortgage Loans in
Group II, plus (b) the allocable portion of the Premium Amount and the Trustee
Fee (calculated as an annual rate based on the outstanding principal amount of
the related Certificates) then accrued and outstanding.
"Advanta": Advanta Mortgage Corp. USA, a Delaware corporation.
"Advanta Loans": The Mortgage Loans serviced by Advanta.
2
"Aggregate Servicing Fee Rate": 0.50% per annum.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Annual Loss Percentage (Rolling Twelve Month)": As of any date of
determination thereof and as to the related Mortgage Loan Servicing Group, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
the Realized Losses that occurred in such Mortgage Loan Servicing Group during
the twelve immediately preceding Prepayment Periods and the denominator of which
is the Loan Balances of the Mortgage Loans in the related Mortgage Loan
Servicing Group on the twelfth Determination Date preceding such date.
"Appraised Value": The appraised value of any Property based upon the
appraisal or other valuation made at the time of the origination of the related
Mortgage Loan, or, in the case of a Mortgage Loan which is a purchase money
mortgage, the sales price of the Property at such time of origination, if such
sales price is less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor, the Seller and the Servicers, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any Vice President, Assistant Vice President, Trust
Officer or any Officer of the Trustee located at the Corporate Trust Office.
"Available Funds": Group I Available Funds or Group II Available Funds,
as the case may be.
"Available Funds Shortfall": A Group I Available Funds Shortfall or
Group II Available Funds Shortfall, as the case may be.
"Balloon Loan": A Mortgage Loan with respect to which the principal
balance by its original terms does not fully amortize at final maturity.
"Balloon Payment": The final payment of principal due with respect to a
Balloon Loan.
"BNC": BNC Mortgage, Inc., a California corporation.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in the States of California and Rhode
Island, The City of New York, or in the city in which the principal corporate
trust office of the Trustee is located, are authorized or obligated by law or
executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 7.02(b) hereof and maintained by the
Trustee. Funds on deposit in the Capitalized Interest Account shall be invested
in a trust deposit with the Trustee from the day following the Startup Day until
the end of each Funding Period.
"Carry-Forward Amount": With respect to any Class of the Class A
Certificates for any Payment Date, the sum of (x) the amount, if any, by which
(i) the Class A Distribution Amount allocable to such
3
Class as of the immediately preceding Payment Date exceeded (ii) the amount of
the actual distribution made to the Owners of such Class of the Class A
Certificates on such immediately preceding Payment Date plus (y) 30 days'
interest on the interest portion of such amount at the Pass-Through Rate in
effect with respect to such Class of Class A Certificates.
"Certificate": Any one of the Class A Certificates, the Class S
Certificates, the Class B-IO Certificates or the Class R Certificates, each
representing the interests and the rights described in this Agreement.
"Certificate Account": The certificate account established in
accordance with Section 7.02(a) hereof and maintained in the corporate trust
department of the Trustee; provided that the funds in such account shall not be
commingled with other funds held by the Trustee.
"Certificate Insurance Policies": The financial guaranty insurance
policy (number 22755) dated December 18, 1996 issued by the Certificate Insurer
for the benefit of the Owners of the Group I Certificates pursuant to which the
Certificate Insurer guarantees Insured Payments and the financial guaranty
insurance policy (number 22756) dated December 18, 1996 issued by the
Certificate Insurer for the benefit of the Owners of the Class A-8 Certificates
pursuant to which the Certificate Insurer guarantees Insured Payments and the
financial guaranty insurance policy (number 22755/22756(2)) dated December 18,
1996 issued by the Certificate Insurer for the benefit of the Owners of the
Class S Certificates pursuant to which the Certificate Insurer guarantees
Insured Payments.
"Certificate Insurer": MBIA Insurance Corporation or any successor
thereto, as issuer of the Certificate Insurance Policies.
"Certificate Insurer Default": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required
under a Certificate Insurance Policy in accordance with its terms; or
(b)(i) the entry by a court having jurisdiction of (A) a
decree or order for relief in respect of the Certificate Insurer in an
involuntary case or proceeding under any applicable United States federal or
state bankruptcy, insolvency, rehabilitation, reorganization or other similar
law or (B) a decree or order adjudging the Certificate Insurer as bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
rehabilitation, arrangement, adjustment or composition of or in respect of the
Certificate Insurer under any applicable United States federal or state law, or
appointing a custodian, receiver, liquidator, rehabilitator, assignee, trustee,
sequestrator or other similar official of the Certificate Insurer or of any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs, and the continuance of any such decree or order for relief or any
such other decree or order unstayed and in effect for a period of 60 consecutive
days; or
(ii) the commencement by the Certificate Insurer of a
voluntary case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated as bankrupt or insolvent, or the consent of the
Certificate Insurer to the entry of a decree or order for relief in respect of
the Certificate Insurer in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency case or
proceeding against the Certificate Insurer, or the consent by the Certificate
Insurer to the filing of such petition or to the appointment of or the taking
possession by a custodian, receiver, liquidator,
4
assignee, trustee, sequestrator or similar official of the Certificate Insurer
or of any substantial part of its property, or the marshalling of assets by the
Certificate Insurer to pay debts generally as they become due, or the admission
by the Certificate Insurer in writing of its inability to pay its debts
generally as they become due, or the taking of corporate action by the
Certificate Insurer in furtherance of any such action.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Class A Certificates, the Certificate Principal
Balances thereof, as follows:
Class A-1 Certificates - $42,200,000
Class A-2 Certificates - $29,000,000
Class A-3 Certificates - $16,500,000
Class A-4 Certificates - $17,000,000
Class A-5 Certificates - $15,000,000
Class A-6 Certificates - $15,900,000
Class A-7 Certificates - $14,400,000
Class A-8 Certificates - $550,000,000
The Class S Certificates, the Class B-IO Certificates and the Class R
Certificates do not have a Certificate Principal Balance.
"Class": Any class of the Class A Certificates, the Class S
Certificates, the Class B-10 Certificates or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates and Class A-8
Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates less any amounts actually distributed on such Class A
Certificates with respect to the Class A Distribution Amount pursuant to Section
7.03(c)(v)(D) and (E) hereof with respect to principal thereon on all prior
Payment Dates (except, for purposes of effecting the Certificate Insurer's
subrogation rights, that portion of Insured Payments made in respect of
principal).
"Class A Certificate Termination Date": With respect to the Class A-1
Certificates, the Class A-1 Certificate Termination Date, with respect to the
Class A-2 Certificates, the Class A-2 Certificate Termination Date, with respect
to the Class A-3 Certificates, the Class A-3 Certificate Termination Date, with
respect to the Class A-4 Certificates, the Class A-4 Certificate Termination
Date, with respect to the Class A-5 Certificates, the Class A-5 Certificate
Termination Date, with respect to the Class A-6 Certificates, the Class A-6
Certificate Termination Date, with respect to the Class A-7 Certificates, the
Class A-7 Certificate Termination Date and with respect to the Class A-8
Certificates, the Class A-8 Certificate Termination Date.
"Class A Distribution Amount": The sum of the Class A-1 Distribution
Amount, the Class A-2 Distribution Amount, the Class A-3 Distribution Amount,
the Class A-4 Distribution Amount, the Class A-5 Distribution Amount, the Class
A-6 Distribution Amount, the Class A-7 Distribution Amount and the Class A-8
Distribution Amount.
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"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed with respect to the
Class A-1 Distribution Amount pursuant to Section 7.03(c)(v)(D)(1) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-1 Certificate Termination Date": The Payment Date on which the
Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-1 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-1 Pass-Through Rate plus any unpaid Preference Amount owed to the Owners
of the Class A-1 Certificates as it relates to interest previously paid on the
Class A-1 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-1 Certificates.
"Class A-1 Distribution Amount": The sum of (x) Class A-1 Current
Interest and (y) the Group I Principal Distribution Amount payable to the Owners
of the Class A-1 Certificates pursuant to Section 7.03(c)(v)(D)(1) hereof.
"Class A-1 Pass-Through Rate": On any Payment Date the lesser of (x)
6.425% per annum and (y) the Group I Available Funds Cap Rate for such Payment
Date.
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less any amounts actually distributed with respect to the
Class A-2 Distribution Amount pursuant to Section 7.03(c)(v)(D)(2) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-2 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-2 Pass-Through Rate plus any unpaid Preference Amount owed to the Owners
of the Class A-2 Certificates as it relates to interest previously paid on the
Class A-2 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-2 Certificates.
"Class A-2 Distribution Amount": The sum of (x) Class A-2 Current
Interest and (y) the Group I Principal Distribution Amount payable to the Owners
of Class A-2 Certificates pursuant to Section 7.03(c)(v)(D)(2) hereof.
6
"Class A-2 Pass-Through Rate": On any Payment Date the lesser of (x)
6.275% per annum and (y) the Group I Available Funds Cap Rate for such Payment
Date.
"Class A-3 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less any amounts actually distributed with respect to the
Class A-3 Distribution Amount pursuant to Section 7.03(c)(v)(D)(3) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-3 Certificate Termination Date": The Payment Date on which the
Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-3 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-3 Pass-Through Rate plus any unpaid Preference Amount owed to the Owners
of the Class A-3 Certificates as it relates to interest previously paid on the
Class A-3 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-3 Certificates.
"Class A-3 Distribution Amount": The sum of (x) Class A-3 Current
Interest and (y) the Group I Principal Distribution Amount payable to the Owners
of Class A-3 Certificates pursuant to Section 7.03(c)(v)(D)(3) hereof.
"Class A-3 Pass-Through Rate": On any Payment Date the lesser of (x)
6.400% per annum and (y) the Group I Available Funds Cap Rate for such Payment
Date.
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less any amounts actually distributed with respect to the
Class A-4 Distribution Amount pursuant to Section 7.03(c)(v)(D)(4) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-4 Certificate Termination Date": The Payment Date on which the
Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-4 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-4 Pass-Through Rate plus any unpaid Preference Amount owed to the Owners
of the Class A-4 Certificates as it relates to interest previously paid on the
Class A-4 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-4 Certificates.
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"Class A-4 Distribution Amount": The sum of (x) Class A-4 Current
Interest and (y) the Group I Principal Distribution Amount payable to the Owners
of Class A-4 Certificates pursuant to Section 7.03(c)(v)(D)(4) hereof.
"Class A-4 Pass-Through Rate": On any Payment Date the lesser of (x)
6.575% per annum and (y) the Group I Available Funds Cap Rate for such Payment
Date.
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less any amounts actually distributed with respect to the
Class A-5 Distribution Amount pursuant to Section 7.03(c)(v)(D)(5) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-5 Certificate Termination Date": The Payment Date on which the
Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-5 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-5 Pass-Through Rate plus any unpaid Preference Amount owed to the Owners
of the Class A-5 Certificates as it relates to interest previously paid on the
Class A-5 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-5 Certificates.
"Class A-5 Distribution Amount": The sum of (x) Class A-5 Current
Interest and (y) the Group I Principal Distribution Amount payable to the Owners
of Class A-5 Certificates pursuant to Section 7.03(c)(v)(D)(5) hereof.
"Class A-5 Pass-Through Rate": On any Payment Date the lesser of (x)
6.700% per annum and (y) the Group I Available Funds Cap Rate for such Payment
Date.
"Class A-6 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A-6 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-6 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-6 Certificates less any amounts actually distributed with respect to the
Class A-6 Distribution Amount pursuant to Section 7.03(c)(v)(D)(6) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-6 Certificate Termination Date": The Payment Date on which the
Class A-6 Certificate Principal Balance is reduced to zero.
8
"Class A-6 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-6 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-6 Pass-Through Rate plus any unpaid Preference Amount owed to the Owners
of the Class A-6 Certificates as it relates to interest previously paid on the
Class A-6 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-6 Certificates.
"Class A-6 Distribution Amount": The sum of (x) Class A-6 Current
Interest and (y) the Group I Principal Distribution Amount payable to the Owners
of Class A-6 Certificates pursuant to Section 7.03(c)(v)(D)(6) hereof.
"Class A-6 Pass-Through Rate": On any Payment Date the lesser of (x)
6.925% per annum and (y) the Group I Available Funds Cap Rate for such Payment
Date.
"Class A-7 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A-7 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class A-7 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less any amounts actually distributed with respect to the
Class A-7 Distribution Amount pursuant to Section 7.03(c)(v)(D)(7) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-7 Certificate Termination Date": The Payment Date on which the
Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-7 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-7 Pass-Through Rate plus any unpaid Preference Amount owed to the Owners
of the Class A-7 Certificates as it relates to interest previously paid on the
Class A-7 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-7 Certificates.
"Class A-7 Distribution Amount": The sum of (x) Class A-7 Current
Interest and (y) the Group I Principal Distribution Amount payable to the Owners
of the Class A-7 Certificates pursuant to Section 7.03(c)(v)(D)(7) hereof.
"Class A-7 Pass-Through Rate": On any Payment Date on or prior to the
Clean-Up Call Date, the lesser of (i) 7.075% per annum and (ii) the Group I
Available Funds Cap Rate for such Payment Date and on any Payment Date in any
month following the month in which the Clean-Up Call Date occurs, the lesser of
(i) 7.575% per annum and (ii) the Group I Available Funds Cap Rate for such
Payment Date.
"Class A-7 Termination Date": November 25, 2026.
"Class A-8 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-8 Certificate, substantially in the form annexed
hereto as Exhibit A-8 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
9
"Class A-8 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less any amounts actually distributed with respect to the
Class A-8 Distribution Amount pursuant to Section 7.03(c)(v)(E) hereof with
respect to principal thereon on all prior Payment Dates (except, for purposes of
effecting the Certificate Insurer's subrogation rights, that portion of Insured
Payments made in respect of principal).
"Class A-8 Certificate Termination Date": The Payment Date on which the
Class A-8 Certificate Principal Balance is reduced to zero.
"Class A-8 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-8 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-8 Pass-Through Rate plus any unpaid Preference Amount owed to the Owners
of the Class A-8 Certificates as it relates to interest previously paid on the
Class A-8 Certificates plus the interest portion of the Carry-Forward Amount, if
any, with respect to the Class A-8 Certificates.
"Class A-8 Distribution Amount": The sum of (x) Class A-8 Current
Interest and (y) the Group II Principal Distribution Amount payable to the
Owners of the Class A-8 Certificates pursuant to Section 7.03(c)(v)(E) hereof.
"Class A-8 Formula Pass-Through Rate": As of any Payment Date, the rate
determined by clause (i) of the definition of Class A-8 Pass-Through Rate.
"Class A-8 Pass-Through Rate": For the initial Payment Date, 5.7875%.
Thereafter, for any Payment Date in any month up to and including the month in
which the Clean-Up Call Date occurs, the lesser of (i) One-Month LIBOR plus
0.225% per annum and (ii) the Group II Available Funds Cap Rate for such Payment
Date; and for any Payment Date in any month following the month in which the
CleanUp Call Date occurs, the lesser of (i) One-Month LIBOR plus 0.450% per
annum and (ii) the Group II Available Funds Cap Rate for such Payment Date.
"Class A-8 Termination Date": November 25, 2026.
"Class B-10 Carry Forward Amount": With respect to any Payment Date the
sum of the amount, if any, by which (x) the Class B-10 Distribution Amount as of
the immediately preceding Payment Date exceeded (y) the amount of the actual
distribution made to Owners of the Class B-10 Certificates on such immediately
preceding Payment Date.
"Class B-10 Certificate": Any one of the Certificates designated on the
face thereof as a Class B-10 Certificate, substantially in the form annexed
hereto as Exhibit B-IO, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein.
"Class B-10 Distribution Amount": With respect to any Payment Date, the
sum of:
(1) with respect to Mortgage Loans in Group I, one-twelfth of
the product of (x) the sum of the aggregate Loan Balances of such
Mortgage Loans on the immediately preceding Payment Date and (y) the
excess of (I) the weighted average of the Coupon Rates of such Mortgage
Loans over (II) the sum of the following payments allocable to Group I
on or in respect of the related
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Payment Date (in each case expressed as an annual rate based on such
aggregate outstanding Loan Balance): (A) the Servicing Fee (calculated
at the initial Servicing Fee Rate), (B) the Premium Amount, (C) the
Trustee Fee, (D) any Reimbursement Amount, and (E) the Class A-7 Pass-
Through Rate;
(2) with respect to Mortgage Loans in Group II, one-twelfth of
the product of (x) the sum of the aggregate Loan Balances of such
Mortgage Loans on the immediately preceding Payment Date and (y) the
excess of (I) the weighted average of the Coupon Rates of such Mortgage
Loans on such immediately preceding Payment Date (weighted on the basis
of the Loan Balances as of such Payment Date) over (II) the sum of the
following payments allocable to Group II on or in respect of the
related Payment Date (in each case expressed as an annual rate based on
such aggregate outstanding Loan Balance): (A) the Servicing Fee
(calculated at the initial Servicing Fee Rate), (B) the Premium Amount,
(C) the Trustee Fee, (D) any Reimbursement Amount and (E) the Class A-8
Pass-Through Rate; and
(3) the Class B-10 Carry Forward Amount.
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit B-2, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein, and evidencing an interest
designated as the "residual interest" in the REMIC for the purposes of the REMIC
Provisions.
"Class S Carry Forward Amount": With respect to any Payment Date, the
sum of (i) the amount, if any, by which (x) the Class S Distribution Amount as
of the immediately preceding Payment Date exceeded (y) the amount of the actual
distribution made to the Owners of the Class S Certificates on such immediately
preceding Payment Date and (ii) 30 days' interest on such amount of the Class S
Pass- Through Rate.
"Class S Certificate": Any one of the Certificates designated on the
face thereof as a Class S Certificate, substantially in the form annexed hereto
as Exhibit B-1, authenticated and delivered by the Trustee representing the
right to distributions as set forth herein. The Class S Certificates are a
"regular interest" in the REMIC.
"Class S Distribution Amount": With respect to any Payment Date, the
sum of (a) the product of (x) the outstanding Loan Balance of each Advanta Loan
as of such Payment Date and (y) one-twelfth of the difference between the
Aggregate Servicing Fee Rate and the Servicing Fee Rate for such Mortgage Loan,
(b) any unpaid Preference Amount, if any, for the Class S Certificates and (c)
the Class S Carry Forward Amount, if any. The Class S Distribution Amount shall
be calculated on a loan by loan basis.
"Clean-Up Call Date": The first Monthly Remittance Date on which the
Class A Certificate Principal Balance has declined to $75,000,000 or less.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
11
"Corporate Trust Office": The principal office of the Trustee at The
Chase Manhattan Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn.:
Structured Finance/MBS.
"Coupon Rate": The rate of interest borne by each Note from time to
time.
"Cram Down Loss": With respect to a Mortgage Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Mortgage Loan, the amount
of such reduction. A "Cram Down Loss" shall be deemed to have occurred on the
date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination thereof,
the Cumulative Realized Losses as a percentage of the Maximum Collateral Amount
(and with respect to the Servicer Loss Test the aggregate portion thereof
applicable to the related Servicer as set forth in the definition of Maximum
Collateral Amount).
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Mortgage Loans in the
related Group (and with respect to the Servicer Loss Test with respect to the
Mortgage Loans in the related Mortgage Loan Servicing Group) since the Cut-Off
Date.
"Current Interest": With respect to any Payment Date, the sum of the
Class A-1 Current Interest, the Class A-2 Current Interest, the Class A-3
Current Interest, the Class A-4 Current Interest, the Class A-5 Current
Interest, the Class A-6 Current Interest, the Class A-7 Current Interest, the
Class A-8 Current Interest and the Class S Distribution Amount for such Payment
Date.
"Custodial Agreement": The Custodial Agreement dated as of December 1,
1996 among the Custodian, the Trustee, the Depositor, the Seller and the
Servicers.
"Custodian": Bankers Trust Company of California, N.A.
"Cut-Off Date": As of the close of business on December 1, 1996.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the Determination Date
immediately following the day such payment is scheduled to be due. A Mortgage
Loan is "30 days Delinquent" if such payment has not been received by the close
of business on the Determination Date of the month immediately succeeding the
month in which such payment was due. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit G
hereto and delivered by the Seller to the Trustee on the Startup Day pursuant to
Section 4.01 hereof.
"Depositor": AMRESCO Residential Securities Corporation, a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and any successor Depository hereafter named.
12
"Designated Depository Institution": With respect to each Principal and
Interest Account, a trust account maintained by The Chase Manhattan Bank, as
long as it remains the Trustee, or by the trust department of a federal or state
chartered depository institution acceptable to the Certificate Insurer, acting
in its fiduciary capacity, having combined capital and surplus of at least
$50,000,000; provided, however, that if a Principal and Interest Account is not
maintained with the Trustee, (i) such institution shall have a long-term debt
rating of at least "A" by Standard & Poor's and "A2" by ▇▇▇▇▇'▇ and (ii) the
Servicers shall provide the Trustee, the Certificate Insurer and the Owners with
a statement identifying the location of the related Principal and Interest
Account when moved.
"Determination Date": As to each Payment Date, the last day of the
related Prepayment Period or if such date is not a Business Day, the next
Business Day thereafter.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Class A Certificates
from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time in
the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"DLJ": DLJ Mortgage Capital, Inc., a Delaware corporation.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"Excess Subordinated Amount": With respect to either Mortgage Loan
Group and any Payment Date, the excess, if any, of (x) the Subordinated Amount
that would apply to the related Mortgage Loan Group on such Payment Date after
taking into account the payment of the related Class A Distribution Amounts on
such Payment Date (except for any distributions of related Subordination
Reduction Amounts on such Payment Date), over (y) the related Specified
Subordinated Amount for such Payment Date.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Custodian on behalf of the
Trustee pursuant to Section 3.05(b) hereof pertaining to a particular Mortgage
Loan and any additional documents required to be added to the File pursuant to
this Agreement.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Scheduled Payment Date": For each Class of Class A Certificates
is as set out in Section 2.08(a).
"First Colony": The First National Mortgage Exchange, Inc. d/b/a First
Colony Financial Group and d/b/a Finamex Financial, Inc., a Delaware
corporation.
"First Franklin": First Franklin Corporation, a Delaware corporation.
13
"Fitch": Fitch Investors Service, L.P.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"Funding Period": With respect to each of Group I and Group II, the
respective period commencing on the Startup Day and ending on the earliest to
occur of (i) the date on which the amount on deposit in the Pre-Funding Account
with respect to such Group (exclusive of any investment earnings) is less than
$100,000 and (ii) March 10, 1997.
"Group I": The pool of Mortgage Loans identified in the related
Schedule of Mortgage Loans as having been assigned to Group I in Schedule I-A
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof and each Subsequent Mortgage Loan delivered to the Trust for inclusion
therein.
"Group I Available Funds": As defined in Section 7.02(c) hereof.
"Group I Available Funds Cap Rate": As of any Payment Date, the
weighted average of the Coupon Rates on the Notes related to the Mortgage Loans
in Group I, less 0.65% per annum.
"Group I Available Funds Shortfall": As defined in Section
7.03(c)(iii)(A) hereof.
"Group I Capitalized Interest Requirement": With respect to the Payment
Dates, in January and February and the Pre-Funding Payment Date the excess, if
any, of (x) the interest on the Group I Certificates on such Payment Date
calculated at the Group I Weighted Average Pass-Through Rate over (y) the sum of
(i) one-month's interest on the aggregate Loan Balances of the Mortgage Loans in
Group I as of the close of business on the last day of the immediately preceding
Remittance Period calculated at a rate equal to 1/12 of the weighted average of
the Coupon Rates of the Mortgage Loans in Group I less the applicable Servicing
Fee Rate as of such Payment Date (or Pre-Funding Payment Date) and (ii) any
Group I Pre-Funding Account Earnings to be transferred to the Capitalized
Interest Account on such Payment Date (or Pre-Funding Payment Date) pursuant to
Section 7.04(d) hereof.
"Group I Certificates": Collectively, the Class A-1 Certificates, the
Class A-2 Certificates, the Class A-3 Certificates, the Class A-4 Certificates,
the Class A-5 Certificates, the Class A-6 Certificates and the Class A-7
Certificates.
"Group I Interest Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest collected or required to
be advanced (net of the applicable Servicing Fee) during the related Remittance
Period with respect to the Mortgage Loans in Group I, (ii) all Compensating
Interest paid by the related Servicers on such Monthly Remittance Date with
respect to Group I and (iii) the portion of the Substitution Amount relating to
interest on the Mortgage Loans in Group I.
"Group I Monthly Remittance Amount": As of any Monthly Remittance Date,
the sum of (i) the Group I Interest Remittance Amount and (ii) the Group I
Principal Remittance Amount for such Monthly Remittance Date.
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"Group I Pre-Funding Account Earnings": With respect to the January 27,
1997 Payment Date, the actual investment earnings earned during the period from
the Startup Day through January 20, 1997 (inclusive) on the portion of the
Pre-Funded Amount remaining and allocable to Group I during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof; with respect to
the February 25, 1997 Payment Date, the actual investment earnings earned during
the period from January 21, 1997 through February 20, 1997 (inclusive) on the
portion of the Pre-Funded Amount remaining and allocable to Group I during such
period as calculated by the Trustee pursuant to Section 3.07(d) hereof; and,
with respect to the Pre-Funding Payment Date, the actual investment earnings
earned during the period from February 21, 1997 through March 16, 1997
(inclusive) on the portion of the Pre-Funded Amount remaining and allocable to
Group I during such period as calculated by the Trustee pursuant to Section
3.07(d) hereof.
"Group I Principal Distribution Amount": With respect to the Group I
Certificates for any Payment Date, the lesser of:
(a) the Group I Total Available Funds plus any Insured Payment actually
made by the Certificate Insurer with respect to the Group I Certificates minus
the Current Interest with respect to the Group I Certificates; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount owed to the Owners of the
Group I Certificates as such amounts relate to principal
previously distributed on the Group I Certificates,
(B) all scheduled installments of principal actually
collected or advanced by the related Servicer during the
related Remittance Period and all unscheduled collections of
principal (other than Prepaid Installments) actually collected
by the related Servicer during the related Prepayment Period,
(C) the principal portion of the Loan Purchase Price
with respect to each Mortgage Loan in Group I that was
repurchased by the related Originator on or prior to the
related Monthly Remittance Date, to the extent such amount is
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
(D) any Substitution Amounts delivered by the related
Originator on the related Monthly Remittance Date in
connection with a substitution of a Mortgage Loan in Group I
(to the extent such Substitution Amounts relate to principal),
to the extent such Substitution Amounts are actually received
by the Trustee on or prior to the related Monthly Remittance
Date,
(E) all Net Liquidation Proceeds actually collected
by the related Servicer with respect to Mortgage Loans in
Group I during the related Prepayment Period (to the extent
such Net Liquidation Proceeds relate to principal) to the
extent such Net Liquidation Proceeds are actually received by
the Trustee on or prior to the related Monthly Remittance
Date,
(F) the amount of any Subordination Deficit with
respect to Group I for such Payment Date,
15
(G) the portion of the proceeds received by the
Trustee with respect to Group I from any termination of the
Trust (to the extent such proceeds relate to principal),
(H) any moneys released from the Pre-Funding Account
as a prepayment of the Group I Certificates on the Payment
Date which immediately follows the end of the Funding Period
as a prepayment of such Certificates on such Payment Date, and
(I) the amount of any Subordination Increase Amount
with respect to Group I for such Payment Date, to the extent
of any Net Monthly Excess Cashflow available for such purpose;
over
(ii) the amount of any Subordination Reduction Amount with
respect to Group I for such Payment Date.
"Group I Principal Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) the principal collected or required
to be advanced with respect to Mortgage Loans in Group I during the related
Remittance Period and all unscheduled collections of principal actually
collected by the related Servicer during the related Prepayment Period (other
than Prepaid Installments), (ii) the principal portion of the Loan Purchase
Price of each such Mortgage Loan in Group I that was purchased from the Trustee
on or prior to such Monthly Remittance Date, to the extent such amount was
actually deposited in the Principal and Interest Account on or prior to such
Monthly Remittance Date, (iii) any Substitution Amounts relating to principal
delivered to the Trust in connection with a substitution of a Mortgage Loan in
Group I, to the extent such Substitution Amounts were actually deposited in the
Principal and Interest Account on or prior to such Monthly Remittance Date, and
(iv) all Net Liquidation Proceeds actually collected by the related Servicer
with respect to such Mortgage Loans in Group I during the related Prepayment
Period (to the extent such Net Liquidation Proceeds related to principal).
"Group I Specified Subordination Percentage": As defined in the
Insurance Agreement.
"Group I Subordinated Amount": As of any Payment Date, the excess, if
any, of (x) the sum of (i) the aggregate Loan Balances of the Mortgage Loans in
Group I as of the close of business on the last day of the related Prepayment
Period and (ii) any amounts on deposit in the Pre-Funding Account relating to
Group I at such time exclusive of any Group I Pre-Funding Account Earnings over
(y) the Class A Certificate Principal Balance of the Group I Certificates as of
such Payment Date (after taking into account the payment of the Group I
Principal Distribution Amount thereon (except for any Subordination Deficit with
respect to Group I and Subordination Increase Amount with respect to Group I) on
such Payment Date).
"Group I Total Available Funds": As defined in Section 7.02(c) hereof.
"Group I Total Monthly Excess Spread": With respect to Group I and any
Payment Date, the excess, if any, of (i) the sum of (w) the interest which is
collected on the Mortgage Loans in such Group during the related Remittance
Period less the related Servicing Fee with respect to Group I, (x) the interest
portion of any Delinquency Advances, (y) Compensating Interest paid by the
related Servicer with respect to Group I for such Remittance Period and (z) the
Group I Capitalized Interest Requirement over (ii) the interest due on (x) the
Group I Certificates and (y) the portion of the interest due on the Class S
Certificates that relates to Advanta Loans listed on Schedule I-A on such
Payment Date; provided, however, that for the Payment Dates during the Funding
Period, the amount in (ii) above shall be
16
multiplied by a fraction (A) the numerator of which is the difference between
the Certificate Principal Balance of the Fixed Rate Group Certificates and the
then outstanding Pre-Funded Amount relating to Group I and (B) the denominator
of which is the Certificate Principal Balance of the Group I Certificates.
"Group I Weighted Average Pass-Through Rate": As to the Group I
Certificates and any Payment Date, the weighted average of the Class A-1
Pass-Through Rate, the Class A-2 Pass-Through Rate, the Class A-3 Pass-Through
Rate, the Class A-4 Pass-Through Rate, the Class A-5 Pass-Through Rate, the
Class A-6 Pass-Through Rate and the Class A-7 Pass-Through Rate, weighted by the
respective Certificate Principal Balance of the related Class as of such Payment
Date after taking into account any distributions of principal to be made on such
Payment Date.
"Group II": The pool of Mortgage Loans identified in the related
Schedule of Mortgage Loans as having been assigned to Group II in Schedule I-B
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof and each Subsequent Mortgage Loan delivered to the Trust for inclusion
therein.
"Group II Available Funds": As defined in Section 7.02(d) hereof.
"Group II Available Funds Cap Carry-Forward Amortization Amount": As of
any Payment Date, any amount distributed from the Group II Available Funds Cap
Carry-Forward Amount Account on such Payment Date pursuant to Section
7.03(c)(iv) hereof.
"Group II Available Funds Cap Carry-Forward Amount": As of any Payment
Date, the excess, if any, of (x) the sum of (i) the excess, if any, equal to (a)
the aggregate amount of interest due on the Class A-8 Certificates on all prior
Payment Dates, calculated at the Class A-8 Formula Pass-Through Rate applicable
to each such Payment Date over (b) the aggregate amount of interest due on the
Class A-8 Certificates on all prior Payment Dates, calculated at the Class A-8
Pass-Through Rate applicable to each such Payment Date, (ii) the amount, if any,
described in clause (iii) hereof as of the immediately preceding Payment Date
and (iii) the product of (a) one-twelfth of the Class A-8 Formula Pass-Through
Rate on such Payment Date and (b) the sum of the amounts described in clauses
(i) and (ii) preceding over (y) all Group II Available Funds Cap Carry-Forward
Amortization Amounts actually funded on all prior Payment Dates.
"Group II Available Funds Cap Carry-Forward Amount Account": The Group
II Available Funds Cap Carry-Forward Amount Account established in accordance
with Section 7.02 hereof and maintained by the Trustee.
"Group II Available Funds Cap Rate": As of any Payment Date the
weighted average of the Coupon Rates on the Notes related to the Mortgage Loans
in Group II, less either (x) 0.65% per annum during the first six Remittance
Periods or (y) 1.15% per annum during any Remittance Period thereafter,
calculated as of the first day of the related Remittance Period.
"Group II Available Funds Shortfall": As defined in Section
7.03(c)(iii)(A) hereof.
"Group II Capitalized Interest Requirement": With respect to the
Payment Dates in January and February 1997 and the Pre-Funding Payment Date, the
excess, if any, of (x) the interest on the Class A-8 Certificates on such
Payment Date calculated at the Class A-8 Pass-Through Rate over (y) the sum of
(i) one-month's interest on the aggregate Loan Balances of the Mortgage Loans in
Group II as of the close
17
of business on the last day of the immediately preceding Remittance Period
calculated at a rate equal to 1/12 of the weighted average of the Coupon Rates
of the Mortgage Loans in Group II less the applicable Servicing Fee Rate as of
such Payment Date (or Pre-Funding Payment Date) and (ii) any Group II Pre-
Funding Account Earnings to be transferred to the Capitalized Interest Account
on such Payment Date (or Pre-Funding Payment Date) pursuant to Section 7.04(d)
hereof.
"Group II Interest Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest collected or required to
be advanced (net of the applicable Servicing Fee) during the related Remittance
Period with respect to the Mortgage Loans in Group II, (ii) all Compensating
Interest paid by the related Servicers on such Monthly Remittance Date with
respect to Group II and (iii) the portion of the Substitution Amount relating to
interest on the Mortgage Loans in Group II.
"Group II Monthly Remittance Amount": As of any Monthly Remittance
Date, the sum of (i) the Group II Interest Remittance Amount and (ii) the Group
II Principal Remittance Amount for such Monthly Remittance Date.
"Group II Pre-Funding Account Earnings": With respect to the January
27, 1997 Payment Date, the actual investment earnings earned during the period
from the Startup Day through January 20, 1997 (inclusive) on the portion of the
Pre-Funded Amount remaining and allocable to Group II during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof with respect to the
February 25, 1997 Payment Date, the actual investment earnings earned during the
period from January 21, 1997 through February 20, 1997 (inclusive) on the
portion of the Pre-Funded Amount remaining and allocable to Group II during such
period as calculated by the Trustee pursuant to Section 3.07(d) hereof; and,
with respect to the Pre-Funding Payment Date, the actual investment earnings
earned during the period from February 21, 1997 through March 16, 1997
(inclusive) on the portion of the Pre-Funded Amount remaining and allocable to
Group II during such period as calculated by the Trustee pursuant to Section
3.07(d) hereof.
"Group II Principal Distribution Amount": With respect to the Class A-8
Certificates for any Payment Date, the lesser of:
(a) the Group II Total Available Funds plus any Insured Payment
actually made by the Certificate Insurer with respect to the Class A-8
Certificates minus the Current Interest with respect to the Class A-8
Certificates; and
(b) the excess, if any, of (i) the sum of:
(A) the Preference Amount owed to the Owners of the
Class A-8 Certificates as such amounts relate to principal
previously distributed on the Class A-8 Certificates,
(B) all scheduled installments of principal actually
collected or advanced by the related Servicers during the
related Remittance Period and all unscheduled collections of
principal (other than Prepaid Installments) actually collected
by the related Servicer during the related Prepayment Period,
(C) the principal portion of the Loan Purchase Price
with respect to each Mortgage Loan in Group II that was
repurchased by the related Originator on or prior
18
to the related Monthly Remittance Date, to the extent such
amount is actually received by the Trustee on or prior to the
related Monthly Remittance Date,
(D) any Substitution Amounts delivered by the related
Originator on the related Monthly Remittance Date in
connection with a substitution of a Mortgage Loan in Group II
(to the extent such Substitution Amounts relate to principal),
to the extent such Substitution Amounts are actually received
by the Trustee on or prior to the related Monthly Remittance
Date,
(E) all Net Liquidation Proceeds actually collected
by the related Servicers with respect to Mortgage Loans in
Group II during the related Prepayment Period (to the extent
such Net Liquidation Proceeds relate to principal) to the
extent such Net Liquidation Proceeds are actually received by
the Trustee on or prior to the related Monthly Remittance
Date,
(F) the amount of any Subordination Deficit with
respect to Group II for such Payment Date,
(G) the portion of the proceeds received by the
Trustee with respect to Group II from any termination of the
Trust (to the extent such proceeds related to principal),
(H) any moneys released from the Pre-Funding Account
as a prepayment of the Class A-8 Certificates on the Payment
Date which immediately follows the end of the Funding Period
as a prepayment of such Certificates on such Payment Date, and
(I) the amount of any Subordination Increase Amount
with respect to Group II for such Payment Date, to the extent
of any Net Monthly Excess Cashflow available for such purpose;
over
(ii) the amount of any Subordination Reduction Amount with
respect to Group II for such Payment Date.
"Group II Principal Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) the principal collected or required
to be advanced with respect to Mortgage Loans in Group II during the related
Remittance Period and all unscheduled collections of principal actually
collected by the related Servicers during the related Prepayment Period (other
than Prepaid Installments), (ii) the Loan Balance of each such Mortgage Loan in
Group II that was purchased from the Trustee on or prior to such Monthly
Remittance Date, to the extent such Loan Balance was actually deposited in the
Principal and Interest Account, (iii) any Substitution Amounts relating to
principal delivered to the Trust in connection with a substitution of a Mortgage
Loan in Group II, to the extent such Substitution Amounts were actually
deposited in the Principal and Interest Account on or prior to such Monthly
Remittance Date, and (iv) all Net Liquidation Proceeds actually collected by the
related Servicers with respect to such Mortgage Loans in Group II during the
related Prepayment Period (to the extent such Net Liquidation Proceeds related
to principal).
"Group II Specified Subordination Percentage": As defined in the
Insurance Agreement.
19
"Group II Subordinated Amount": As of any Payment Date, the excess, if
any, of (x) the sum of (i) the aggregate Loan Balances of the Mortgage Loans in
Group II as of the close of business on the last day of the related Prepayment
Period and (ii) any amounts on deposit in the Pre-Funding Account relating to
Group II at such time exclusive of any Group II Pre-Funding Account Earnings
over (y) the Certificate Principal Balance of the Class A-8 Certificates as of
such Payment Date (after taking into account the payment of the Group II
Principal Distribution Amount thereon (except for any Subordination Deficit with
respect to Group II and Subordination Increase Amount with respect to Group II)
on such Payment Date).
"Group II Total Available Funds": As defined in Section 7.02(d) hereof.
"Group II Total Monthly Excess Spread": With respect to Group II and
any Payment Date, the excess, if any, of (i) the sum of (w) the interest which
is collected on the Mortgage Loans in such Group during the related Remittance
Period less the related Servicing Fee with respect to Group II, (y) the interest
portion of any Delinquency Advances, (y) Compensating Interest paid by the
related Servicers with respect to Group II for such Remittance Period and (z)
the Group II Capitalized Interest Requirement over (ii) the interest due on (x)
the Class A-8 Certificates and (y) the portion of the interest due on the Class
S Certificates that relates to Advanta Loans listed on Schedule I-B on such
Payment Date; provided, however, that for the Payment Dates during the Funding
Period, the amount in (ii) above shall be multiplied by a fraction (A) the
numerator of which is the difference between the Certificate Principal Balance
of the Class A-8 Certificates and the then outstanding Pre-Funded Amount
relating to Group II and (B) the denominator of which is the Certificate
Principal Balance of the Class A-8 Certificates.
"Highest Lawful Rate": As defined in Section 11.13.
"Highland": Highland Federal Bank, a federal savings bank.
"Indemnification Agreement": The Indemnification Agreement dated as of
December 4, 1996, among the Certificate Insurer, the Depositor and each
Underwriter.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"Initial Mortgage Loans": The Mortgage Loans to be conveyed to the
Trust by the Depositor on the Startup Day.
"Insurance Agreement": The Insurance Agreement dated as of December 1,
1996, among the Depositor, the Seller, the Certificate Insurer and the Trustee,
as it may be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Mortgage Loan, provided that any amount remitted
under Section 8.11 hereof shall be considered a payment under an Insurance
Policy.
"Insured Payment": With respect to either Mortgage Loan Group and as to
any Payment Date (i) the excess, if any, of (a) the sum of the Current Interest
related to the Group I Certificates, the Class A-8 Certificates or the Class S
Certificates, as the case may be, and the then existing related Subordination
Deficit, if any, over (b) the Total Available Funds to be actually distributed
on such Payment Date on the Group I Certificates or the Class A-8 Certificates,
as the case may be, pursuant to Section 7.03(c)(v) hereof (without regard to any
related Insured Payment to be made with respect to such Payment Date), plus (ii)
an amount equal to the Preference Amount with respect to the related Class of
20
Class A Certificates or Class S Certificates plus (iii) as of the Class A-7
Termination Date and with respect to the Class A-7 Certificates, an amount
sufficient to reduce the Class A-7 Certificate Principal Balance to zero plus
(iv) as of the Class A-8 Termination Date and with respect to the Class A-8
Certificates an amount sufficient to reduce the Class A-8 Certificate Principal
Balance to zero.
"Interest Remittance Amount": The sum of the Group I Interest
Remittance Amount and the Group II Interest Remittance Amount.
"Late Payment Rate": For any Payment Date, the fluctuating rate of
interest, as it is published from time to time in the New York, New York edition
of The Wall Street Journal, under the caption "Money Rates" as the "prime rate,"
to change when and as such published prime rate changes, plus 2% per annum. The
Late Payment Rate shall be computed on the basis of a year of 360 days
calculating the actual number of days elapsed. In no event shall the Late
Payment Rate exceed the maximum rate permissible under any applicable law
limiting interest rates.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by a Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, including, without limitation, legal
fees and expenses and accrued but unpaid Servicing Fees, and any unreimbursed
Servicing Advances expended by that Servicer pursuant to Section 8.09(b) with
respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by a Servicer
in connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise and Section 8.13(a).
"Loan Balance": With respect to each Mortgage Loan and as of any date
of determination, the outstanding principal balance thereof, on the Cut-Off Date
with respect to the Initial Mortgage Loans or relevant Subsequent Cut-Off Date
with respect to the Subsequent Mortgage Loans, less the sum of (i) any principal
payments relating to such Mortgage Loan (whether received from the related
Mortgagor or advanced by the related Servicer) included in previous Monthly
Remittance Amounts, and (ii) any Cram Down Losses relating to such Mortgage
Loan; provided, however, that the Loan Balance for any Mortgage Loan that has
become a Liquidated Loan shall be zero as of the first day of the Remittance
Period following the Remittance Period in which such Mortgage Loan becomes a
Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from
the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04, 3.05,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of such
Mortgage Loan as of the date of purchase (assuming that the related Delinquency
Advance has already been remitted), plus one month's interest on the Loan
Balance thereof as of the beginning of the related Remittance Period computed at
the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Mortgage Loan, (ii) the interest
portion of any Delinquency Advances which the related Servicer has theretofore
failed to remit with respect to such Mortgage Loan as required by this Agreement
and (iii) all reimbursed Delinquency Advances to the extent that reimbursement
is not made from the Mortgagor or from Liquidation Proceeds from the respective
Mortgage Loan.
21
"Loan-to-Value Ratio": As of any particular date, the percentage
obtained by dividing the Appraised Value into the original principal balance of
the Note.
"London Business Day": Any day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
"Maximum Collateral Amount": As to Group I, $150,000,000; provided that
with respect to Group I, $125,678,474.42 shall apply to Advanta and
$24,321,525.58 shall apply to Option One for purposes of calculating the
Servicer Loss Test; as to Group II, $550,000,000; provided that with respect to
Group II, $391,210,663.24 shall apply to Advanta and $158,78,336.76 shall apply
to Option One for purposes of calculating the Servicer Loss Test.
"Monthly Remittance Amount": The sum of the Group I Monthly Remittance
Amount and the Group II Monthly Remittance Amount.
"Monthly Remittance Date": The 20th day of each month or if such day is
not a Business Day, the Business Day succeeding such day, commencing in January
1997.
"Monthly Servicing Report": Any report provided by a Servicer pursuant
to Section 8.29 hereof.
"Moody's": ▇▇▇▇▇'▇ Investors Service Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple interest in real property securing a Note.
"Mortgage Loan Group" or "Group": Group I or Group II, as the case may
be. References herein to the related Class of Class A Certificates, when used
with respect to a Mortgage Loan Group, shall mean (A) in the case of Group I,
the Group I Certificates and (B) in the case of Group II, the Class A-8
Certificates.
"Mortgage Loan Servicing Group": Advanta Loans or Option One Loans, as
applicable.
"Mortgage Loans": Such of the mortgage loans (including Initial
Mortgage Loans and Subsequent Mortgage Loans) transferred and assigned to the
Trust pursuant to Section 3.05(a) and 3.07(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the
Mortgage Loans originally so held being identified in the Schedules of Mortgage
Loans. The term "Mortgage Loan" includes any Mortgage Loan which is Delinquent,
which relates to a foreclosure or which relates to a Property which is REO
Property prior to such Property's disposition by the Trust. Any mortgage loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust by the Depositor, in fact
was not transferred and assigned to the Trust for any reason whatsoever,
including, without limitation, the incorrectness of the statement in a Transfer
Agreement concerning the transfer of title to the transferee with respect to
such mortgage loan, shall nevertheless be considered a "Mortgage Loan" for all
purposes of this Agreement.
"Mortgagor": The obligor on a Note.
22
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses, unreimbursed Delinquency Advances,
unreimbursed Servicing Advances and accrued Servicing Fees relating to such
Mortgage Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"Net Monthly Excess Cashflow": As defined in Section 7.03(c)(iv)
hereof.
"New Century": New Century Mortgage Corporation, a California
corporation.
"90-Day Delinquent Loan": With respect to any Determination Date, the
Mortgage Loan related to each REO Property and each Mortgage Loan with respect
to which any portion of a Scheduled Payment is 90 days or more Delinquent.
"90+ Delinquency Percentage (Rolling Three Month)": With respect to
each Mortgage Loan Servicing Group and any Determination Date, the average of
the percentage equivalents of the fractions determined for each of the three
immediately preceding Remittance Periods the numerator of each of which is equal
to the aggregate Loan Balance of 90-Day Delinquent Loans (including any Mortgage
Loans which have gone into foreclosure or have been discharged by reason of
bankruptcy) in the related Mortgage Loan Servicing Group as of such
Determination Date and the denominator of which is the aggregate Loan Balance of
all of the Mortgage Loans in the related Mortgage Loan Servicing Group as of
such Determination Date.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"O/C Loss Test": The O/C Loss Test with respect to each Mortgage Loan
Group and for any period set out below is satisfied if the related Cumulative
Loss Percentage for such period does not exceed the percentage set out for such
period below:
Cumulative Loss
Period Percentage
------ ----------
December 2, 1996 - December 1, 1997 .75%
December 2, 1997 - December 1, 1998 1.25%
December 2, 1998 - December 1, 1999 1.80%
December 2, 1999 - December 1, 2000 2.25%
December 2, 2000 - and thereafter 2.75%
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Trustee.
"One-Month LIBOR": With respect to any Accrual Period for the Class A-8
Certificates, the rate determined by the Trustee on the related One-Month LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations
23
are provided, the rate for that date will be the arithmetic mean of the
quotations (rounded upwards if necessary to the nearest whole multiple of
1/16%). If fewer than two quotations are provided as requested, the rate for
that date will be the arithmetic mean of the rates quoted by major banks in New
York City, selected by the Trustee, at approximately 11:00 a.m. (New York City
time) on such date for one-month U.S. dollar loans to leading European banks.
"One-Month LIBOR Determination Date": With respect to any Accrual
Period for the Class A-8 Certificates, the second London Business Day preceding
the commencement of such Accrual Period.
"Operative Documents": Collectively, this Agreement, the Transfer
Agreements, the Subsequent Transfer Agreements, the Certificate Insurance
Policies, the Indemnification Agreement, the Certificates, and the Insurance
Agreement.
"Opinion of Counsel": A written opinion of counsel, who may be counsel
to the Certificate Insurer, Depositor, Seller, any Servicer or the Trustee,
which counsel shall be reasonably acceptable to the Trustee and the Certificate
Insurer.
"Option One": Option One Mortgage Corporation, a California
corporation.
"Option One Loans": The Mortgage Loans serviced by Option One.
"Original Aggregate Loan Balance": The aggregate Loan Balances of all
Initial Mortgage Loans as of the Cut-Off Date, i.e., $558,217,786.38.
"Original Group I Pre-Funding Amount": $32,918,084.89.
"Original Group II Pre-Funding Amount": $108,864,128.73.
"Original Pre-Funded Amount": The amount deposited in the Pre-Funding
Account on the Startup Day from the proceeds of the sale of the Certificates,
which amount is $141,782,213.62.
"Originator": Option One, Quality, New Century, Weyerhaeuser, First
Colony, First Franklin, Highland Federal, Accredited and BNC.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee and the Certificate
Insurer is presented that any such Certificates are held by a bona fide
purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
24
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Overfunded Interest Amount": With respect to each Subsequent Transfer
Date, the sum, if any, of (x) with respect to the Group I Certificates, the
excess of (i) interest that would accrue from the Subsequent Cut-Off Date
through February 28, 1997 on the aggregate Loan Balances of the Subsequent
Mortgage Loans related to Group I acquired by the Trust on such Subsequent
Transfer Date, calculated at the rate at which Pre-Funding Account moneys are
invested as of such Subsequent Transfer Date over (ii) interest that would
accrue from the related Subsequent Cut-Off Date through February 28, 1997 on the
aggregate Loan Balances of the Subsequent Mortgage Loans acquired by the Trust
on such Subsequent Transfer Date, calculated at a rate equal to the sum of (I)
the Group I Weighted Average Pass-Through Rate and (II) the Premium Amount and
the Trustee Fee each allocable to Group I (such fees and amounts calculated as
an annual rate based on the aggregate Loan Balances of the Mortgage Loans in
Group I), and (y) with respect to the Class A-8 Certificates the excess of (i)
interest that would accrue from the Subsequent Cut-Off Date through February 28,
1997 on the aggregate Loan Balances of the Subsequent Mortgage Loans related to
Group II acquired by the Trust on such Subsequent Transfer Date, calculated at
the rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date over (ii) interest that would accrue from the related Subsequent
Cut-Off Date through February 28, 1997 on the aggregate Loan Balances of the
Subsequent Mortgage Loans acquired by the Trust on such Subsequent Transfer
Date, calculated at a rate equal to the sum of (I) the Class A-8 Pass-Through
Rate and (II) the Premium Amount and the Trustee Fee each allocable to Group II
(such fees and amounts calculated as an annual rate based on the aggregate Loan
Balances of the Mortgage Loans in Group II).
"Owner": The Person in whose name a Certificate is registered in the
Register, and the Certificate Insurer, to the extent described in Section 5.06
and Section 7.03(f) hereof, respectively; provided that solely for the purposes
of determining the exercise of any voting rights hereunder, none of the Seller,
any Seller affiliate, any Servicer or any Servicer Affiliate shall be considered
an Owner of a Class A Certificate hereunder.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the month in which the Startup Day occurs.
"Percentage Interest": With respect to a Class A Certificate a
fraction, expressed as a decimal, the numerator of which is the initial
Certificate Principal Balance represented by such Class A Certificate and the
denominator of which is the aggregate initial Certificate Principal Balance
represented by all the Class A Certificates of such Class. With respect to a
Class S Certificate, a Class B-10 Certificate or a Class R Certificate, the
portion of the Class evidenced thereby, expressed as a percentage, as stated on
the face of such Certificate, all of which shall total 100% with respect to the
related Class.
25
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"Preference Amount": With respect to the Class A Certificates and the
Class S Certificates, as the case may be, means, any amounts of Current Interest
and principal included in previous distributions of any Class A Distribution
Amounts to the Owners of the Class A Certificates or the Class S Distribution
Amount included in previous distributions to the Owners of the Class S
Certificates which are recovered from such Owners as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such Owners and for
which there has been full compliance with the provisions of Section 7.11.
"Pre-Funded Amount": With respect to any Determination Date, the amount
remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 7.02(b) hereof and maintained by the Trustee.
"Pre-Funding Determination Date": March 10, 1997.
"Pre-Funding Payment Date": March 17, 1997.
"Premium Amount": As defined in the Commitment Letters, dated as of
December 17, 1996, by and between the Certificate Insurer and the Seller,
relating to the Certificate Insurance Policies.
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received by the related
Servicer prior to the scheduled due date for such installment, intended by the
Mortgagor as an early payment thereof and not as a Prepayment with respect to
such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan which is
received by a Servicer in advance of the scheduled due date for the payment of
such principal (other than the principal portion of any Prepaid Installment).
Substitution Amounts, the portion of the purchase price of any Mortgage Loan
purchased from the Trust pursuant to Section 3.03, 3.04, 3.05, 3.06(b) or
8.10(b) hereof representing principal and the proceeds of any Insurance Policy
which are to be applied as a payment of principal on the related Mortgage Loan
shall be deemed to be Prepayments for all purposes of this Agreement.
"Prepayment Interest Excess": Interest received on Prepayments in full
by a Mortgagor from the second day to the 15th day of any month after the month
of the Startup Day.
"Prepayment Period": As to any Payment Date, the period commencing on
the opening of business on the 16th day of the calendar month preceding the
month in which such Payment Date occurs and ending on the closing of business on
the 15th day of the month in which such Payment Date occurs (or, with respect to
the first Payment Date, the period from the day after the Cut-Off Date through
January 15, 1997.
26
"Preservation Expenses": Expenditures made by a Servicer in connection
with a foreclosed Mortgage Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
"Principal and Interest Account": Each principal and interest account
established by a Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": Either the Group I Principal Remittance
Amount or the Group II Principal Remittance Amount, as the case may be.
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Projected Net Monthly Excess Cashflow": As of any Payment Date and
with respect to either Group, six times Net Monthly Excess Cashflow, as
calculated pursuant to Section 7.03(c)(iv) hereof with respect to such Group on
such Payment Date.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": The Prospectus dated July 28, 1996 constituting part of
the Registration Statement.
"Prospectus Supplement": The AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1996-5 Prospectus Supplement dated December 4, 1996 to the
Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for
another pursuant to Section 3.03, 3.04, 3.05 or 3.06(b) hereof, which (i) has a
Coupon Rate not less than and not more than 1% greater than the Coupon Rate of
the Mortgage Loan being replaced, (ii) is of the same property type (i.e.,
single family, condominium, PUD unit, etc.) or is a single family dwelling and
the same occupancy status as the replaced Mortgage Loan or is a primary
residence, (iii) shall mature no later than January 1, 2027, (iv) has a
Loan-to-Value Ratio as of the Subsequent Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (v) shall be of
the same or higher credit quality classification (determined in accordance with
the related Originator's credit underwriting guidelines set forth in the related
Originator's underwriting manual) as the Mortgage Loan which such Qualified
Subsequent Mortgage replaces, (vi) has a Loan Balance as of the related
Subsequent Cut-Off Date not greater than and not substantially less than the
Loan Balance of the replaced Mortgage Loan as of such Subsequent Cut-Off Date,
(vii) shall not provide for a Balloon Payment if the related Mortgage Loan did
not provide for a Balloon Payment (and if such related Mortgage Loan provided
for a Balloon Payment, such Qualified Replacement Mortgage shall have an
original maturity of not less than the original maturity of such related
Mortgage Loan), (viii) shall be a fixed rate first lien Mortgage Loan if the
Mortgage Loan being replaced is a fixed rate Mortgage Loan or an adjustable rate
Mortgage Loan if the Mortgage Loan being replaced is an adjustable rate Mortgage
Loan (ix) if such Mortgage Loan being replaced is in Group II, (a) has the index
of the replaced Mortgage Loan, (b) has the same amount of time between rate
27
adjustment dates as the replaced Mortgage Loan and (c) has a margin no less than
the replaced Mortgage Loan and (x) satisfies the criteria set forth from time to
time in the definition thereof at Section 860G(a)(4) of the Code (or any
successor statute thereto) and applicable to the Trust.
"Quality": Quality Mortgage USA, Inc., a California corporation.
"Rating Agencies": Collectively, ▇▇▇▇▇'▇, Fitch and Standard & Poor's
or any successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by
which (x) the Loan Balance thereof plus any accrued and unpaid interest thereon
as of the date of liquidation exceeds (y) Net Liquidation Proceeds realized
thereon applied in reduction of such Loan Balance and accrued and unpaid
interest. As to any Mortgage Loan as to which there has been a Cram Down Loss,
the amount of such Cram Down Loss.
"Record Date": With respect to the Group I Certificates and each
Payment Date, the last day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs and with respect to the Class
A-8 Certificates and each Payment Date, the day immediately preceding such
Payment Date.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank
of Tokyo and National Westminster Bank PLC, provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with the Seller or any affiliate thereof, (iii) whose quotations
appear on Telerate Page 3750 on the relevant One-Month LIBOR Determination Date
and (iv) which have been designated as such by the Trustee.
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-8687), including all amendments thereto and including the Prospectus
Supplement relating to the Class A Certificates constituting a part thereof.
"Reimbursement Amount": As of any Payment Date, the sum of (x)(i) all
Insured Payments previously paid to the Trustee by the Certificate Insurer and
not previously repaid to the Certificate Insurer pursuant to Section
7.03(c)(iii)(C) or (D) hereof plus (ii) interest accrued on each such Insured
Payment not previously repaid at the Late Payment Rate and (y)(i) any amounts
then due and owing to the Certificate Insurer under the Insurance Agreement plus
(ii) interest on such amounts at the Late Payment Rate. The Certificate Insurer
shall notify the Trustee, the Depositor and the Seller of the amount of any
Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
28
"REMIC Estate": The segregated pool of assets referred to as the Trust
Estate (other than the Pre-Funding Account and the Capitalized Interest
Account).
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"Remittance Period": As to any Monthly Remittance Date, the period
commencing on the opening of business on the second day of the month preceding
the month in which such Monthly Remittance Date occurs and ending on the close
of business on the first day of the month in which such Monthly Remittance Date
occurs.
"REO Property": A Property acquired by a Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Reporting Date": Two Business Days (no later than 5:00 p.m. California
time) following the Determination Date of each month, on which date each
Servicer will provide the Monthly Servicing Report described in Section 8.29
hereof to the Trustee.
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
"Residual Net Monthly Excess Cashflow": With respect to any Payment
Date, the aggregate Net Monthly Excess Cashflow, if any, remaining, plus any
Subordination Reduction Amount remaining after the making of all applications,
transfers and disbursements described in Sections 7.03(c)(i) through
7.03(c)(vi)(A) hereof.
"Schedule of Mortgage Loans": Each of the schedules of Mortgage Loans,
segregated by Mortgage Loan Group, with respect to the Initial Mortgage Loans
listing each Initial Mortgage Loan in the related Group to be conveyed on the
Startup Day and with respect to Subsequent Mortgage Loans listing each
Subsequent Mortgage Loan conveyed to the Trust for inclusion in the related
Group as of each Subsequent Transfer Date and the name of the related Servicer.
Such Schedules of Mortgage Loans shall identify each Mortgage Loan by (1) the
Servicer's loan number, (2) the related Servicing Fee, (3) borrower's name, (4)
address (including the state) of the Property, (5) the lien status thereof, (6)
the Loan-to-Value Ratio, (7) the Loan Balance as of the Cut-Off Date, (8) the
Coupon Rate thereof, (9) the paid-through date for such Mortgage Loan and (10)
with respect to only the Advanta Loans, whether the Mortgage Loan is located in
an area identified in the Federal Registrar by the Federal Emergency Management
Agency as having special flood hazards.
"Scheduled Payment": As of any date of calculation, with respect to a
Mortgage Loan, the then stated scheduled monthly installment of principal and
interest payable as it may have been reduced thereunder which, if timely paid,
would result in the full amortization of principal over the term thereof (or, in
the case of a "balloon" Note, the term to the nominal maturity date for
amortization purposes, without regard to the actual maturity date).
"Securities Act": The Securities Act of 1933, as amended.
29
"Seller": AMRESCO Residential Capital Markets, Inc., a Delaware
corporation.
"Servicers" or "Servicer": Advanta and Option One and their permitted
successors and assigns. Any reference to Servicers or Servicer shall mean the
related Servicer with respect to any Mortgage Loan or Mortgage Loan Servicing
Group.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicer Clean-Up Call Date": The first Monthly Remittance Date on
which the outstanding Certificate Principal Balance has declined to $37,500,000.
"Servicer Loss Test": The Servicer Loss Test for each Servicer and with
respect to its related Mortgage Loan Servicing Group for any period set out
below is satisfied if the Cumulative Loss Percentage as it relates to such
Mortgage Loan Servicing Group and such period does not exceed the percentage set
out for such period below (provided, that for purposes of the calculation of the
Servicer Loss Test, Realized Losses attributable solely to Cram Down Losses
shall be excluded from the calculation of Cumulative Loss Percentage):
Cumulative Loss
Period Percentage
------ ----------
December 2, 1996 - December 1, 1997 .75%
December 2, 1997 - December 1, 1998 1.25%
December 2, 1998 - December 1, 1999 1.80%
December 2, 1999 - December 1, 2000 2.25%
December 2, 2000 and thereafter 2.75%
"Servicer Termination Event": As defined in Section 8.20(d) hereof.
"Servicer Termination Test": The Servicer Termination Test for each
Servicer and with respect to the related Mortgage Loan Servicing Group is
satisfied for any date of determination thereof, if (x) the 90+ Delinquency
Percentage (Rolling Three Month) with respect to the related Mortgage Loan
Servicing Group is less than 13.0%, (y) the Servicer Loss Test is satisfied and
(z) the Annual Loss Percentage (Rolling Twelve Month) as it relates to such
Mortgage Loan Servicing Group for the twelve month period immediately preceding
the date of determination thereof is not greater than 2.25%.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Mortgage Loan, an amount retained
by the related Servicer as compensation for servicing and administration duties
relating to such Mortgage Loan pursuant to Section 8.15.
"Servicing Fee Letter": Each of the servicing fee letters between the
Seller and the related Servicer, setting forth the Servicing Fee Rate and other
servicing compensation applicable to such Servicer.
"Servicing Fee Rate": The rate per annum set forth in the related
Servicing Fee Letter.
30
"Specified Subordinated Amount": Means as to each Group:
(a) for any Payment Date commencing on the Startup Day and
ending on the later to occur of (i) the date upon which the aggregate
Loan Balances of the Mortgage Loans in the related Group on such
Payment Date are less than or equal to one-half of the related Maximum
Collateral Amount and (ii) the 30th Payment Date following the Startup
Day, the greater of the Specified Subordinated Amount Requirement and
the excess of (i) the aggregate Loan Balances of all Mortgage Loans in
the related Group which are 91 or more days Delinquent (including REO
properties) over (ii) the Projected Net Monthly Excess Cash Flow as of
such Payment Date; and
(b) for any Payment Date occurring after the last Payment Date
specified in clause (a) above, the greatest of (i) the lesser of (A)
the related Specified Subordinated Amount Requirement and (B) two (2)
times the Specified Subordination Percentage, times the then
outstanding Loan Balance of all Mortgage Loans in the related Group,
(ii) the excess of (A) the aggregate Loan Balance of all Mortgage Loans
which are 91 or more days Delinquent (including REO Properties) over
(B) the Projected Net Monthly Excess Cashflow as of such Payment Date,
(iii) an amount equal to .50% times the related Maximum Collateral
Amount and (iv) an amount equal to the aggregate Loan Balances of the
four largest loans in the related Group.
(c) Notwithstanding anything to the contrary set forth in
clauses (a) and (b) of this definition, on and after any Payment Date
on which (A) an Insured Payment has become due and owing with respect
to such Group or (B) as to Group I, the Servicer Termination Test is
not satisfied with respect to each of Advanta and Option One or (C) as
to Group II, the Servicer Termination Test is not satisfied with
respect to each of Option One and Advanta, the related Specified
Subordinated Amount shall be an amount not less than the related
Specified Subordinated Amount as of the immediately preceding Payment
Date.
"Specified Subordinated Amount Requirement": As of any Payment Date,
the product of the related Specified Subordination Percentage and the Maximum
Collateral Amount with respect to the related Group.
"Specified Subordination Percentage": As defined in the Commitment
Letters dated December 17, 1996 with respect to the Certificate Insurance
Policies.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of
the McGraw Hill Companies, Inc..
"Startup Day": December 18, 1996.
"Subordinate Certificates": The Class B-10 Certificates and the Class R
Certificates.
"Subordinated Amount": The Group I Subordinated Amount or the Group II
Subordinated Amount, as the case may be.
"Subordination Deficiency Amount": With respect to either Mortgage Loan
Group and any Payment Date, the excess, if any, of (i) the Specified
Subordinated Amount applicable to such Mortgage Loan Group and Payment Date over
(ii) the Subordinated Amount applicable to such Mortgage Loan Group and Payment
Date prior to taking into account the payment of any related Subordination
Increase Amounts on such Payment Date.
31
"Subordination Deficit": With respect to either Mortgage Loan Group and
Payment Date, the amount, if any, by which (x) the aggregate of the related
Class A Certificate Principal Balances, after taking into account the payment of
the Class A Distribution Amount with respect to such Mortgage Loan Group on such
Payment Date (except for any Subordination Deficit with respect to the Classes
of Certificates related to such Mortgage Loan Group and Subordination Increase
Amount with respect to such Mortgage Loan Group), exceeds (y) the sum of (a) the
aggregate Loan Balances of the Mortgage Loans in the related Mortgage Loan Group
as of the close of business on the last day of the related Prepayment Period and
(b) with respect to the related Group, the amount, if any, on deposit in the
Pre- Funding Account allocable to such Group as of the close of business on the
last day of the related Prepayment Period.
"Subordination Increase Amount": With respect to either Mortgage Loan
Group and Payment Date, the lesser of (i) the related Subordination Deficiency
Amount as of such Payment Date (after taking into account the payment of the
related Class A Distribution Amount on such Payment Date (except for any
Subordination Increase Amount with respect to such Mortgage Loan Group)) and
(ii) the aggregate amount of Net Monthly Excess Cashflow allocated to the
Classes of Certificates related to such Mortgage Loan Group pursuant to Sections
7.03(c)(iv)(A) and 7.03(c)(iv)(B) on such Payment Date.
"Subordination Reduction Amount": With respect to any Mortgage Loan
Group and Payment Date, an amount equal to the lesser of (x) the Excess
Subordinated Amount for such Mortgage Loan Group and Payment Date and (y) the
Principal Remittance Amount with respect to such Mortgage Loan Group for the
related Monthly Remittance Date.
"Subsequent Cut-Off Date": The close of business on the first day of
the month in which a Qualified Replacement Mortgage or a Subsequent Mortgage
Loan is transferred and assigned to the Trust.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the Trust after
the Startup Day for inclusion in Group I or Group II pursuant to Section 3.07
hereof, which shall be listed on the Schedule of Mortgage Loans attached to a
Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee, the Depositor
and the Seller substantially in the form of Exhibit C hereto, by which
Subsequent Mortgage Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": With respect to Subsequent Mortgage Loans,
the date specified in each Subsequent Transfer Agreement, and with respect to a
Qualified Replacement Mortgage, the date upon which a conveyance of such
Qualified Replacement Mortgage to the Trust is effective.
"Subservicer": Any Person with whom a Servicer has entered into a
subservicing agreement and who satisfies all requirements set forth in Section
8.03 hereof in respect of the qualification of a subservicer.
"Subservicing Agreement": The written contract between a Servicer and
any Subservicer relating to servicing and/or administration of certain Mortgage
Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tax Matters Certificate": The Class R Certificate, initially issued to
The Chase Manhattan Bank as the initial Tax Matters Person.
32
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates, which shall be issued to and held by The Chase Manhattan
Bank throughout the term hereof unless another Person shall accept an assignment
of such interest and the designation of Tax Matters Person pursuant to Section
11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the Dow
▇▇▇▇▇ Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Notice": As defined in Section 9.03(a) hereof.
"Total Available Funds": Either the Group I Total Available Funds or
the Group II Total Available Funds, as applicable.
"Total Monthly Excess Cashflow": As defined in Section 7.03(c)(iii)
hereof.
"Total Monthly Excess Spread": Either the Group I Total Monthly Excess
Spread or the Group II Total Monthly Excess Spread, as applicable.
"Transfer Agreement": Any of (i) the Continuing Loan Purchase Agreement
dated as of April 5, 1996, between New Century, as seller, and the Seller, as
buyer, as supplemented by the Supplement dated December 18, 1996; (ii) the
Continuing Loan Purchase Agreement dated March 1, 1996 between Option One, as
seller, and the Seller, as buyer, as supplemented by the Supplement dated
December 18, 1996; (iii) the Continuing Loan Purchase Agreement dated August 15,
1996 between First Colony, as seller, and the Seller, as buyer as supplemented
by the Supplement dated December 18, 1996; (iv) the Continuing Loan Purchase
Agreement dated as of October 25, 1996, between Quality, as seller, and the
Seller, as buyer, as supplemented by Supplement dated December 18, 1996; (v) the
Continuing Loan Purchase Agreement dated as of August 20, 1996, between First
Franklin, as seller, and the Seller, as buyer, as supplemented by Supplement
dated December 18, 1996; (vi) the Continuing Loan Purchase Agreement dated as of
September 1, 1996, between Highland, as seller, and the Seller, as buyer, as
supplemented by Supplement dated December 18, 1996; (vii) the Continuing Loan
Purchase Agreement dated as of October 1, 1996, between Weyerhaeuser, as seller,
and the Seller, as buyer, as supplemented by Supplement dated December 18, 1996;
(viii) Assignment, Assumption and Recognition Agreement dated as of September
12, 1996, between DLJ, as seller, and the Seller, as buyer, along with that
certain Master Mortgage Loan Purchase Agreement dated October 31, 1995, between
BNC, as seller, and DLJ, as buyer, as supplemented by Supplement dated December
18, 1996; (ix) Assignment, Assumption and Recognition Agreement dated as of
September 25, 1996, between DLJ, as seller, and the Seller, as buyer, along with
that certain Master Mortgage Loan Purchase Agreement dated October 31, 1995,
between BNC, as seller, and DLJ, as buyer, as supplemented by Supplement dated
December 18, 1996; and (x) Assignment, Assumption & Recognition Agreement dated
as of September 27, 1996, between DLJ, as seller, and the Seller, as buyer,
along with that certain Master Mortgage Loan Purchase Agreement dated September
29, 1995, between Quality as seller, and DLJ, as buyer, as supplemented by
Supplement dated December 18, 1996.
"Trust": AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, the trust created under this Agreement.
33
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": The Chase Manhattan Bank, a New York banking corporation,
the corporate trust office of which is located on the date of execution of this
Agreement at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Structured
Finance/MBS, not in its individual capacity but solely as Trustee under this
Agreement, and any successor hereunder.
"Trustee Fee": The fee, if any, set out in a side letter between the
Seller and the Trustee.
"Weyerhaeuser": Weyerhaeuser Mortgage Company, a California
corporation.
"Underwriters": Prudential Securities Incorporated, CS First Boston,
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
34
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto (excluding the Servicers) do hereby create and
establish, pursuant to the laws of the State of New York and this Agreement, the
Trust, which, for convenience, shall be known as "AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-5".
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: AMRESCO Residential
Securities Corporation Mortgage Loan Trust 1996-5 or at such other address as
the Trustee may designate by notice to the Depositor, the Seller, the Servicers,
the Owners and the Certificate Insurer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Mortgage Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the REMIC Estate's status as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the fees of the Trustee and
(ii) any reasonable expenses of the Trustee that are "unanticipated expenses of
the REMIC" within the meaning of Treasury Regulations Section 1.860G-1(b)(3),
shall be paid pursuant to Section 7.03(c)(ii). The Seller shall pay directly the
reasonable fees and expenses of counsel to the Trustee pursuant to a fee letter
between the Seller and the Trustee. The reasonable fees and expenses of the
Trustee's counsel in connection with the review and delivery of this Agreement
and related documentation shall be paid by the Seller on the Startup Day.
35
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the situs of the Trust
shall be in the State of New York; provided that it is understood that the Files
may be held by the Custodian on behalf of the Trustee outside the State of New
York.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the REMIC Estate shall be
evidenced by the interests having the characteristics and terms as follows,
including for federal income tax purposes the month in which the Final Scheduled
Payment Dates occur:
Initial Final Scheduled
Class Designation Balance Payment Dates
----------------- ------- -------------
Class A-1 $42,200,000 August 25, 2011
Class A-2 $29,000,000 April 25, 2028
Class A-3 $16,500,000 October 25, 2020
Class A-4 $17,000,000 September 25, 2022
Class A-5 $15,000,000 March 25, 2024
Class A-6 $15,900,000 June 25, 2025
Class A-7 $14,400,000 November 25, 2026
Class A-8 $550,000,000 November 25, 2026
Class B-10 (1) November 25, 2026
Class S Certificates (1) November 25, 2026
Class R Certificates (1) November 25, 2026
-----------------
(1) No Certificate Principal Balance.
(b) The Depositor hereby designates the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class S and Class
B-10 Certificates as "regular interests," and the Class R Certificates as the
single class of "residual interests" in the REMIC Estate for purposes of the
REMIC Provisions.
(c) The Startup Day is hereby designated as the "startup day" of the
REMIC Estate within the meaning of Section 860G(a)(9) of the Code.
(d) The Owner of the Tax Matters Person Residual Interest in the REMIC
Estate is hereby designated as Tax Matters Person with respect to the REMIC
Estate.
(e) The Trust and the REMIC Estate shall, for federal income tax
purposes, maintain books on a calendar year basis and report income on an
accrual basis.
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(f) The Trustee shall cause the REMIC Estate to elect to be treated as
a REMIC under Section 860D of the Code. Any inconsistencies or ambiguities in
this Agreement or in the administration of the Trust shall be resolved in a
manner that preserves the validity of such election to be treated as a REMIC.
(g) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to the REMIC Estate. Such information will be
provided in the manner described in Treasury Regulation Section 1.860E-2(a)(5),
or any successor regulation thereto.
END OF ARTICLE II
37
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS AND THE SELLER;
COVENANT OF SELLER TO CONVEY MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Seller, the Certificate Insurer, the Servicers and the Owners that as of the
Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under the Operative Documents to which it is a party.
(b) The execution and delivery by the Depositor and its performance and
compliance with the terms of the Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the
Depositor and will not violate the Depositor's certificate of incorporation or
bylaws or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which the Depositor is a
party or by which the Depositor is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Depositor or any of its properties.
(c) Each Operative Document to which the Depositor is a party, assuming
due authorization, execution and delivery by the other parties hereto and
thereto, constitutes a valid, legal and binding obligation of the Depositor,
enforceable against it in accordance with the terms hereof and thereof, except
as the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) The Depositor 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 materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder and under the Operative Documents to which the Depositor
is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor, which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
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(f) No certificate of an officer, statement furnished in writing or
report delivered, or to be delivered, pursuant to the terms hereof by the
Depositor contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading. The Registration Statement does not contain any
untrue statement of a material fact required to be stated therein or omit to
state any material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to the Depositor that materially adversely affects or in the
future may (so far as the Depositor can now reasonably foresee) materially
adversely affect the Depositor or the Mortgage Loans or the ownership interests
therein represented by the Certificates that has not been set forth in the
Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the acquisition by the
Depositor of the Mortgage Loans, the conveyance by the Depositor of the Mortgage
Loans, the purchase and sale of the Certificates and the execution, delivery and
performance by the Depositor of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by the Operative
Documents on the part of the Depositor and the performance by the Depositor of
its obligations under this Agreement and such of the other Operative Documents
to which it is a party.
(i) The transactions contemplated by the Operative Documents are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Mortgage Loans, nor is the Depositor aware of any pending
insolvency.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Mortgage
Loans to the Trustee.
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Section 3.02 Representations and Warranties of the Servicers.
(i) Each Servicer hereby represents and warrants to the Trustee, the
Depositor, the Seller, the Certificate Insurer and the Owners, as to itself
only, that as of the Startup Day:
(a) It is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation, is in compliance
with the laws of each state in which any Property is located to the extent
necessary to enable it to perform its obligations hereunder and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. Such Servicer has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under the Operative Documents to which it is a party.
(b) The execution and delivery of the Operative Documents to which such
Servicer is a party by such Servicer and its performance and compliance with the
terms thereof have been duly authorized by all necessary corporate action on the
part of such Servicer and will not violate such Servicer's articles or
certificate of incorporation or bylaws or 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 such Servicer is a party or by which such Servicer is bound or violate
any statute or any order, rule or regulation of any court, governmental agency
or body or other tribunal having jurisdiction over such Servicer or any of its
properties.
(c) Each Operative Document to which such Servicer is a party, assuming
due authorization, execution and delivery by the other parties thereto,
constitutes a valid, legal and binding obligation of such Servicer, enforceable
against it in accordance with the terms thereof, except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general principles of equity (whether considered in a proceeding or action in
equity or at law).
(d) Such Servicer 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 would materially and adversely affect the
condition (financial or otherwise) or operations of such Servicer or its
properties or would materially and adversely affect its performance hereunder.
(e) No litigation is pending with respect to which such Servicer has
received service of process or, to the best of such Servicer's knowledge,
threatened against such Servicer which litigation would prohibit its entering
into the Operative Documents to which such Servicer is a party or would
materially and adversely affect the condition (financial or otherwise) or
operations of such Servicer or its properties or would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which such Servicer is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by such Servicer contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions,
40
approvals, etc. under any state securities laws, real estate syndication or
"Blue Sky" statutes, as to which such Servicer makes no such representation or
warranty), that are necessary or advisable in connection with the execution,
delivery and performance by such Servicer of the Operative Documents to which it
is a party, have been duly taken, given or obtained, as the case may be, are in
full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by the Operative Documents on the part of such Servicer and the
performance by such Servicer of its obligations under the Operative Documents to
which it is a party.
(h) The collection practices used by such Servicer with respect to the
Mortgage Loans serviced by it have been, in all material respects, legal,
proper, prudent and customary in the mortgage servicing business.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of such Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Mortgage Loans to the
Trustee.
(ii) Upon discovery by any of the Seller, a Servicer, the Depositor,
the Certificate Insurer, or the Trustee (each, for purposes of this paragraph, a
"party") of a breach of any of the representations and warranties set forth in
this Section 3.02 which materially and adversely affects the interests of the
Owners or of the Certificate Insurer, 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 such breach, the related Servicer shall (A) cure
such breach in all material respects to the satisfaction of the Certificate
Insurer, (B) to the extent such breach can only be cured through repurchase or
substitution of one or more Mortgage Loans, the Servicer (other than Advanta)
may so repurchase or substitute in the manner set forth in Section 3.04(b), and
(C) to the extent that such breach is not cured in accordance with clause (A) or
(B) above, the related Servicer may thereafter be removed pursuant to Section
8.20(a)(iv) hereof; provided, however, that if any party can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended with the written
approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Trustee,
the Depositor, the Certificate Insurer, the Servicers and the Owners as of the
Startup Day as follows:
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Seller has all requisite corporate power and authority to own and
operate its properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations under
the Operative Documents to which it is a party.
(b) The execution and delivery by the Seller and its performance and
compliance with the terms of the Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the Seller
and will not violate the Seller's certificate of incorporation or
41
bylaws or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which the Seller is a party
or by which the Seller is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Seller or any of its properties.
(c) Each Operative Document to which the Seller is a party, assuming
due authorization, execution and delivery by the other parties hereto and
thereto, constitutes a valid, legal and binding obligation of the Seller,
enforceable against it in accordance with the terms hereof and thereof, except
as the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) The Seller 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 materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which would materially and adversely affect its performance
under the Operative Documents to which the Seller is a party.
(e) No litigation is pending with respect to which the Seller has
received service of process or, to the best of the Seller's knowledge,
threatened against the Seller, which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Seller or its properties
or might have consequences that would materially and adversely affect its
performance under the Operative Documents to which the Seller is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered or to be delivered pursuant to the terms hereof by the Seller
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Seller or matters or activities for which the Seller is responsible
in accordance with the Operative Documents or which are attributable to the
Seller therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Seller required to be stated therein or necessary to make
the statements contained therein with respect to the Seller, in light of the
circumstances under which they were made, not misleading. There is no fact known
to the Seller that materially adversely affects or in the future may (so far as
the Seller can now reasonably foresee) materially adversely affect the Seller or
the Mortgage Loans or the ownership interests therein represented by the
Certificates that has not been set forth in the Registration Statement.
(h) Upon the receipt of each Mortgage Loan (including the related Note)
and other items of the Trust Estate by the Trustee under this Agreement, the
Trust will have good title to such Mortgage Loan (including the related Note)
and such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be,
42
by or from any federal, state or other governmental authority or agency (other
than any such actions, approvals, etc. under any state securities laws, real
estate syndication or "Blue Sky" statutes, as to which the Seller makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution, delivery and
performance by the Seller of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by the other
Operative Documents on the part of the Seller and the performance by the Seller
of its obligations under this Agreement and such of the other Operative
Documents to which it is a party.
(j) The transactions contemplated by the Operative Documents are in the
ordinary course of business of the Seller.
(k) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Mortgage Loans, nor is the Seller aware of any pending
insolvency.
(l) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Seller hereunder are not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
(m) The Seller is not aware of a default by an Originator under any
Operative Document or that any Mortgage Loan breaches any representation or
warranty in a Transfer Agreement that as of the Startup Date is not subject to
cure.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Mortgage
Loans to the Trustee.
Upon discovery by any of the Servicers, the Depositor, the Seller, the
Certificate Insurer or the Trustee (each, for purposes of this paragraph, a
"party") of a breach of any of the representations and warranties set forth in
this Section 3.03 which materially and adversely affects the interests of the
Owners or the interests of the Certificate Insurer, the party discovering such
breach shall give prompt written notice to the other parties. The Seller hereby
covenants and agrees that within 60 days of its discovery or its receipt of
notice of breach, it shall cure such breach in all material respects or, with
respect to a breach of clause (h) above, it shall itself, or if the related
Originator or other party to the related Transfer Agreement causes such breach,
such party shall on the Monthly Remittance Date next succeeding such discovery
or receipt of notice (i) within two years of the Startup Day, substitute in lieu
of any Mortgage Loan not in compliance with clause (h) a Qualified Replacement
Mortgage and, if the outstanding principal amount of such Qualified Replacement
Mortgage as of the applicable Subsequent Cut-Off Date is less than the Loan
Balance of such Mortgage Loan as of such Subsequent Cut-Off Date, deliver an
amount equal to such difference together with the aggregate amount of (A) all
unreimbursed Delinquency Advances and Servicing Advances theretofore made with
respect to such Mortgage Loan and (B) the interest portion of any Delinquency
Advances which the related Servicer has theretofore failed to remit with respect
to such Mortgage Loan (a "Substitution Amount") to the related Servicer for
deposit in the Principal and Interest Account or (ii) purchase such Mortgage
Loan from the Trust at the Loan Purchase Price, which purchase price shall be
delivered to the related Servicer for deposit in the Principal and Interest
Account. Notwithstanding any provision of this Agreement to the contrary, with
respect to any Mortgage Loan which is not in default or as to which no default
is imminent, no repurchase or
43
substitution pursuant hereto shall be made unless the related Originator or the
Seller obtains for the Trustee and the Certificate Insurer an opinion of counsel
experienced in federal income tax matters to the effect that such a repurchase
or substitution would not constitute a Prohibited Transaction for the REMIC
Estate or otherwise subject the REMIC Estate to tax and would not jeopardize the
status of the REMIC Estate as a REMIC (a "REMIC Opinion") addressed to the
related Servicer, the Trustee and the Certificate Insurer and acceptable to the
related Servicer, the Certificate Insurer and the Trustee. Any Mortgage Loan as
to which repurchase or substitution was delayed pursuant to this Section because
of the inability to deliver a REMIC Opinion shall be repurchased or substituted
for (subject to compliance with Sections 3.03, 3.04 or 3.06, as the case may be)
upon the earlier of (a) the occurrence of a default or imminent default with
respect to such Mortgage Loan and (b) receipt by the Trustee and the Certificate
Insurer of a REMIC Opinion.
Section 3.04 Covenants of Seller to Take Certain Actions with Respect
to the Mortgage Loans In Certain Situations.
(a) Other than the Seller's right to recapture any premium paid by it
in connection with its purchase of Mortgage Loans, the Seller hereby assigns to
the Depositor, who assigns to the Trustee for the benefit of the Owners and the
Certificate Insurer all of its right, title and interest under each Transfer
Agreement applicable to the Mortgage Loans but none of its obligations
thereunder. Insofar as such Transfer Agreement provides for representations and
warranties made by the related Originator or another party who has sold loans to
the Seller in respect of a Mortgage Loan and any remedies provided thereunder
for any breach of such representations and warranties, such right, title and
interest may be enforced against such Originator directly by the Seller, the
Depositor, the related Servicer, by the Trustee on behalf of the Owners, or by
the Certificate Insurer; provided, that the Trustee must enforce such remedies
if such other parties do not so enforce such remedies. Upon the discovery by the
Seller, the Depositor, the Certificate Insurer, a Servicer or the Trustee of a
breach of any of the representations and warranties made in a Transfer Agreement
in respect of any Mortgage Loan, without regard to any limitation set forth in
such representation or warranty concerning the knowledge of the related
Originator or another party who has sold loans to the Seller as to the facts
stated therein, which materially and adversely affects the interests of the
Owners or of the Certificate Insurer in such Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other parties.
A breach of any representation or warranty (x) relating to
marketability of title sufficient to transfer unencumbered title to a Mortgage
Loan set forth in each Transfer Agreement, (y) relating to enforceability of the
Mortgage Loan against the related Mortgagor or Property set forth in each
Transfer Agreement or (z) the status of such Mortgage Loan as a "qualified
mortgage" under Section 860G(a)(3) of the Code, is a priori the breach of a
representation or warranty which "materially and adversely affects the interests
of the Owners or of the Certificate Insurer" in such Mortgage Loan; provided
that the related Originator shall nevertheless have the opportunity to cure,
substitute or repurchase in accordance with the applicable Transfer Agreement
and this Agreement.
(b) Upon the earliest to occur of the Seller's discovery, its receipt
of notice of breach of a representation and warranty given by an Originator from
any one of the other parties hereto or from the Certificate Insurer or such time
as a breach of any representation and warranty materially and adversely affects
the interests of the Owners or of the Certificate Insurer as set forth above,
the Seller hereby covenants and warrants that it shall promptly request that the
related Originator cure such breach in all material respects or, if such breach
is not cured, the Seller shall request that the related Originator, subject to
the further requirements of this paragraph and within the time period specified
in the related
44
Transfer Agreement (but in any case for a Mortgage Loan that is not a "qualified
mortgage", within 90 days of discovery thereof) (i) within two years of the
Startup Day, substitute in lieu of each Mortgage Loan which has given rise to
the requirement for action a Qualified Replacement Mortgage and deliver the
Substitution Amount applicable thereto, to the related Servicer for deposit in
the related Principal and Interest Account or (ii) purchase such Mortgage Loan
from the Trust at a purchase price equal to the Loan Purchase Price thereof,
which purchase price shall be delivered to the related Servicer for deposit in
the related Principal and Interest Account by the related Originator. In
connection with any such proposed purchase or substitution, the Seller may
request the Originator at such party's expense to cause to be delivered to the
Trustee or may itself deliver to the related Servicer, the Trustee and to the
Certificate Insurer an opinion of counsel experienced in federal income tax
matters stating whether or not such a proposed purchase or substitution would
constitute a Prohibited Transaction for the Trust or would jeopardize the status
of the Trust as a REMIC, and the related Originator shall only be required to
take either such action to the extent such action would not constitute a
Prohibited Transaction for the Trust or would not jeopardize the status of the
Trust as a REMIC. Any required purchase or substitution, if delayed by the
absence of such opinion, shall nonetheless occur upon the earlier of (i) the
occurrence of a default or imminent default with respect to the Mortgage Loan or
(ii) the delivery of such opinion by the Seller at the related Originator's
expense or by the related Originator. Any repurchase or substitution shall occur
prior to the related Monthly Remittance Date and the related Originator shall
provide the related Servicer with written notice no less than five Business Days
in advance of such repurchase or substitution. It is understood and agreed that
the obligation of the related Originator to cure the defect, or substitute for
or purchase any Mortgage Loan as to which a representation or warranty is untrue
in any material respect and has not been remedied shall constitute the sole
remedy available to the Owners, the Seller, the Depositor, the Trustee and the
Certificate Insurer.
(c) In the event that any Qualified Replacement Mortgage is delivered
by an Originator to the Trust pursuant to this Section 3.04 or Section 3.06
hereof, the Seller shall cause the related Originator to take the actions
described in Section 3.04(b) with respect to such Qualified Replacement Mortgage
upon the discovery by any of the Owners, the Seller, the Certificate Insurer, a
Servicer or the Trustee that the representations and warranties set forth in the
related Transfer Agreement or in Section 3.03 above, are untrue in any material
respect on the date such Qualified Replacement Mortgage is conveyed to the Trust
such that the interests of the Owners or the Certificate Insurer in the related
Qualified Replacement Mortgage are materially and adversely affected; provided,
however, that for the purposes of this subsection (c) the representations and
warranties in the related Transfer Agreement or as set forth in Section 3.3
above referring to items "as of the Cut-Off Date" or "as of the Startup Day"
shall be deemed to refer to such items as of the related Subsequent Cut-Off
Date.
(d) Any of the foregoing obligations set forth in subsection (b) or (c)
applicable to any Originator (other than Option One) will be required to be
performed by the Seller if the related Originator defaults in performing the
obligation and such default remains unremedied for 30 days.
(e) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Mortgage Loans (including
Qualified Replacement Mortgages) to the Trustee.
(f) The Trustee and the Servicers (in their capacities as Servicers)
shall have no duty to conduct any affirmative investigation other than as
specifically set forth in this Agreement as to the occurrence of any condition
requiring the repurchase or substitution of any Mortgage Loan pursuant to this
Section or the eligibility of any Mortgage Loan for purposes of this Agreement.
45
Section 3.05 Conveyance of the Mortgage Loans, Subsequent Mortgage
Loans and Qualified Replacement Mortgages.
(a) On the Startup Day the Seller, concurrently with the execution and
delivery hereof, hereby transfers, assigns, sets over and otherwise conveys
without recourse to the Depositor and the Depositor, concurrently with the
execution and delivery hereof, transfers, assigns, sets over and otherwise
conveys without recourse, to the Trustee for the benefit of the Owners of the
Certificates, all of their respective right, title and interest in and to the
Trust Estate; provided, however, that the Seller reserves and retains all of its
right, title and interest in and to principal (including Prepayments collected)
and interest due on each Initial Mortgage Loan on or prior to the Cut-Off Date
on any Mortgage Loan that is current on the Cut-Off Date. The transfer by the
Depositor of the Initial Mortgage Loans set forth on the Schedule of Mortgage
Loans to the Trustee is absolute and is intended by the Owners and all parties
hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Initial Mortgage Loans conveying
good title thereto free and clear of any liens and encumbrances from the Seller
to the Depositor and from the Depositor to the Trust and that the Initial
Mortgage Loans not be part of the Depositor's or the Seller's estate in the
event of insolvency. In the event that either such conveyance or a conveyance of
a Qualified Replacement Mortgage or a conveyance pursuant to Section 3.07 and
any Subsequent Transfer Agreement is deemed to be a loan, the parties intend
that the Seller shall be deemed to have granted to the Depositor and the
Depositor shall be deemed to have granted to the Trustee a security interest in
the Trust Estate, and that this Agreement shall constitute a security agreement
under applicable law.
In connection with such sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the States of Texas and Delaware, a UCC-1 financing statement
executed by the Seller as debtor, naming the Depositor as secured party and
listing the Initial Mortgage Loans and the other property (including any
Qualified Replacement Mortgage) described above as collateral and on or prior to
each Subsequent Transfer Date the Seller will file in such offices a UCC-1
financing statement listing the Subsequent Mortgage Loans so transferred as
collateral. The characterization of the Seller as a debtor and the Depositor as
the secured party on such financing statements is solely for protective purposes
and shall in no way be construed as being contrary to the intent of the parties
that this transaction be treated as a sale of the Seller's entire right, title
and interest in the Trust Estate. In connection with such filing, the Seller
agrees that it shall cause to be filed all necessary continuation statements
thereof and to take or cause to be taken such actions and execute such documents
as are necessary to perfect and protect the Trustee's, the Owners' and the
Certificate Insurer's interest in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance,
from the Depositor to the Trustee, the Depositor has filed, in the appropriate
office or offices in the States of Texas and Delaware, a UCC-1 financing
statement executed by the Depositor as debtor, naming the Trustee as secured
party and listing the Initial Mortgage Loans and the other property (including
any Qualified Replacement Mortgage) described above as collateral and on or
prior to each Subsequent Transfer Date the Depositor will file in such offices a
similar UCC-1 financing statement listing the Subsequent Mortgage Loans so
transferred as collateral. The characterization of the Depositor as a debtor and
the Trustee as the secured party in such financing statements is solely for
protective purposes and shall in no way be construed as being contrary to the
intent of the parties that this transaction be treated as a sale of the
Depositor's entire right, title and interest in the Trust Estate. In connection
with such filing, the Depositor agrees that it
46
shall cause to be filed all necessary continuation statements thereof and to
take or cause to be taken such actions and execute such documents as are
necessary to perfect and protect the Trustee's, the Owners' and the Certificate
Insurer's interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Initial
Mortgage Loans and prior to each Subsequent Transfer Date with respect to the
Qualified Replacement Mortgage or Subsequent Mortgage Loan, the Depositor agrees
to:
(i) deliver without recourse to the Custodian, on behalf of
the Trustee, on the Startup Day with respect to each Initial Mortgage
Loan or on each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgage or Subsequent Mortgage Loans, (A) the original
Notes endorsed in blank or to the order of the Trustee, (B) the
original title insurance policy or any one of an original title binder,
an original preliminary title report or an original title commitment or
a copy of any of the foregoing certified by the issuer of the title
insurance policy, or the attorney's opinion of title, (C) originals or
certified copies of all intervening recorded assignments, showing a
complete chain of title from origination to the Trustee, if any, with
evidence of recording thereon, (D) originals of all assumption,
modification, written assurance or substitution agreements, if any and
(E) either: (1) the original Mortgage, with evidence of recording
thereon, (2) a certified copy if such original Mortgage has not been
returned by the applicable recording office, or (3) a copy of the
Mortgage certified by the public recording office in those instances
where the original recorded Mortgage has been lost;
(ii) cause the Custodian on behalf of the Trustee, within 60
days following the Startup Day with respect to the Initial Mortgage
Loans or on each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgages or Subsequent Mortgage Loans to complete the
assignments of the Mortgages to "The Chase Manhattan Bank, as Trustee
of AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 under the Pooling and Servicing Agreement dated as of December
1, 1996" to be submitted to the Seller for recording in the appropriate
jurisdictions (unless the Originator is Option One, in which case
Option One shall so submit such assignments) for recording in the
appropriate jurisdictions; provided, however, that the Depositor shall
not be required to cause the Trustee to complete and cause the related
Originator (if the Originator is Option One) or the Seller to record an
assignment for any Mortgage with respect to a Property located in
California or with respect to which the original recording information
is lacking;
(iii) if not delivered on the Startup Day, deliver the title
insurance policy or title searches, the original Mortgages and such
recorded assignments, together with originals or duly certified copies
of any and all prior assignments, to the Custodian on behalf of the
Trustee within 15 days of receipt thereof by the Depositor (but in any
event, with respect to any Mortgage as to which original recording
information has been made available to the Depositor, within one year
after the Startup Day with respect to the Initial Mortgage Loans or on
each Subsequent Transfer Date with respect to the Qualified Replacement
Mortgages or Subsequent Mortgage Loans); and
(iv) furnish to the Trustee and the Certificate Insurer at the
Depositor's expense, an opinion of counsel with respect to the sale and
perfection of the Subsequent Mortgage Loans delivered to the Trust,
corporate and enforceability matters and an opinion of counsel as to
the tax consequences to the Trust, if any, resulting from the
conveyance of Subsequent Mortgage Loans, each in form and substance
satisfactory to the Trustee and the Certificate Insurer.
47
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Custodian on behalf of
the Trustee of a copy of such Mortgage, such assignment or assignments of
Mortgage certified by the public recording office to be a true copy of the
recorded original thereof.
Copies of all Mortgage assignments received by the Custodian on behalf
of the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of the Seller.
(c) In the case of Initial Mortgage Loans which have been prepaid in
full after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu
of the foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) The Seller shall cause the related Originator, to transfer, assign,
set over and otherwise convey without recourse, to the Trustee all right, title
and interest of such party in and to any Qualified Replacement Mortgage
delivered to the Trustee on behalf of the Trust by such party pursuant to
Section 3.03, 3.04 or 3.06 hereof and all such party's right, title and interest
to principal and interest due on such Qualified Replacement Mortgage after the
applicable Subsequent Cut-Off Date; provided, however, that such party shall
reserve and retain all right, title and interest in and to payments of principal
and interest due on such Qualified Replacement Mortgage on or prior to the
applicable Subsequent Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage therefor, the Trustee will
transfer, assign, set over and otherwise convey without recourse or
representation, to the party providing such Qualified Replacement Mortgage, all
of its right, title and interest in and to such released Mortgage Loan and all
the Trust's right, title and interest to principal and interest due on such
released Mortgage Loan after the applicable Subsequent Cut-Off Date; provided,
however, that the Trust shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such released Mortgage Loan
on or prior to the applicable Subsequent Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Depositor and then to the Trustee on behalf of the
Trust, the Seller agrees to (i) deliver without recourse to the Trustee on the
date of delivery of such Qualified Replacement Mortgage the original Note
relating thereto, endorsed in blank or to the order of the Trustee, (ii) cause
promptly to be recorded an assignment in the appropriate jurisdictions, (iii)
deliver the original Qualified Replacement Mortgage and such recorded
assignment, together with original or duly certified copies of any and all prior
assignments, to the Trustee within 15 days of receipt thereof by the Seller (but
in any event within 120 days after the date of conveyance of such Qualified
Replacement Mortgage), (iv) deliver the title insurance policy, or where no such
policy is required to be provided under Section 3.05(b)(i)(B), the other
evidence of title in same required in Section 3.05(b)(i)(B) and (v) originals of
all assumption, modification, written assurance or substitution agreements, if
any.
48
(g) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage the Trustee shall deliver on
the date of conveyance of such Qualified Replacement Mortgage to the party
providing such Qualified Replacement Mortgage (i) the original Note relating
thereto, endorsed without recourse or representation, to the Seller, (ii) the
original Mortgage so released and all assignments relating thereto and (iii)
such other documents as constituted the File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller shall prepare a substitute assignment or cure such defect, as the
case may be, and thereafter cause each such assignment to be duly recorded.
Section 3.06 Acceptance by Trustee; Certain Substitutions of Mortgage
Loans; Certification by Trustee.
(a) The Trustee agrees to cause the Custodian to execute and deliver on
the Trustee's behalf on the Startup Day an acknowledgment of receipt of the
items delivered by the Seller or the Depositor in the form attached as Exhibit E
hereto, and declares that it will hold such documents and any amendments,
replacement or supplements thereto, as well as any other assets included in the
definition of Trust Estate and delivered to the Custodian on behalf of the
Trustee, as Trustee in trust upon and subject to the conditions set forth herein
for the benefit of the Owners and the Certificate Insurer. The Trustee agrees to
cause the Custodian on the Trustee's behalf to review, for the benefit of the
Owners and the Certificate Insurer, such items within 45 days after the Startup
Day (or, with respect to any document delivered after the Startup Day, within 45
days of receipt and with respect to any Subsequent Mortgage Loan or Qualified
Replacement Mortgage, within 45 days after the Subsequent Transfer Date) and to
deliver to the Depositor, the Seller, the related Servicer and the Certificate
Insurer a certification in the form attached hereto as Exhibit F (a "Pool
Certification") to the effect that, as to each Mortgage Loan listed in the
Schedule of Mortgage Loans (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such Pool Certification as not covered
by such Pool Certification), (i) all documents required to be delivered to it
pursuant to Section 3.05(b)(i) of this Agreement are in its possession, (ii)
such documents have been reviewed by it and have not been mutilated, damaged or
torn and relate to such Mortgage Loan and (iii) based on its examination and
only as to the foregoing documents, the information set forth on items (1), (3)
and (4) of the Schedule of Mortgage Loans accurately reflects the information
set forth in the File. Neither the Trustee nor the Custodian shall have any
responsibility for reviewing any File except as expressly provided in this
subsection 3.06(a). Without limiting the effect of the preceding sentence, in
reviewing any File, neither the Trustee nor the Custodian shall have any
responsibility for determining whether any document is valid and binding,
whether the text of any assignment is in proper form (except to determine if the
Trustee is the assignee), whether any document (other than the assignments) has
been recorded in accordance with the requirements of any applicable jurisdiction
or whether a blanket assignment is permitted in any applicable jurisdiction, but
shall only be required to determine whether a document has been executed, that
it appears to be what it purports to be, and, where applicable, that it purports
to be recorded. Neither the Trustee nor the Custodian shall be under any duty or
obligation to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other than what they
purport to be on their face, nor shall either the Trustee or the Custodian be
under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any
Mortgage Loan.
49
(b) If the Trustee or the Custodian on behalf of the Trustee during
such 45-day period finds any document constituting a part of a File which is not
executed, has not been received, or is unrelated to the Mortgage Loans
identified in the Schedule of Mortgage Loans, or that any Mortgage Loan does not
conform to the description thereof as set forth in the Schedule of Mortgage
Loans, the Trustee shall promptly so notify the Depositor, the Seller, the
related Servicer, the related Originator and the Certificate Insurer. In
performing any such review, the Trustee and the Custodian on behalf of the
Trustee may conclusively rely on the Seller as to the purported genuineness of
any such document and any signature thereon. It is understood that the scope of
the Trustee's and the Custodian's on behalf of the Trustee review of the items
delivered by the Seller pursuant to Section 3.05(b)(i) is limited solely to
confirming that the documents listed in Section 3.05(b)(i) have been executed
and received, relate to the Files identified in the Schedule of Mortgage Loans
and conform to the description thereof in the Schedule of Mortgage Loans. The
Seller agrees to request that the related Originator use reasonable efforts to
remedy a material defect in a document constituting part of a File of which it
is so notified by the Trustee. If, however, within the time period specified in
the related Transfer Agreement after the Trustee's notice to the related
Originator respecting such defect the related Originator has not remedied the
defect and the defect materially and adversely affects the interest in the
related Mortgage Loan of the Owners or of the Certificate Insurer, the Seller
will request the related Originator to, within the time period set forth in the
related Transfer Agreement, (i) substitute in lieu of such Mortgage Loan a
Qualified Replacement Mortgage and deliver the Substitution Amount to the
applicable Servicer for deposit in the Principal and Interest Account or (ii)
purchase such Mortgage Loan at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be delivered to the applicable Servicer for
deposit in the related Principal and Interest Account.
(c) In addition to the foregoing, the Trustee also agrees to cause the
Custodian to provide an updated report during the 12th month after the Startup
Day indicating the current status of the exceptions previously indicated on the
Pool Certification (the "Final Certification"). After delivery of the Final
Certification, the Trustee shall provide to the Certificate Insurer and the
Servicers no less frequently than monthly updated certifications indicating the
then current status of exceptions, until all such exceptions have been
eliminated.
Section 3.07 Conveyance of the Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in Section
3.05 and paragraphs (b) and (c) below in consideration of the Trustee's delivery
on the relevant Subsequent Transfer Dates to or upon the order of the Depositor
of all or a portion of the balance of funds in the Pre-Funding Account, the
Depositor shall on each Subsequent Transfer Date sell, transfer, assign, set
over and otherwise convey without recourse, to the Trustee, all of the
Depositor's right, title and interest in and to any and all benefits accruing to
the Depositor from the Subsequent Mortgage Loans (other than any principal and
interest payments received thereon on or prior to the relevant Subsequent
Cut-Off Date) which the Depositor will cause to be delivered to the Trustee
therewith (and all substitutions therefor as provided by Sections 3.03, 3.04 and
3.06), together with the related Subsequent Mortgage Loan documents and the
Depositor's interest in any Property and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing and proceeds of all
the foregoing (including, but not by way of limitation, all proceeds of any
mortgage insurance, hazard insurance and title insurance policy relating to the
Subsequent Mortgage Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing). There shall be no more than three Subsequent Transfer Dates.
50
The transfer of the Subsequent Mortgage Loans set forth on the Schedule
of Mortgage Loans by the Seller to the Depositor and by the Depositor to the
Trust shall be absolute and shall be intended by the Owners and all parties
hereto to be treated as a sale by the Seller to the Depositor and by the
Depositor to the Trust. Any Subsequent Mortgage Loan so transferred will be
included in the related Mortgage Loan Group. The amount released from the
Pre-Funding Account shall be one-hundred percent (100%) of the aggregate
principal balances of the Subsequent Mortgage Loans so transferred. Upon the
transfer by the Depositor of the Subsequent Mortgage Loans hereunder, such
Subsequent Mortgage Loans (and all principal collected and interest accruing
thereon subsequent to the Subsequent Cut-Off Date) and all other rights and
interests with respect to such Subsequent Mortgage Loans transferred pursuant to
a Subsequent Transfer Agreement shall be deemed for all purposes hereunder to be
part of the Trust Estate. The Seller hereby covenants and agrees to use its best
efforts to ensure that a sufficient amount of Subsequent Mortgage Loans will be
transferred to the Depositor during the Funding Period to enable the Depositor
to reduce the Pre-Funded Amount with respect to each Group to less than
$100,000. The Depositor hereby covenants and agrees to use its best efforts to
ensure that a sufficient amount of Subsequent Mortgage Loans will be transferred
to the Trust during the Funding Period to reduce the Pre- Funded Amount with
respect to each Group to less than $100,000.
(b) The obligation of the Trustee to accept the transfer of the
Subsequent Mortgage Loans and the other property and rights related thereto
described in paragraph (a) above is subject to the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Depositor shall have provided the Trustee and
the Certificate Insurer with an Addition Notice not less than
ten (10) calendar days prior to the proposed Subsequent
Transfer Date (unless the Trustee and the Certificate Insurer
agree to a shorter time period) and shall have provided any
information reasonably requested by any of the foregoing with
respect to the Subsequent Mortgage Loans;
(ii) the Depositor shall have delivered to the Trustee a
duly executed written assignment (including an acceptance by
the Trustee) in substantially the form of Exhibit C, which
shall include a Schedule of Mortgage Loans, listing the
Subsequent Mortgage Loans and any other exhibits listed
thereon;
(iii) the Depositor shall have deposited in the
applicable Principal and Interest Account all principal
collected and interest accruing in respect of such Subsequent
Mortgage Loans on or after the related Subsequent Cut-Off
Date;
(iv) as of each Subsequent Transfer Date, neither the
Depositor nor the Seller was insolvent, nor will either of
them be made insolvent by such transfer, nor is either of them
aware of any pending insolvency;
(v) the Funding Period for the related Group shall not
have ended;
(vi) the Depositor shall have delivered to the Trustee
an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and in the
related Subsequent Transfer Agreement together with the
written approval of the Certificate Insurer required by
paragraph (c) below;
51
(vii) the Certificate Insurer shall have delivered to the
Trustee an Officer's Certificate or some other form of
acceptance confirming that the Subsequent Mortgage Loans
conform to the representatives and warranties in Section 4.06
of the Insurance Agreement; and
(viii) such sale will not result in a materially adverse
tax consequence to the Trust as evidenced by an Opinion of
Counsel delivered to the Trustee by the Depositor at its own
expense.
(c) The obligation of the Trust to purchase a Subsequent Mortgage Loan
is subject to the following requirements: (i) with respect to Group I only, such
Subsequent Mortgage Loan will be a fixed rate mortgage loan, and with respect to
Group II only, such Subsequent Mortgage Loan will be an adjustable rate mortgage
loan; (ii) such Subsequent Mortgage Loan may not be 30 or more days
contractually Delinquent as of the related Subsequent Cut-Off Date; (iii) the
remaining term to maturity of such Subsequent Mortgage Loan may not exceed 360
months; (iv) no Subsequent Mortgage Loan will have a minimum Coupon Rate less
than 5.00%; and (v) following the purchase of such Subsequent Mortgage Loan by
the Trust, the Mortgage Loans (including the Subsequent Mortgage Loans) (a) will
have a weighted average Coupon Rate of at least 7.00% and 5.00% for Group I and
Group II, respectively; (b) will have a weighted average Loan-to-Value Ratio of
not more than 66.00% and 71.00% for Group I and Group II, respectively; (c) will
not have Balloon Loans with an aggregate Loan Balance in excess of 8.50% of the
Original Aggregate Loan Balance of the Mortgage Loans in Group I and will not
have any Balloon Loans in Group II; and (d) will have no Mortgage Loan with a
Loan Balance in excess of $599,580 for Group I and $734,286 for Group II. In
addition, the Certificate Insurer shall have the right to review and approve
each Subsequent Mortgage Loan. With the consent of the Seller and the
Certificate Insurer, the above characteristics may be modified.
(d) In connection with each Subsequent Transfer Date and on the Payment
Dates occurring in January and February 1997 and on the Pre-Funding Payment
Date, the Trustee shall determine: (i) the amount and correct dispositions of
each of the Group I and Group II Capitalized Interest Requirements, Overfunded
Interest Amounts, Pre-Funding Account Earnings and the Pre-Funded Amount and
(ii) any other necessary matters in connection with the administration of the
Pre-Funding Account and of the Capitalized Interest Account. In the event that
any amounts are released as a result of an error in calculation to the Owners or
Depositor from the Pre-Funding Account or from the Capitalized Interest Account,
such Owners or the Depositor shall immediately repay such amounts to the
Trustee.
END OF ARTICLE III
52
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 10 a.m., Washington, District of Columbia time on the Startup Day
(the "Closing"), at the offices of Seller, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
(or at such other location acceptable to the Seller), the Seller will sell and
convey the Initial Mortgage Loans and the money, instruments and other property
related thereto to the Depositor and the Depositor will sell and convey the
Initial Mortgage Loans and the money, instruments and other property related
thereto to the Trustee, and the Trustee will deliver (i) to the Underwriters the
Class A Certificates with an aggregate Percentage Interest in each Class equal
to 100%, registered in the name of Cede & Co., or in such other names as the
Underwriters shall direct, against payment of the purchase price thereof by wire
transfer of immediately available funds to the Trustee, (ii) to the initial
purchasers thereof, Class S Certificates with a cumulative Percentage Interest
equal to 100%, and (iii) to the respective registered owners thereof, a Class
B-10 Certificate with a Percentage Interest equal to 100% and a Class R
Certificate with a Percentage Interest equal to 99.999%, registered in the names
designated by the Depositor and the Tax Matters Person Residual Interest to the
Trustee.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Certificates the Depositor shall instruct the Trustee to deposit (a) an
amount equal to the Original Pre-Funded Amount in the Pre- Funding Account and
(b) an amount equal to $1,132,748.29 the Capitalized Interest Account
contributed by the Depositor out of such proceeds or otherwise. The Trustee
shall then remit the entire balance of such net proceeds to the Depositor in
accordance with instructions delivered by the Depositor.
END OF ARTICLE IV
53
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" no debt of any
Person is represented thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law and except for the rights of
the Trustee on behalf of the Owners of the Class A Certificates and the Class S
Certificates with respect to the Certificate Insurance Policies). The Class A
Certificates and the Class S Certificates are payable solely from payments
received on or with respect to the Mortgage Loans (other than the Servicing
Fees), moneys in the Principal and Interest Account, except as otherwise
provided herein, moneys in the Pre-Funding Account and the Capitalized Interest
Account, from earnings on moneys and the proceeds of property held as a part of
the Trust Estate and, with respect to the Class A Certificates and the Class S
Certificates upon the occurrence of certain events, from Insured Payments. Each
Certificate entitles the Owner thereof to receive monthly on each Payment Date,
in order of priority of distributions with respect to such Class of Certificates
as set forth in Section 7.03, a specified portion of such payments with respect
to the Mortgage Loans (and, with respect to the Owners of the Class A
Certificates and the Class S Certificates, Insured Payments deposited in the
Certificate Account), pro rata in accordance with such Owner's Percentage
Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee
any Certificate prior to receiving the final distribution due thereon. Any such
Certificate as to which the Trustee has made the final distribution thereon
shall be deemed cancelled and shall no longer be Outstanding for any purpose of
this Agreement, whether or not such Certificate is ever returned to the Trustee.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates, the Class A-8 Certificates, the
Class S Certificates, the Class R Certificates and the Class B-10 Certificates
shall be in substantially the forms set forth in Exhibits A-1, ▇-▇, ▇-▇, ▇-▇,
▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, B-2 and B-10 hereof, respectively, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Agreement or as may in the Depositor's judgment be
necessary, appropriate or convenient to comply, or facilitate compliance, with
applicable laws, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any applicable securities laws or as may,
consistently herewith, be determined by the Authorized Officer of the Depositor
executing such Certificates, as evidenced by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated on behalf of the
Trust, by the manual or facsimile signature of one of the Trustee's Authorized
Officers.
54
Certificates bearing the manual or facsimile signature of individuals
who were at any time the proper officers of the Depositor shall, upon proper
authentication by the Trustee, bind the Trust, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
execution and delivery of such Certificates or did not hold such offices at the
date of authentication of such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the
"Register") in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and
the registration of transfer of Certificates. The Trustee is hereby initially
appointed Registrar for the purpose of registering Certificates and transfers of
Certificates as herein provided. The Certificate Insurer, the Owners and the
Trustee shall have the right to inspect the Register during the Trustee's normal
hours and to obtain copies thereof, and the Trustee shall have the right to rely
upon a certificate executed on behalf of the Registrar by an Authorized Officer
thereof as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates then Outstanding with the consent of the Certificate
Insurer or, if there are no longer any Class A Certificates then Outstanding, by
such majority of the Percentage Interests represented by the Class R
Certificates, the Trustee will give the Certificate Insurer and the Owners
prompt written notice of the appointment of such Registrar and of the location,
and any change in the location, of the Register.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal amount or Percentage Interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously Outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
55
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the ownership of each
such Class A Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, no Class A Certificates shall be issued in
denominations of less than $1,000 except that one certificate in each class may
be in an amount less than $1,000. The Class B-10 Certificates the Class S
Certificates and Class R Certificates (other than the Tax Matters Person
Residual Interest) will be issued in minimum percentage interests of 10%.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Class A Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicers, the Seller, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicers, the Seller, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Class A Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Class A Certificate as shown in the Register, of any
notice with respect to the Class A Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of Class
A Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
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(h) In the event that (i) the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Depositor or the Trustee is unable to locate a
qualified successor or (ii) the Depositor at its sole option elects to terminate
the book-entry system through the Depository, the Class A Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Depositor may determine that the Class A Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Depositor and at the Depositor's expense, or
such depository's agent or designee but, if the Depositor does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names registered Owners of Class A Certificates
transferring Class A Certificates shall designate, in accordance with the
provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates and all notices with respect to such Class A
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee and the Certificate Insurer such security or indemnity as may be
reasonably required by it to hold the Trustee and the Certificate Insurer
harmless, then, in the absence of notice to the Trustee or the Registrar that
such Certificate has been acquired by a bona fide purchaser, the Depositor shall
execute and the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Class, tenor and aggregate principal amount, bearing a
number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
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Section 5.06 Persons Deemed Owners.
The Certificate Insurer, the Trustee and any agent of the Trustee may
treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be affected by notice to
the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership or
assignment of an interest in a Class R Certificate (whether pursuant to a
purchase, a transfer resulting from a default under a secured lending agreement
or otherwise) shall be made to a Disqualified Organization or an agent of a
Disqualified Organization. The transfer, sale or other disposition of a Class R
Certificate (whether pursuant to a purchase, a transfer resulting from a default
under a secured lending agreement or otherwise) to a Disqualified Organization
shall be deemed to be of no legal force or effect whatsoever and such transferee
shall not be deemed to be an Owner for any purpose hereunder, including, but not
limited to, the receipt of distributions on such Class R Certificate.
Furthermore, in no event shall the Trustee accept surrender for transfer,
registration of transfer, or register the transfer, of any Class R Certificate
nor authenticate and make available any new Class R Certificate unless the
Trustee has received an affidavit from the proposed transferee in the form
attached hereto as Exhibit I. Each holder of a Class R Certificate by his
acceptance thereof, shall be deemed for all purposes to have consented to the
provisions of this Section 5.08(a).
(b) No other sale or other transfer of record or beneficial ownership
of a Class B-10 Certificate a Class S Certificate, or a Class R Certificate
shall be made unless such transfer is exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and any
applicable state securities laws or is made in accordance with said Securities
Act and laws. In the event such a transfer is to be made within three years from
the Startup Day, (i) the Trustee or the Depositor shall require a written
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Depositor and the Certificate Insurer in the event that such transfer may be
made pursuant to an exemption, describing the applicable exemption and the basis
therefor, from said Securities Act and laws or is being made pursuant to said
Securities Act and laws, which Opinion of Counsel shall not be an expense of the
Trustee, the Trust Estate, the Servicers or the Certificate Insurer, and (ii)
the Trustee shall require the transferee to execute an investment letter
acceptable to and in form and substance satisfactory to the Seller and the
Certificate Insurer certifying to the Trustee, the Certificate Insurer and the
Seller the facts surrounding such transfer, which investment letter shall not be
an expense of the Trustee, the Trust Estate, the Certificate Insurer or the
Seller. The Owner of a Class B-10 Certificate, Class S Certificate or Class R
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Certificate Insurer, the Servicers, the Depositor and
the Seller 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.
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(c) No transfer of a Class B-10 Certificate or Class R Certificate
shall be made unless the Trustee shall have received a representation letter
from the transferee of such Class B-10 Certificate or Class R Certificate,
acceptable to and in form and substance satisfactory to the Trustee, to the
effect that such transferee is not an employee benefit plan subject to Section
406 of Employee Retirement Income Security Act ("ERISA") nor a plan or other
arrangement subject to Section 406 of ERISA nor a plan or other arrangement
subject to Section 4975 of the Code (collectively, a "Plan"), nor is acting on
behalf of any Plan nor using the assets of any Plan to effect such transfer.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Class B-10 or Class R Certificate to or on behalf of any Plan shall be null
and void and of no effect.
(d) No sale or other transfer of any Class A Certificate may be made to
the Depositor or the Seller or any Originator. No sale or other transfer of any
Class A Certificate may be made to a Seller affiliate unless the Trustee and the
Certificate Insurer shall have been furnished with an Opinion of Counsel
acceptable to the Certificate Insurer and the Trustee experienced in federal
bankruptcy matters to the effect that such sale or transfer would not adversely
affect the character of the conveyance of the Mortgage Loans to the Trust as a
sale. To the extent any payment to an Owner of a Class A Certificate constitutes
an Insured Payment, such payment will not be made to the Seller, the Depositor
or the Servicers or any Subservicer. No sale or other transfer of the Class R
Certificate issued to the Tax Matters Person appointed on the Startup Day may be
transferred or sold to any Person, except to a person who accepts the
appointment of Tax Matters Person pursuant to Section 11.18 hereof.
(e) No transfer of a Class A Certificate or any interest therein shall
be made to any Plan or to any entity using the assets of any Plan to effect such
transfer prior to the time that the balance of the related Pre-Funding Account
is reduced to zero.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date or
(ii) if requested by any Owner of (A) a Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7 or Class A-8 Certificate having an original
principal balance of not less than $1,000,000 or (B) a Class S, a Class B-10 or
Class R Certificate having a Percentage Interest of not less than 10% in writing
not later than five Business Days prior to the applicable Record Date (which
request does not have to be repeated unless it has been withdrawn), to such
Owner by wire transfer to an account within the United States designated no
later than five Business Days prior to the related Record Date, made on each
Payment Date, in each case to each Owner of record on the immediately preceding
Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee,
and no amounts so withdrawn from the Certificate Account for payments of
Certificates and no Insured Payment shall be paid over to the Trustee except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust, to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate and Class S
Certificate and remaining unclaimed by the Owner of such Certificate for the
period then specified in the escheat laws of the State of New York after such
amount has become due and payable shall be discharged from such trust and be
paid to the Owners of the Class R Certificates; and the Owner of such Class A
Certificate and Class S Certificate shall thereafter, as an unsecured general
creditor, look only to the Owners of the Class R Certificates for payment
thereof (but only to the extent of the amounts so paid to the Owners of the
Class R Certificates) and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon
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cease; provided, however, that the Trustee or such Paying Agent before being
required to make any such payment, may at the expense of the Trust cause to be
published once, in the eastern edition of The Wall Street Journal, notice that
such money remains unclaimed and that, after a date specified therein, which
shall be not fewer than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be paid to the Owners of the Class R
Certificates. The Trustee shall, at the direction of the Depositor, also adopt
and employ, at the expense of the Trust, any other reasonable means of
notification of such payment (including but not limited to mailing notice of
such payment to Owners whose right to or interest in moneys due and payable but
not claimed is determinable from the records of the Registrar, the Trustee or
any Paying Agent, at the last address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer, at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor or the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the interests of the Owners and the
Certificate Insurer represented thereby, in such Trust Estate against
the contrary claims of all Persons and parties.
The Trustee shall send copies of any request received from the
Certificate Insurer or the Depositor to take any action pursuant to this Section
6.03 to the other parties hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer as such rights are set forth in this Agreement;
provided, however, that nothing in this Section shall require any action by the
Trustee unless the Trustee shall first (i) have been furnished indemnity
satisfactory to it and (ii) when required by this Agreement, have been requested
by the Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates; provided, further, however, that if
there is a dispute with respect to payments under the Certificate Insurance
Policy the Trustee's sole responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
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Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g).
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any Person
except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement
to be impaired, or permit any Person to be released from any covenants
or obligations with respect to the Trust or to the Certificates under
this Agreement, except as may be expressly permitted hereby or (B)
permit any lien, charge, adverse claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise upon
or burden the Trust Estate or any part thereof or any interest therein
or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policies,
or for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor, the Certificate Insurer and the Trustee of such
Owner's intention to institute such proceeding;
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(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates then Outstanding or,
if there are no Class A Certificates then Outstanding, by such
percentage of the Percentage Interests represented by the
Class R Certificates, shall have made written request to the
Trustee to institute such proceeding in its own name as
Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) as long as any Class A Certificates or Class S Certificates
are Outstanding or any Reimbursement Amounts remain unpaid,
the Certificate Insurer consented in writing thereto (unless
the Certificate Insurer is the party against whom the
proceeding is directed); and
(6) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners
of a majority of the Percentage Interests represented by the
Class A Certificates or, if there are no Class A Certificates
then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement (unless the Certificate Insurer is the
party against whom the proceeding is directed).
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee, the Certificate Insurer or to the
Owners is intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or
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otherwise. Except as otherwise provided herein, the assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer, the Seller or any
Owner of any Certificate to exercise any right or remedy under this Agreement
with respect to any event described in Section 8.20(a) or (b) shall impair any
such right or remedy or constitute a waiver of any such event or an acquiescence
therein. Every right and remedy given by this Article VI or by law to the
Trustee, the Certificate Insurer or to the Owners may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee, the Certificate
Insurer, or by the Owners, as the case may be.
Section 6.11 Control by Certificate Insurer and Owners.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates or Reimbursement Amounts then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates then Outstanding
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee with respect to the Certificates or exercising
any trust or power conferred on the Trustee with respect to the Certificates or
the Trust Estate, including, but not limited to, those powers set forth in
Section 6.03 and Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Agreement;
(2) the Trustee shall have been provided with indemnity satisfactory
to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with such
direction; provided, however, that the Seller or the Trustee, as
the case may be, need not take any action which it determines
might involve it in liability or may be unjustly prejudicial to
the Owners not so directing.
Section 6.12 Access to Owners of Certificates' Names and Addresses. (a)
If the Certificate Insurer or any Owner (for purposes of this Section 6.12, an
"Applicant") applies in writing to the Trustee, and such application states that
the Applicant desires to communicate with other Owners with respect to their
rights under this Agreement or under the Certificates and is accompanied by a
copy of the communication which such Applicant proposes to transmit, then the
Trustee shall, at the expense of such Applicant, within ten (10) Business Days
after the receipt of such application, furnish or cause to be furnished to such
Applicant a list of the names and addresses of the Owners of record as of the
most recent Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the Owners
hereunder, regardless of the source from which such information was derived.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policies,
including (a) all payments due on the Mortgage Loans in accordance with the
respective terms and conditions of such Mortgage Loans and required to be paid
over to the Trustee by the related Servicer or by any Subservicer and (b)
Insured Payments. The Trustee shall hold all such money and property received by
it, other than pursuant to or as contemplated by Section 6.02(e) hereof, as part
of the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts;
(a) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, a segregated trust account, entitled the Certificate
Account, to be held by the Trustee on behalf of the Owners of the Certificates,
the Trustee and the Certificate Insurer, as their interests may appear.
(b) The Depositor shall cause to be established, and the Trustee shall
maintain, at the Corporate Trust Office three segregated trust accounts,
referred to herein as the "Pre-Funding Account", the "Capitalized Interest
Account" and the "Group II Available Funds Cap Carry-Forward Amount Account" to
be held by the Trustee in the name of the Trust for the benefit of the Owners
and the Certificate Insurer, as their interests may appear.
(c) No later than the second Business Day after the Trustee's receipt
of each Servicer's related Monthly Servicing Report pursuant to Section 8.29,
the Trustee shall determine (subject to the terms of Section 10.03(j) hereof,
based solely on information provided to it by each Servicer) with respect to the
immediately following Payment Date, the amount that is expected to be on deposit
in the Certificate Account as of such Payment Date for Group I (disregarding the
amount of any Insured Payments), which amount will be equal to the sum of (x)
the amount on deposit therein with respect to such Group excluding the amount of
any Total Monthly Excess Cashflow from Group I included in such amount and any
payments or other recoveries on the Mortgage Loans that are not required to be
distributed to the Owners on the next Payment Date plus (y) any amount of Total
Monthly Excess Cashflow from either Group to be applied on such Payment Date to
the Group I Certificates excluding any payments or other recoveries on the
Mortgage Loans that are not required to be distributed to the Owners on the next
Payment Date plus (z) any deposit to the Certificate Account from the
Pre-Funding Account and the Capitalized Interest Account expected to be made
with respect to Group I. The amount described in clauses (x) and (z) of the
preceding sentence with respect to each Payment Date is the "Group I Available
Funds"; the sum of the amounts described in clauses (x), (y) and (z) of the
preceding sentence with respect to each Payment Date is the "Group I Total
Available Funds."
(d) No later than the second Business Day after the Trustee's receipt
of each Servicer's related Monthly Servicing Report pursuant to Section 8.29,
the Trustee shall determine (subject to the terms of Section 10.03(j) hereof,
based solely on information provided to it by each Servicer) with respect to the
immediately following Payment Date, the amount that is expected to be on deposit
in the Certificate Account as of such Payment Date for Group II (disregarding
the amount of any Insured Payments), which amount will be equal to the sum of
(x) the amount on deposit therein with respect to such Group
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excluding the amount of any Total Monthly Excess Cashflow from Group II included
in such amount and any payments or other recoveries on the Mortgage Loan that
are not required to be distributed to the Owners on the next Payment Date plus
(y) any amount of Total Monthly Excess Cashflow from either Group to be applied
on such Payment Date to the Class A-8 Certificates excluding any payments or
other recoveries on the Mortgage Loans that are not required to be distributed
to the Owners on the next Payment Date plus (z) any deposit to the Certificate
Account from the Pre-Funding Account and the Capitalized Interest Account
expected to be made with respect to Group II. The amount described in clauses
(x) and (z) of the preceding sentence with respect to each Payment Date is the
"Group II Available Funds"; the sum of the amounts described in clauses (x), (y)
and (z) of the preceding sentence with respect to each Payment Date is the
"Group II Total Available Funds."
Section 7.03 Flow of Funds.
(a) With respect to Group I, the Trustee shall deposit to the
Certificate Account, without duplication, (i) any Insured Payments relating to
such Group, (ii) the proceeds of any liquidation of the assets of the Trust
insofar as such proceeds relate to Group I, (iii) all remittances made to the
Trustee pursuant to Section 8.09 insofar as such remittances relate to Group I,
(iv) each portion of the Group I Monthly Remittance Amount remitted by the
related Servicer, (v) on the Payment Dates and the Pre- Funding Payment Date
during the Funding Period and the Pre-Funding Payment Date, the Group I
Capitalized Interest Requirement and the Group I Pre-Funding Account Earnings to
be transferred on such Payment Date (or Pre-Funding Payment Date) from the
Capitalized Interest Account, pursuant to Section 7.04(e) hereof and (vi) on the
Payment Dates during the Funding Period the amount, if any, to be transferred on
such Payment Date (or Pre-Funding Payment Date) from the Pre-Funding Account
pursuant to Section 7.04(c) hereof.
(b) With respect to Group II, the Trustee shall deposit (x) to the
Certificate Account without duplication, (i) any Insured Payments relating to
such Group, (ii) the proceeds of any liquidation of the assets of the Trust
insofar as such proceeds relate to Group II, (iii) all remittances made to the
Trustee pursuant to Section 8.09 insofar as such remittances relate to Group II,
(iv) each portion of the Group II Monthly Remittance Amount remitted by the
related Servicer, (v) on the Payment Dates during the Funding Period and the
Pre-Funding Payment Date, the Group II Capitalized Interest Requirement to be
transferred on such Payment Date (or Pre-Funding Payment Date) from the
Capitalized Interest Account, pursuant to Section 7.04(e) hereof and (vi) on the
Payment Dates during the Funding Period and the Pre- Funding Payment Date, the
amount, if any, to be transferred on such Payment Date (or Pre-Funding Payment
Date) from the Pre-Funding Account pursuant to Section 7.04(c) hereof and (y) to
the Group II Available Funds Cap Carry-Forward Amount Account any Group II
Available Funds Cap Carry- Forward Amounts.
(c) With respect to the Certificate Account, on each Payment Date, the
Trustee shall make the following allocations, disbursements and transfers for
each Mortgage Loan Group from amounts deposited therein pursuant to subsections
(a) and (b), respectively, in the following order of priority, and each such
allocation, transfer and disbursement shall be treated as having occurred only
after all preceding allocations, transfers and disbursements have occurred:
(i) first, the Trustee shall disburse the Premium Amount for such
Payment Date to the Certificate Insurer;
(ii) second, to the Trustee, the Trustee Fees with respect to such
Group then due (plus any expenses owing to the Trustee
pursuant to Section 2.05 and Section 8.21(f));
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(iii) third, the Trustee shall allocate an amount equal to the sum
of (x) the Total Monthly Excess Spread with respect to such
Mortgage Loan Group and Payment Date (net of the related
Premium Amount paid pursuant to clause (i) above and the
Trustee Fee payable under clause (ii) above) plus (y) any
Subordination Reduction Amount with respect to such Mortgage
Loan Group and Payment Date (such sum (net of such Premium
Amount and Trustee Fee) being the "Total Monthly Excess
Cashflow" with respect to such Mortgage Loan Group and Payment
Date) with respect to such Mortgage Loan Group in the
following order of priority:
(A) first, such Total Monthly Excess Cashflow with respect
to each Group shall be allocated to the payment of the
related Class A Distribution Amount pursuant to clause
(v) below on such Payment Date with respect to the
related Mortgage Loan Group in an amount equal to the
amount, if any, by which (x) the related Current
Interest and Subordination Deficit, if any, for such
Payment Date exceeds (y) the Available Funds with
respect to such Mortgage Loan Group for such Payment
Date (the amount of such difference being the "Group I
Available Funds Shortfall" with respect to Group I and
the "Group II Available Funds Shortfall" with respect to
Group II);
(B) second, any portion of the Total Monthly Excess Cashflow
with respect to such Mortgage Loan Group remaining after
the application described in clause (A) above shall be
allocated against any Available Funds Shortfall with
respect to the other Mortgage Loan Group and to the
payment of the related Class A Distribution Amount with
respect to the other Mortgage Loan Group pursuant to
clause (iv) below;
(C) third, any portion of the Total Monthly Excess Cashflow
with respect to such Mortgage Loan Group remaining after
the allocations described in clauses (A) and (B) above
shall be disbursed to the Certificate Insurer in respect
of amounts owed on account of any Reimbursement Amount
with respect to the related Mortgage Loan Group; and
(D) fourth, any portion of the Total Monthly Excess Cashflow
with respect to such Mortgage Loan Group remaining after
the allocations described in clauses (A), (B) and (C)
above shall be disbursed to the Certificate Insurer in
respect of any Reimbursement Amount with respect to the
other Mortgage Loan Group;
(iv) fourth, the amount, if any, of the Total Monthly Excess
Cashflow with respect to a Mortgage Loan Group on a Payment
Date remaining after the allocations described in clause (iii)
above (the "Net Monthly Excess Cashflow" for such Mortgage
Loan Group and Payment Date) is required to be allocated in
the following order of priority:
(A) first, such Net Monthly Excess Cashflow shall be used to
reduce to zero, through the allocation of a
Subordination Increase Amount to the payment of the
related Class A Distribution Amount pursuant to clause
(v) below, any Subordination Deficiency Amount with
respect to the related Mortgage Loan Group as of such
Payment Date;
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(B) second, any Net Monthly Excess Cashflow remaining after
the allocation described in clause (A) above shall be
used to reduce to zero, through the allocation of a
Subordination Increase Amount to the payment of the
related Class A Distribution Amount pursuant to clause
(v) below, the Subordination Deficiency Amount, if any,
with respect to the other Mortgage Loan Group; and
(C) third, an amount equal to the lesser of (i) any
portion of the Net Monthly Excess Cashflow remaining
after the allocations described in clauses (A) and
(B) above and (ii) the excess of (a) the Group II
Available Funds Cap Carry-Forward Amount for such
Payment Date over (b) the amount then on deposit in
the Group II Available Funds Cap Carry-Forward Amount
Account shall be allocated to the Group II Available
Funds Cap Carry-Forward Amount Account.
(D) fourth, any Net Monthly Excess Cashflow remaining
after the allocations described in clauses (A), (B)
and (C) above shall be paid to the related Servicer
to the extent of any unreimbursed Delinquency
Advances and Servicing Advances determined by the
related Servicer to be nonrecoverable and Servicing
Fees and unreimbursed expenses pursuant to Section
8.25;
(v) fifth, following the making by the Trustee of all allocations,
transfers and disbursements described above under this
subsection (c) from amounts (including any related Insured
Payment) then on deposit in the Certificate Account with
respect to the related Mortgage Loan Group, the Trustee shall
distribute:
(A) to the Owners of the Group I Certificates, the
related Current Interest thereon until the related
Class A Certificate Termination Date on a pro rata
basis based on each such Class of Group I
Certificate's Current Interest without any priority
among the related Group I Certificates;
(B) to the Owners of the Class A-8 Certificates, the
Class A-8 Current Interest until the Class A-8
Certificate Termination Date;
(C) to the Owners of the Class S Certificates, the Class
S Distribution Amount for such Payment Date on a pro
rata basis with no priority among such Class S
Certificates;
(D) the Group I Principal Distribution Amount shall be
distributed as follows:
(1) first, to the Owners of the Class A-1
Certificates until the Class A-1 Certificate
Termination Date;
(2) second, to the Owners of the Class A-2
Certificates until the Class A-2 Certificate
Termination Date;
(3) third, to the Owners of the Class A-3
Certificates until the Class A-3 Certificate
Termination Date;
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(4) fourth, to the Owners of the Class A-4
Certificates until the Class A-4 Certificate
Termination Date;
(5) fifth, to the Owners of the Class A-5
Certificates until the Class A-5 Certificate
Termination Date;
(6) sixth, to the Owners of the Class A-6
Certificates until the Class A-6 Certificate
Termination Date; and
(7) seventh, to the Owners of the Class A-7
Certificates until the Class A-7 Certificate
Termination Date;
(E) to the Owners of the Class A-8 Certificates, the
Group II Principal Distribution Amount until the
Class A-8 Certificate Termination Date;
(vi) sixth, following the making by the Trustee of all allocations,
transfers and disbursements described above under this
subsection (c), from amounts then on deposit in the
Certificate Account, the Trustee shall distribute:
(A) to the Owners of the Class B-10 Certificates, the
Class B-10 Distribution Amount; and
(B) to the Owners of the Class R Certificates, the
Residual Net Monthly Excess Cashflow, if any, for
such Payment Date.
(d) On each Payment Date, following the allocations and payments
described above, the Trustee shall distribute to the Owners of
the Class A-8 Certificates the amount, if any, then on deposit
in the Group II Available Funds Cap Carry-Forward Amount
Account.
(e) On any Payment Date during the continuance of any Certificate
Insurer Default:
(i) Any amounts otherwise payable to the Certificate
Insurer as Premium Amounts or Reimbursement Amounts
shall be retained in the Certificate Account as Total
Available Funds; and
(ii) If there is a Subordination Deficit, then the Class A
Principal Distribution Amount for such Payment Date
shall be distributed pro rata to the Owners of any
Outstanding Class A Certificates on such Payment
Date.
(f) Notwithstanding (i) clause (c)(v) above, the aggregate amounts
distributed on all Payment Dates to the Owners of the Class A Certificates on
account of principal pursuant to clauses (c)(v)(D) and (E) shall not exceed the
original Certificate Principal Balance of the related Certificates and (ii)
clause (c)(vi) above, the Trustee shall distribute any amounts owed to the
related Servicer pursuant to Section 8.30 hereof prior to any distribution to
the Owners of the Class B-10 Certificates.
(g) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Owners of the Class A Certificates or Class S Certificates, the
Trustee shall receive such payments as attorney-in-fact of the Owners of the
Class A Certificates or Class S Certificates and deposit such Insured Payments
in
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the Policy Payments Account and on the related Payment Date transfer such
Insured Payments to the Certificate Account and shall distribute such Insured
Payments on the related Payment Date, or the proceeds thereof to the Owners of
such Certificates or on such later date on which the Trustee has received such
Insured Payment on or before 12:00 noon New York City time.
(h) Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates or
interest on any of the Class S Certificates which is made with moneys received
pursuant to the terms of any Certificate Insurance Policy shall not be
considered payment of such Certificates from the Trust and shall not result in
the payment of or the provision for the payment of the principal of or interest
on such Certificates within the meaning of Section 7.03. The Depositor, the
Seller, the Servicers and the Trustee acknowledge, and each Owner by its
acceptance of a Certificate agrees, that without the need for any further action
on the part of the Certificate Insurer, the Depositor, the Seller, the
Servicers, the Trustee or the Registrar (a) to the extent the Certificate
Insurer makes payments, directly or indirectly, on account of principal of or
interest on any Class A Certificates to the Owners of such Certificates, the
Certificate Insurer will be fully subrogated to the rights of such Owners to
receive such principal and interest together with any interest thereon of the
applicable Pass-Through Rate from the Trust and (b) the Certificate Insurer
shall be paid such principal and interest but only from the sources and in the
manner provided herein for the payment of such principal and interest.
It is understood and agreed that the intention of the parties is that
the Certificate Insurer shall not be entitled to reimbursement on any Payment
Date for amounts previously paid by it other than pursuant to clauses
7.03(c)(iii)(C) and (D).
The Trustee or Paying Agent shall (i) receive as attorney-in-fact of
each Owner of Class A Certificates and Class S Certificates any Insured Payment
from the Certificate Insurer and (ii) disburse the same to the Owners of the
related Class A Certificates and Class S Certificates as set forth in Section
7.03(c)(v). Insured Payments disbursed by the Trustee or Paying Agent from
proceeds of the Certificate Insurance Policies shall not be considered payment
by the Trust, nor shall such payments discharge the obligation of the Trust with
respect to such Class A Certificates and Class S Certificates and the
Certificate Insurer shall be entitled to receive the related Reimbursement
Amount pursuant to Section 7.03(c)(iii)(C) and (D) hereof.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Subordinate Certificates to receive distributions in
respect of the Subordinate Certificates, and all ownership interests of the
Owners of the Subordinate Certificates, in and to such distributions, shall be
subject and subordinate to the preferential rights of the Owners of the Class A
Certificates and Class S Certificates to receive distributions thereon and the
ownership interests of such Owners in such distributions, as described herein.
In accordance with the foregoing, the ownership interests of the Owners of the
Subordinate Certificates in amounts deposited in the Accounts from time to time
shall not vest unless and until such amounts are distributed in respect of the
Subordinate Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the Owners
of the Subordinate Certificates shall not be required to refund any amount
properly distributed on the Subordinate Certificates pursuant to this Section
7.03.
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Section 7.04 Pre-Funding Account and Capitalized Interest Account.
(a) On the Startup Day, the Depositor will deposit in the Pre-Funding
Account, on behalf of the Owners of the Class A Certificates, from the proceeds
of the sale of the Class A Certificates, the Original Pre-Funded Amount.
(b) On any Subsequent Transfer Date, the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Loan Balances of the Subsequent Mortgage Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Depositor upon satisfaction of the conditions set forth in Sections 3.05 and
3.07 hereof with respect to such transfer; in connection with such instruction
the Depositor shall additionally inform the Trustee whether such Subsequent
Mortgage Loans are being transferred to Group I or Group II. In no event shall
the Depositor be permitted to instruct the Trustee to release from the
Pre-Funding Account to the Certificate Account with respect to Subsequent
Mortgage Loans to be transferred to a Group an amount in excess of the Original
Pre-Funded Amount with respect to such Group.
(c) If (x) the Pre-Funded Amount with respect to a Mortgage Loan Group
has not been reduced to zero by the Pre-Funding Determination Date or (y) the
Pre-Funded Amount with respect to a Mortgage Loan Group has been reduced to
$100,000 or less on either the January or February 1997 Monthly Remittance Date,
then the Depositor shall instruct the Trustee to withdraw from the Pre-Funding
Account the amount (exclusive of any related Pre-Funding Account Earnings still
on deposit therein) remaining in the Pre-Funding Account with respect to a Group
of Mortgage Loans and deposit such amount to the Certificate Account, on the
Monthly Remittance Date in the month following the month in which the earlier of
either (x) or (y) occurs; provided, however, that if neither of the events
described in clauses (x) and (y) has occurred prior to the Pre-Funding
Determination Date, then the Trustee shall withdraw on the Pre-Funding
Determination Date from the Pre-Funding Account the amount (exclusive of any
related Pre-Funding Account Earnings still on deposit therein) remaining in the
Pre-Funding Account and deposit such amount to the Certificate Account, which
will be distributed to the related Owners of the Class A Certificates on the
Pre-Funding Payment Date.
(d) On the Payment Dates in January and February 1997 and on the
Pre-Funding Payment Date the Trustee shall transfer from the Pre-Funding Account
to the Capitalized Interest Account, (i) with respect to Group I, the Group I
Pre-Funding Account Earnings and (ii) with respect to Group II, the Group II
Pre-Funding Account Earnings, if any, applicable to such Payment Date (or
Pre-Funding Payment Date).
(e) On the Payment Dates in January and February 1997 and on the
Pre-Funding Payment Date the Trustee shall transfer from the Capitalized
Interest Account to the Certificate Account, for the benefit of the Owners of
the related Certificates, the Group I or Group II Capitalized Interest
Requirement for such Payment Date (or Pre-Funding Payment Date).
(f) On each Subsequent Transfer Date the Trustee shall distribute the
Overfunded Interest Amount (calculated by the Trustee on the day prior to such
Subsequent Transfer Date) from the Capitalized Interest Account to the Seller
and on the Pre-Funding Payment Date, the Trustee shall distribute to the Seller
any amounts remaining in the Capitalized Interest Account after taking into
account the transfers on such Payment Date described in clause (e) above. The
Capitalized Interest Account shall be closed at the end of the Funding Period.
All amounts, if any, remaining in the Capitalized Interest Account on such day
shall be transferred to the Seller.
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Section 7.05 Investment of Accounts.
(a) Except as provided below, consistent with any requirements of the
Code, all or a portion of any Account held by the Trustee for the benefit of the
Owners shall be invested and reinvested by the Trustee in the name of the
Trustee for the benefit of the Owners, as directed in writing by the party who
benefits from such investment, which shall be the Depositor in the case of the
Pre-Funding Account and the Capitalized Interest Account and the related
Servicer in the case of the related Principal and Interest Account, in one or
more Eligible Investments bearing interest or sold at a discount. The earnings
on each Principal and Interest Account are payable to the related Servicer.
Earnings on the Certificate Account are payable to the Trustee. The bank serving
as Trustee or any affiliate thereof may be the obligor on any investment which
otherwise qualifies as an Eligible Investment. No investment in any Account
shall mature later than the Business Day immediately preceding the next Payment
Date.
If the Depositor shall have failed to give investment directions to the
Trustee then the Trustee shall invest the funds in such Accounts in money market
funds described in Section 7.07(k) to be redeemable without penalty no later
than the Business Day immediately preceding the next Payment Date.
(b) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment included therein (except to
the extent that the bank serving as Trustee is the obligor thereon).
(c) All income or other gain from investments in any Account held by
the Trustee shall be deposited in such Account immediately on receipt (other
than the Principal and Interest Accounts, which income or other gains shall be
retained by the related Servicer and the Certificate Account, which income or
other gains shall be retained by the Trustee), and any loss resulting from such
investments shall be charged to such Account, provided that the related Servicer
and the Trustee shall each contribute funds in an amount equal to such loss in
the case of the Principal and Interest Account and the Certificate Account,
respectively.
Section 7.06 Reserved.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, FHLMC senior debt obligations, and
FNMA senior debt obligations, but excluding any of such securities whose terms
do not provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
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(e) FNMA mortgage-backed securities (other than stripped mortgage
securities which are valued greater than par on the portion of unpaid principal)
and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated A-1+ or
better by Standard & Poor's and P-1 by Moody's;
(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB by Standard &
Poor's) which has combined capital, surplus and undivided profits of at least
$50,000,000 which deposits are insured by the FDIC and held up to the limits
insured by the FDIC;
(h) Investment agreements approved by the Certificate Insurer provided:
1. The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligation rated Aa2
or better by Moody's and AA or better by Standard & Poor's, or is the
lead bank of a parent bank holding company with an uninsured, unsecured
and unguaranteed senior debt obligation meeting such rating
requirements, and
2. Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time prior to
the withdrawal date), and
3. The agreement is not subordinated to any other obligations
of such insurance company or bank, and
4. The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
5. The Trustee and the Certificate Insurer receive an opinion
of counsel (at the expense of the party requesting the investment) that
such agreement is an enforceable obligation of such insurance company
or bank;
(i) Repurchase agreements collateralized by securities described in
(a), (c), or (e) above with any registered broker/dealer subject to the
Securities Investors Protection Corporation's jurisdiction and subject to
applicable limits therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed short-term or long-term obligation rated
P-1 or Aa2, respectively, or better by Moody's and A-1+ or AA, respectively, or
better by Standard & Poor's, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank, (b) a bank
which is a member of the FDIC and which has combined capital, surplus
and undivided profits of not less than $125 million, or (c) a bank
approved in writing for such purpose by the Certificate Insurer, and
the Trustee shall have received written confirmation from
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such third party that it holds such securities, free and clear of any
lien, as agent for the Trustee, and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1 et
seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less frequently
than monthly and will liquidate the collateral securities if any
deficiency in the required collateral percentage is not restored within
two business days of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106%.
(j) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's and
Moody's; and
(k) Investments in money market funds rated AAAm or AAAm-G by Standard
& Poor's and Aaa by Moody's;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
(a) Not later than the later of (i) 5:00 p.m. (New York City time) on
the second Business Day after the Trustee's receipt of the Monthly Servicing
Report and (ii) the related Monthly Remittance Date, the Trustee shall determine
whether an Insured Payment will be required to be made by the Certificate
Insurer on the following Payment Date; provided that the Trustee agrees to use
its best efforts to provide such notice earlier than such second Business Day.
If the Trustee determines that an Insured Payment will be required to be made by
the Certificate Insurer on the following Payment Date, then no later than 5:00
p.m. (New York City time) on the date of such determination the Trustee shall
furnish the Certificate Insurer and the Depositor with a completed Notice in the
form set forth as Exhibit J hereto. The Notice shall specify the amount of
Insured Payment and shall constitute a claim for an Insured Payment pursuant to
the related Certificate Insurance Policy.
(b) On or before the Business Day preceding each Payment Date, the
Trustee shall notify (subject to the terms of Section 10.03(j)) hereof the
Depositor, the Seller and the Certificate Insurer of the following information
with respect to the next Payment Date (which notification may be given by
facsimile, or by telephone promptly confirmed in writing):
(1) The aggregate amount then on deposit in the Certificate
Account;
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(2) The Class A Distribution Amount, with respect to each
Class individually, and all Classes in the aggregate, on the next
Payment Date;
(3) The amount of any Subordination Increase Amount;
(4) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
(5) The application of the amounts described in clauses (1),
(3) and (4) preceding to the allocation and distribution of the related
Class A Distribution Amounts on such Payment Date in accordance with
Section 7.03 hereof;
(6) The Certificate Principal Balance of each Class of Class A
Certificates, the aggregate amount of the principal of each Class of
the Class A Certificates to be paid on such Payment Date and the
remaining Certificate Principal Balance of each Class of Class A
Certificates following any such payment;
(7) The amount, if any, of any Realized Losses for the related
Remittance Period;
(8) The amount of any Subordination Reduction Amount by Group
and in the aggregate;
(9) For the Payment Dates during the Funding Period, and as to
each Group and in the aggregate (A) the related Pre-Funded Amount
previously used to purchase Subsequent Mortgage Loans, (B) the related
Pre-Funded Amount distributed as part of the related Principal
Distribution Amount, (C) the related Pre-Funding Account Earnings
transferred to the Capitalized Interest Account, and (D) the amounts
transferred from the Capitalized Interest Account to the Certificate
Account and the Overfunded Interest Amount to the Seller, if any;
(10) The amount of the B-10 Distribution Amount and the amount
of any Residual Net Monthly Excess Cashflow for each Group and in the
aggregate; and
(11) whether the Servicer Termination Test and the Stepdown
Requirement have been met and state separately each component thereof.
Section 7.09 Reports by Trustee.
(a) On each Payment Date the Trustee shall report in writing to the
Depositor (in hard copy and electronic diskette format), each Owner, the
Certificate Insurer, the Underwriters and their designees (designated in writing
to the Trustee) and the Rating Agencies;
(i) the amount of the distribution with respect to such
Owners' Certificates (based on a Certificate in the original principal
amount of $1,000);
(ii) (a) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments or other recoveries of principal included therein, (b) with
respect to each Group, any Pre-Funded Amounts distributed as a
Prepayment (based on a Certificate in the original principal amount of
$1,000) and (c) any Subordination Increase Amount with respect to the
related Mortgage Loan Group and in the aggregate;
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(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$1,000);
(iv) if the distribution (net of any Insured Payment) to the
Owners of any Class of the Class A Certificates or Class S Certificates
on such Payment Date was less than the related Class A Distribution
Amount or Class S Distribution Amount on such Payment Date, the related
Carry Forward Amount and the allocation thereof to the related Classes
of the Class A Certificates or Class S Certificates resulting therefrom
or Class S Carry-Forward Amount;
(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Class A Certificates or Class S
Certificates on such Payment Date;
(vi) the principal amount of each Class of Class A Certificate
which will be Outstanding and the aggregate Loan Balance of each Group
and in the aggregate, in each case after giving effect to any payment
of principal on such Payment Date;
(vii) the aggregate Loan Balance of the Mortgage Loans in each
Group and in the aggregate and the aggregate Loan Balance of the
Initial Mortgage Loans and the Subsequent Mortgage Loans in each Group
in each case after giving effect to any payment of principal on such
Payment Date;
(viii) the Subordinated Amount and Subordination Deficit for
each Group and in the aggregate, if any, remaining after giving effect
to all distributions and transfers on such Payment Date;
(ix) based upon information furnished by the Depositor, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in
computing their market discount;
(x) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect to
each Group and in the aggregate;
(xi) the weighted average Coupon Rate of the Mortgage Loans
with respect to each Group and in the aggregate;
(xii) such other information as the Certificate Insurer may
reasonably request with respect to Delinquent Mortgage Loans;
(xiii) the largest Mortgage Loan balance outstanding in each
Group and in the aggregate;
(xiv) for the Payment Dates during the Funding Period, the
remaining Pre-Funded Amount for each Group and in the aggregate;
(xv) the Servicing Fees, Trustee's Fees and Premium Amount
allocable to each Group and in the aggregate;
(xvi) the amount of any Group II Available Funds Cap
Carry-Forward Amount; and
(xvii) One-Month LIBOR on the most recent One-Month LIBOR
Determination Date.
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Each Servicer shall provide to the Trustee the information required by
Section 8.29 with respect to the Mortgage Loans serviced by it to enable the
Trustee to perform its reporting obligations under this Section, and the
obligations of the Trustee under this Section are conditioned upon such
information being received and the information provided in clauses (ii)(a),
(vii), (x), (xi) and (xii) above shall be based solely upon information
contained in the Monthly Servicing Report provided by a Servicer to the Trustee.
(b) In addition, on each Payment Date the Trustee will distribute to
the Depositor, each Owner, the Certificate Insurer, the Underwriters and the
Rating Agencies, together with the information described in Subsection (a)
preceding, the following information with respect to each Mortgage Loan Group
which information is hereby required to be prepared in hard copy or tape format
by the related Servicers (other than the information in clause (i)) and
furnished to the Trustee to the extent provided for in Section 8.29 for such
purpose on the Reporting Date:
(i) the related Class A Certificate Principal Balance, as of
such Payment Date;
(ii) the number and aggregate principal balances of Mortgage
Loans in each Group (a) 30 days Delinquent, (b) 31-60 days Delinquent,
(c) 61-90 days Delinquent, (d) 91 or more days Delinquent, as of the
close of business on the last Business Day of the related Remittance
Period (taking into account payments received on or prior to the
related Determination Date).
(iii) the numbers and aggregate Loan Balances of all Mortgage
Loans in each Group as of such Payment Date and the percentage that
each of the amounts represented by clauses (a), (b) and (c) of
paragraph (ii) above represent as a percentage of the respective
amounts in this paragraph (iii);
(iv) the status and the number and dollar amounts of all
Mortgage Loans in each Group in foreclosure proceedings as of the close
of business on the related Determination Date, separately stating, for
this purpose, all Mortgage Loans in each Group with respect to which
foreclosure proceedings were commenced in the immediately preceding
calendar month;
(v) the number of Mortgagors and the Loan Balances of Mortgage
Loans in each Group of the related Mortgages involved in bankruptcy
proceedings as of the close of business on the related Determination
Date;
(vi) the existence and status of any REO Properties in each
Group, as of the close of business on the related Determination Date;
(vii) the book value of any REO Property in each Group as of
the close of business on the related Determination Date;
(viii) the Cumulative Loss Percentage for each Group and each
Mortgage Loan Servicing Group, the amount of Cumulative Realized Losses
for each Group and each Mortgage Loan Servicing Group and in the
aggregate, the current period Realized Losses and the Annual Loss
Percentage for such Group and each Mortgage Loan Servicing Group and in
the aggregate, in each case as of the related Determination Date; and
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(ix) the 90+ Delinquency Percentage and the number and amount
by principal balance of 90 Day Delinquent Loans in each Group and each
Mortgage Loan Servicing Group, in each case as of the related
Determination Date.
(c) Each Servicer shall furnish to the Trustee and to the Certificate
Insurer, during the term of this Agreement, such periodic, special, or other
reports or information not specifically provided for herein, with respect to
Mortgage Loans serviced by it, as may be necessary, reasonable, or appropriate
with respect to the Trustee or the Certificate Insurer, as the case may be, or
otherwise with respect to the purposes of this Agreement, all such reports or
information to be provided by and in accordance with such applicable
instructions and directions as the Trustee or the Certificate Insurer may
reasonably require; provided, that the related Servicer shall be entitled to be
reimbursed by the requesting party, for the fees and actual expenses associated
with providing such reports, if such reports are not generally produced in the
ordinary course of business.
Section 7.10 Additional Reports by Trustee.
(a) The Trustee shall report to the Depositor, the Seller, the
Underwriters, the Certificate Insurer and each Owner, with respect to the amount
on deposit in the Certificate Account, the amount therein relating to each Group
and the identity of the investments included therein, as the Depositor, the
Seller or the Certificate Insurer may from time to time request. Without
limiting the generality of the foregoing, the Trustee shall, at the request of
the Depositor, the Seller or the Certificate Insurer transmit promptly to the
Depositor, the Seller and the Certificate Insurer copies of all accountings of
receipts in respect of the Mortgage Loans furnished to it by the related
Servicer and shall notify the Seller and the Certificate Insurer if any Monthly
Remittance Amount has not been received by the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer with respect to
any written notices it may from time to time receive which provide an Authorized
Officer with actual knowledge that any of the representations and warranties
contained herein or in any of the Transfer Agreements are inaccurate.
Section 7.11 Preference Payments
Subject to the terms of the related Certificate Insurance Policy, the
Certificate Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by State Street Bank and
Trust Company, N.A., its fiscal agent (the "Fiscal Agent") of (i) a certified
copy of an order requiring the return of such Preference Amount, (ii) an opinion
of counsel satisfactory to the Certificate Insurer that such order is final and
not subject to appeal, (iii) an assignment in such form as if reasonably
required by the Certificate Insurer, irrevocably assigning to the Certificate
Insurer all rights and claims of the Owner relating to or arising under the
Class A Certificates against the debtor which made such preference payment or
otherwise with respect to such preference payment, (iv) appropriate instruments
to effect the appointment of the Certificate Insurer as agent for such Owner in
any legal proceeding related to such preference payment, such instruments being
in a form satisfactory to the Certificate Insurer and (v) a Notice (as described
in the Certificate Insurance Policy), provided, that if such documents are
received after 5:00 p.m. New York City time on such Business Day, they will be
deemed to be received on the following Business Day. Such payments shall be
disbursed to the receiver or the trustee in bankruptcy named in the final order
of the court exercising on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Class A
Certificates to such receiver or trustee in bankruptcy, in which case payment
shall be disbursed to the Owner.
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Each Owner of a Class A or Class S Certificate, by its purchase of
Class A or Class S Certificates, the related Servicer and the Trustee hereby
agree that the Certificate Insurer may at any time during the continuation of
any proceeding relating to a preference claim direct all matters relating to
such preference claim, including, without limitation, the direction of any
appeal of any order relating to such preference claim and the posting of any
surety, supersedes or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Certificate Insurer shall be subrogated
to the rights of the related Servicer, the Trustee and the Owner of each Class A
or Class S Certificate in the conduct of any such preference claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection any such preference claim.
Section 7.12 Claims Upon the Policies.
If within the latter of (i) 5:00 p.m. (New York City time) on the
second Business Day after the Trustee's receipt of the Monthly Servicing Report
from each of the Servicers, and (ii) the related Monthly Remittance Date, the
Trustee determines that the Total Available Funds are insufficient to pay the
Insured Payments on such Payment Date, the Trustee shall give notice by 5:00
p.m. (New York City time) on such date to the Certificate Insurer by telephone
or telecopy of the amount of such deficiency, confirmed in writing in the form
of the Notice set forth as Exhibit A to the related Certificate Insurance
Policy, to the Certificate Insurer and the Fiscal Agent (as defined in such
Certificate Insurance Policy). Under the related Certificate Insurance Policy,
the Certificate Insurer shall make the Insured Payment on the later of (i) 12:00
noon (New York City time) on the second Business Day following receipt of such
notice and (ii) 12:00 noon (New York City time) on the Payment Date.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 8.01 Servicers and Subservicers. (a) Acting directly or through
one or more subservicers as provided in Section 8.03, each Servicer, as
servicer, shall service and administer the Mortgage Loans identified on the
Schedule of Mortgage Loans as being serviced by it as described below and with
reasonable care, and using that degree of skill and attention that such Servicer
exercises with respect to comparable mortgage loans that it services for itself
or others, and shall have full power and authority, acting alone, to do or cause
to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. In performing such
servicing functions such Servicer shall (i) take into account the mortgagor
non-conforming credit quality of the Mortgage Loans, (ii) follow the policies
and procedures that it would apply to similar loans held for its own account,
unless such policies and procedures are not generally in accordance with
standard industry practices, in which case the Servicer shall service the loans
generally in accordance with standard industry practices applicable to servicing
similar loans, (iii) comply with all applicable laws and follow collection
practices with respect to the related Mortgage Loans that are in all material
respects legal, proper and prudent, and (iv) subject to its obligation to comply
with clauses (i), (ii) and (iii): (A) with regard to Advanta, will not
materially change its collection and servicing practices that are in existence
as of the Startup Day without the consent of the Seller (such consent not to be
unreasonably withheld) and (B) with regard to Option One will comply with
reasonable requests of the Seller including accelerated collection and
foreclosure procedures. Advanta shall notify the Certificate Insurer of the
changes specified in clause (iv)(A) of the preceding sentence.
(b) The duties of each Servicer shall include the collecting and
posting of all payments, responding to inquiries of Mortgagors or by federal,
state or local government authorities with respect to the Mortgage Loans,
investigating delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and accounting for collections,
furnishing monthly statements to the Trustee and the Seller with respect to
remittances on the Mortgage Loans, advising the Trustee or the Seller of the
amount of Compensating Interest and Delinquency Advances due as of any Monthly
Remittance Date with respect to the Mortgage Loans serviced by it and funding
such Compensating Interest and Delinquency Advances, to the extent set forth in
this Agreement. Each Servicer shall reasonably cooperate with the Trustee and
furnish upon reasonable request to the Trustee with reasonable promptness
information in its possession as may be necessary or appropriate to enable the
Trustee to perform its tax reporting duties hereunder.
(c) The Seller and the Depositor intend that the REMIC Estate shall
constitute and that the affairs of REMIC Estate shall be conducted so as to
qualify it as a REMIC. In furtherance of such intention, each Servicer covenants
and agrees that it shall not knowingly or intentionally take any action or omit
to take any action that would cause the termination of the REMIC status of the
REMIC Estate or that would subject the REMIC Estate to tax.
(d) Each Servicer may, and is hereby authorized to, perform any of its
servicing responsibilities with respect to all or certain of the Mortgage Loans
through a subservicer as it may from time to time designate in accordance with
Section 8.03 but no such designation of a subservicer shall serve to release
such Servicer from any of its obligations under this Agreement. Such subservicer
shall have all the rights and powers of the relevant Servicer with respect to
such Mortgage Loans under this Agreement.
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(e) Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, each Servicer in its own name or in the name of a
subservicer is hereby authorized and empowered and this subsection shall
constitute a power of attorney to carry out its servicing and administrative
duties hereunder, on behalf of itself, the Owners and the Trust or any of them;
to institute foreclosure proceedings or obtain a deed in lieu of foreclosure so
as to effect ownership of any Property on behalf of the Trust and to hold title
to any Property upon such foreclosure or deed in lieu of foreclosure on behalf
of the Trust; provided, however, that Section 8.14(a) and (c) shall constitute a
power of attorney from the Trustee to each Servicer with respect to the matters
described therein and in accordance with the terms thereof. Subject to Sections
8.13 and 8.14, the Trustee shall furnish any Servicer or any Subservicer with
any additional powers of attorney and other documents as such Servicer shall
reasonably request to enable such Servicer or any Subservicer to carry out its
respective servicing and administrative duties hereunder.
(f) Each Servicer shall give prompt notice to the Trustee, the Seller
and the Certificate Insurer of any action, of which a responsible officer of
such Servicer has actual knowledge, to (i) assert a claim against the Trust or
(ii) assert control over the Trust or the Trust Estate.
(g) Servicing Advances incurred by any Servicer in connection with the
servicing of the Mortgage Loans (including any penalties in connection with the
payment of any taxes and assessments or other charges) on any Property shall be
recoverable by such Servicer to the extent described in Section 8.09 and in
Section 7.03(c)(iv)(D) hereof.
Section 8.02 Collection of Certain Mortgage Loan Payments. (a) Each
Servicer shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any applicable Insurance Policies,
follow such collection procedures as it follows from time to time with respect
to mortgage loans in its servicing portfolio that are comparable to the Mortgage
Loans; provided that such Servicer shall always at least follow collection
procedures that are consistent with Section 8.01(a) hereof. Consistent with the
foregoing, each Servicer may in its discretion (i) waive any assumption fees,
late payment charges, charges for checks returned for insufficient funds or
other fees which may be collected in the ordinary course of servicing the
Mortgage Loans, (ii) if a Mortgagor is in default or about to be in default
because of a Mortgagor's financial condition, arrange with the Mortgagor a
schedule for the payment of delinquent payments due on the related Mortgage Loan
or (iii) modify payments of monthly principal and interest on any Mortgage Loan
becoming subject to the terms of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended, in accordance with such Servicer's general policies with
respect to comparable mortgage loans subject to such Act. No Servicer shall be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Note or otherwise or against any public or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law. Consistent with the terms of this Agreement, a Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor, provided, however, that (unless the Mortgagor is in
default with respect to the Mortgage Loan, or such default is, in the judgment
of such Servicer, imminent and such Servicer has the consent of the Seller) such
Servicer may not permit any modification with respect to any Mortgage Loan that
would change the Coupon Rate (except for any change made pursuant to the
adjustment provisions of a Note evidencing an Adjustable Rate Loan), forgive the
payment of any principal or interest or prepayment penalties (unless the
Servicer in its reasonable judgment believes that forgiving such prepayment
penalties will result in a financial benefit to the Trust), change the
outstanding principal amount, require any future advances, provide for the
substitution or release of any material portion of
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the collateral or extend the final maturity date on such Mortgage Loan; provided
further that no such indulgence shall affect the Servicer's obligation to make
Delinquency Advances pursuant to Section 8.09.
(b) Each Servicer shall deposit into the related Principal and Interest
Account in accordance with Section 8.08(a) all Prepaid Installments received by
it, and shall apply such Prepaid Installments as directed by such Mortgagor and
as set forth in the related Note.
Section 8.03 Subservicing Agreements Between Servicer and Subservicer.
Each Servicer may enter into subservicing agreements for any servicing and
administration of Mortgage Loans with any institution which is acceptable to the
Certificate Insurer and the Owner of a majority of the Percentage Interests of
the Class R Certificates, as indicated in writing, and which represents and
warrants that it is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement. For this
purpose, subservicing shall not be deemed to include the use of a tax service,
or services for reconveyance, insurance or brokering REO Property. Each Servicer
shall give prior notice to the Certificate Insurer, the Seller and the Trustee
of the appointment of any Subservicer and shall furnish to the Certificate
Insurer and the Seller a copy of such Subservicing Agreement. For purposes of
this Agreement, the relevant Servicer shall be deemed to have received payments
on Mortgage Loans when any Subservicer has received such payments. Any such
Subservicing Agreement shall be consistent with and not violate the provisions
of this Agreement. Each Subservicing Agreement shall provide that a successor
Servicer shall have the option to terminate such agreement without payment of
any fees if the predecessor Servicer is terminated or resigns.
Section 8.04 Successor Subservicer. Each Servicer may terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and either itself directly service the related Mortgage
Loans or enter into a Subservicing Agreement with a successor Subservicer that
qualifies under Section 8.03.
Section 8.05 Liability of Servicer. The Servicers shall not be relieved
of their respective obligations under this Agreement notwithstanding any
Subservicing Agreement or any of the provisions of this Agreement relating to
agreements or arrangements between such Servicer and a Subservicer or otherwise,
and such Servicer shall be obligated to the same extent and under the same terms
and conditions as if it alone were servicing and administering the Mortgage
Loans as such terms and conditions may be limited pursuant to the terms of this
Agreement. Each Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of such Servicer by such Subservicer and nothing
contained in such Subservicing Agreement shall be deemed to limit or modify this
Agreement. The Trust shall not indemnify any Servicer for any losses due to any
Subservicer's negligence.
Section 8.06 No Contractual Relationship Between Subservicer and
Trustee, Certificate Insurer or the Owners. Any Subservicing Agreement and any
other transactions or services relating to the Mortgage Loans involving a
Subservicer shall be deemed to be between the Subservicer and the related
Servicer alone and the Certificate Insurer, the Trustee and the Owners shall not
be deemed parties thereto and shall have no claims, rights, obligations, duties
or liabilities with respect to any Subservicer except as set forth in Section
8.07 hereof or in the related Subservicing Agreement.
Section 8.07 Assumption or Termination of Subservicing Agreement by
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of each Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that such
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Servicer's rights and obligations under any Subservicing Agreement then in force
between such Servicer and a Subservicer may be assumed or terminated by the
Trustee at its option. Each Servicer shall, upon request of the Trustee, but at
the expense of such Servicer, deliver to the Trustee documents and records
relating to each Subservicing Agreement and an accounting of amounts collected
and held by such Servicer and otherwise use its best reasonable efforts to
effect the orderly and efficient transfer of the Subservicing Agreement to the
Trustee.
Section 8.08 Principal and Interest Accounts; Escrow Accounts. (a) Each
Servicer shall establish in its name on behalf of the Trustee for the benefit of
the Owners of the Certificates and maintain or cause to be maintained at a
Designated Depository Institution a Principal and Interest Account to be held as
a trust account. The Principal and Interest Accounts shall be identified on the
records of the Designated Depository Institution as follows: [Name of Servicer]
on behalf of The Chase Manhattan Bank, as Trustee under the Pooling and
Servicing Agreement relating to the AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1996-5 dated as of December 1, 1996. If the institution at
any time holding a Principal and Interest Account ceases to be eligible as a
Designated Depository Institution hereunder, then the related Servicer in the
case of a Principal and Interest Account shall, within 30 days, be required to
name a successor institution meeting the requirements for a Designated
Depository Institution hereunder. If such party fails to name such a successor
institution, then the Trustee shall cause such Account to be held as a trust
account with a qualifying Designated Depository Institution. The related
Servicer shall notify the Trustee, the Seller, the Certificate Insurer and the
Depositor if there is a change in the name, account number or institution
holding a Principal and Interest Account. Subject to Subsection (c) below, each
Servicer shall deposit all receipts related to the Mortgage Loans into the
related Principal and Interest Accounts on a daily basis (but no later than the
second Business Day after receipt).
(b) All funds in the Principal and Interest Accounts may only be held
(i) uninvested, up to the limits insured by the FDIC or (ii) invested in
Eligible Investments as selected by the related Servicer. The Principal and
Interest Accounts shall be held in trust in the name of the Trustee for the
benefit of the Owners of the Certificates and the Certificate Insurer (other
than the earnings thereon which shall be retained by the related Servicer).
(c) Subject to Section 8.09, each Servicer shall deposit on a daily
basis (except as described below), and in any case not later than two Business
Days following receipt, to the related Principal and Interest Account all
scheduled principal and interest payments on the Mortgage Loans serviced by it
due after the Cut-Off Date or Subsequent Cut-Off Date and all unscheduled
principal and interest collections received after the Cut-Off Date or Subsequent
Cut-Off Date including any Prepayments and Net Liquidation Proceeds, all Loan
Purchase Prices and Substitution Amounts received by such Servicer with respect
to the Mortgage Loans, other recoveries or amounts related to the Mortgage Loans
received by such Servicer after the Cut-Off Date, Compensating Interest (which
shall be deposited into the Certificate Account on or prior to each Monthly
Remittance Date) and Delinquency Advances (which shall be deposited no later
than the related Monthly Remittance Date) but net of (i) the related Servicing
Fee with respect to each Mortgage Loan and other servicing compensation to such
Servicer as permitted by Section 8.15 hereof, (ii) principal retained by the
Depositor (including Prepayments) and due on the related Mortgage Loans on or
prior to the Cut-Off Date, (iii) interest retained by the Depositor and accruing
on the related Mortgage Loans on or prior to the Cut-Off Date or Subsequent
Cut-Off Date, and (iv) reimbursements for unreimbursed or unrecovered
Delinquency Advances and Servicing Advances pursuant to Section 8.09.
(d) Each Servicer may each make withdrawals from the related Principal
and Interest Account only for the following purposes:
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(A) to effect the timely remittance to the Trustee of the
Monthly Remittance Amount due on each Monthly Remittance
Date and to effect the timely remittance to the Trustee
on each Monthly Remittance Date of any Compensating
Interest;
(B) to reimburse itself pursuant to Section 8.09 hereof for
unreimbursed Delinquency Advances and Servicing Advances
and unrecovered Delinquency Advances and Servicing
Advances determined by it to be nonrecoverable.
(C) to withdraw investment earnings on amounts on deposit in
its Principal and Interest Account;
(D) to withdraw amounts that have been deposited to the
related Principal and Interest Account in error;
(E) to reimburse itself pursuant to Section 8.25; and
(F) to clear and terminate the related Principal and
Interest Accounts following the termination of the Trust
Estate pursuant to Article IX hereof.
(e) On each Monthly Remittance Date, each Servicer shall remit to the
Trustee by wire transfer in immediately available funds from the related
Principal and Interest Account for deposit to the Certificate Account, the
portion of the Monthly Remittance Amount remaining after the withdrawals
permitted by clauses (B)-(E) of Section 8.08(d) related to the Mortgage Loans
serviced by such Servicer for such Monthly Remittance Date.
(f) Each Servicer shall establish and maintain one or more custodial
accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors, if any, received with respect to the Mortgage
Loans, or advances by such Servicer, for the payment of taxes, assessments,
hazard insurance premiums and primary mortgage insurance policy premiums or
comparable items for the account of the Mortgagors. Nothing herein shall require
any Servicer to compel a Mortgagor to establish an Escrow Account in violation
of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums or primary mortgage insurance policy premiums, condominium or PUD
association dues, or comparable items, to reimburse such Servicer, 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 Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement. As part of
its servicing duties, such Servicer shall be required to pay to the Mortgagors
interest on funds in the Escrow Account, to the extent required by law.
Each Servicer shall advance the payments (to be treated as Servicing
Advances) referred to in the preceding paragraph that are not timely paid by the
Mortgagors, including tax penalties, if any; provided, however, that such
Servicer shall be required to so advance only to the extent that such advances,
in the good faith business judgment of such Servicer, will be recoverable by
such Servicer out of Insurance Proceeds, Liquidation Proceeds or otherwise from
the related Mortgage Loan.
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Section 8.09 Delinquency Advances, Servicing Advances and Compensating
Interest.
(a) Each Servicer is required, not later than each Monthly Remittance
Date, to deposit into the related Principal and Interest Account an amount equal
to the sum of the interest (net of the Servicing Fee) and scheduled principal
due (except any Balloon Payment), but not collected, with respect to Delinquent
Mortgage Loans serviced by it during the related Remittance Period but only if,
in its good faith business judgment, such Servicer reasonably believes that such
amount will ultimately be recovered from the related Mortgage Loan. With respect
to each Balloon Loan, the related Servicer shall be required to advance an
amount of principal and interest on an assumed schedule based on the original
principal amortization for the related Balloon Loan (but only if, in its good
faith business judgment, such Servicer reasonably believes that such amount will
ultimately be recovered from the related Mortgage Loan). Any determination of
nonrecoverability shall be explained in a notice provided to the Trustee and the
Seller. Such amounts are "Delinquency Advances". Each Servicer shall be
permitted to fund its payment of Delinquency Advances from its own funds or from
funds on deposit in the related Principal and Interest Account that are not
required to be distributed on the related Payment Date. To the extent a Servicer
uses funds not required for distribution on a Payment Date to make Delinquency
Advances with respect to such Payment Date, it shall deposit into the related
Principal and Interest Account such amount prior to the next succeeding Monthly
Remittance Date. Each Servicer shall be entitled to reimbursement for
Delinquency Advances from late collections, Liquidation Proceeds or otherwise
with respect to collections on the Mortgage Loan (including Balloon Loans) with
respect to which such Delinquency Advance was made.
Notwithstanding the foregoing, in the event that a Servicer determines
that the aggregate unreimbursed Delinquency Advances exceed the expected
Liquidation Proceeds on a Mortgage Loan, such Servicer shall not be required to
make any future Delinquency Advances with respect to that Mortgage Loan, and
shall be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances from amounts in the related Principal and Interest Account. Such
Servicer shall give written notice of such determination to the Trustee, the
Certificate Insurer and the Seller, and the Trustee shall promptly furnish a
copy of such notice to the Owner of a majority of the Percentage Interests of
the Class R Certificates; provided, further, that such Servicer shall be
entitled to recover any unreimbursed Delinquency Advances from the aforesaid
Liquidation Proceeds prior to the payment of the Liquidation Proceeds to any
other party to this Agreement.
(b) Each Servicer will pay all customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred in the performance of its servicing
obligations, including, but not limited to, the cost of (i) Preservation
Expenses, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of REO Property, (iv) the escrow
expenditures required pursuant to Section 8.08(f) hereof (but is only required
to pay such costs and expenses to the extent such Servicer reasonably believes
that such amounts will ultimately be recovered from the related Mortgage Loan)
and (v) fees and expenses for opinions of counsel pursuant to Section 8.13. Each
such amount so paid will constitute a "Servicing Advance". Each Servicer may
recover Servicing Advances (x) from the Mortgagors to the extent permitted by
the Mortgage Loans, (y) from Liquidation Proceeds realized upon the liquidation
of the related Mortgage Loan, and (z) as provided in Section 7.03(c)(iv)(D)
hereof. Except as provided in the previous sentence, and in Sections 7.03(c)(iv)
and 8.13, in no case may a Servicer recover Servicing Advances from principal
and interest payments on any Mortgage Loan or from any amounts relating to any
other Mortgage Loan.
Section 8.10 Compensating Interest; Purchase of Mortgage Loans. (a) On
or prior to each Determination Date and with respect to Mortgage Loans serviced
by it, each Servicer shall deposit into the related Principal and Interest
Account with respect to any full Prepayment made by the Mortgagor
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after the end of the Prepayment Period in the preceding calendar month until the
last day of such calendar month received on a Mortgage Loan, an amount equal to
the excess, if any, of (x) 30 days' interest at the Mortgage Loan's Coupon Rate
(less the Servicing Fee) on the Loan Balance of such Mortgage Loan as of the
first day of the related Prepayment Period over (y) to the extent not previously
advanced, the interest paid by the Mortgagor with respect to the Mortgage Loan
for the related Remittance Period (any such amount, "Compensating Interest"),
which amount shall be included in the Monthly Remittance Amount to be made
available to the Trustee on each Monthly Remittance Date; provided that the sum
of all such deposits shall not exceed the amounts set forth in the related
Servicing Fee Letter.
(b) Each Servicer with respect to Mortgage Loans serviced by it, may,
but is not obligated to, purchase for its own account any 90-Day Delinquent Loan
or any Mortgage Loan as to which enforcement proceedings have been brought by
the related Servicer pursuant to Section 8.13. Any such Mortgage Loan so
purchased shall be purchased by such Servicer on a Monthly Remittance Date at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be deposited in the related Principal and Interest Account.
Section 8.11 Maintenance of Insurance. (a) Each Servicer shall cause to
be maintained with respect to each Mortgage Loan serviced by it a hazard
insurance policy with a generally acceptable carrier that provides for fire and
extended coverage, and which provides for a recovery by such Servicer on behalf
of the Trust of insurance proceeds relating to such Mortgage Loan in an amount
not less than the least of (i) the outstanding principal balance of the Mortgage
Loan, (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the full insurable value of the premises.
(b) If the Mortgage Loan relates to a Property which is located in an
area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, as identified to the related Servicer by
the Originator in the related Mortgage Loan Schedule, and flood insurance has
been made available, the related Servicer will cause to be maintained with
respect thereto a flood insurance policy in a form meeting the requirements of
the current guidelines of the Federal Insurance Administration with a generally
acceptable carrier in an amount representing coverage, and which provides for a
recovery by such Servicer on behalf of the Trust of insurance proceeds relating
to such Mortgage Loan of not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973.
(c) In the event that a Servicer shall obtain and maintain a blanket
policy insuring against fire, flood and hazards of extended coverage on all of
the Mortgage Loans, then, to the extent such policy names such Servicer as loss
payee and provides coverage in an amount equal to the aggregate unpaid principal
balance on the Mortgage Loans without co-insurance and otherwise complies with
the requirements of this Section 8.11, such Servicer shall be deemed
conclusively to have satisfied its obligations with respect to fire and hazard
insurance coverage under this Section 8.11, it being understood and agreed that
such blanket policy may contain a deductible clause, in which case such Servicer
shall, in the event that there shall not have been maintained on the related
Property a policy complying with the preceding paragraphs of this Section 8.11,
and there shall have been a loss which would have been covered by such policy,
deposit in the related Principal and Interest Account from such Servicer's own
funds the difference, if any, between the amount that would have been payable
under a policy complying with the preceding paragraphs of this Section 8.11 and
the amount paid under such blanket policy. Upon
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the request of the Trustee or the Certificate Insurer, such Servicer shall cause
to be delivered an Officer's Certificate to the Trustee or the Certificate
Insurer to the effect that the Servicer maintains such policy.
(d) Each Servicer also shall maintain on related REO Property, fire and
hazard insurance with extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements which are a
part of such property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property, liability insurance and, to
the extent required and available under the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973, as amended, flood insurance in an
amount as provided above.
(e) If a Servicer shall fail to maintain or cause to be maintained any
insurance required by this Section 8.11, and there shall have been a loss which
would have been covered by such policy, the Servicer shall deposit in the
related Principal and Interest Account from the Servicer's own funds the amount,
if any, that would have been payable under a policy complying with the preceding
paragraphs of this Section 8.11.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements. When a Property has been or is about to be conveyed by the
Mortgagor, the related Servicer shall, to the extent a responsible officer
thereof has actual knowledge of such conveyance or prospective conveyance,
exercise the rights of the Trust to accelerate the maturity of the related
Mortgage Loan under any "due-on-sale" clause contained in the related Mortgage
or Note; provided, however, that such Servicer shall not exercise any such right
if the "due-on-sale" clause, in the reasonable belief of such Servicer, is not
enforceable under applicable law or if such Servicer reasonably believes in good
faith it is not in the best interests of the Trust. In such event, such Servicer
is authorized to enter into an assumption and modification agreement with the
Person to whom such Property has been or is about to be conveyed, pursuant to
which such Person becomes liable under the Note and, unless prohibited by
applicable law or the Mortgage Documents, the Mortgagor remains liable thereon.
If the foregoing is not permitted under applicable law, such Servicer is
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
Person is substituted as Mortgagor and becomes liable under the Note; provided,
however, that to the extent any such substitution of liability agreement would
not otherwise have been delivered by such Servicer in its usual procedures for
mortgage loans held in its own portfolio such Servicer shall, prior to executing
and delivering such agreement, obtain the prior written consent of the
Certificate Insurer. The Trustee shall execute any agreements required to
effectuate the foregoing. The Mortgage Loan, as assumed, shall conform in all
respects to the requirements, representations and warranties of this Agreement.
The related Servicer of such Mortgage Loan shall notify the Trustee that any
such assumption or substitution agreement has been completed by forwarding to
the Trustee the original copy of such assumption or substitution agreement,
which copy shall be added by the Trustee to the related File and which shall,
for all purposes, be considered a part of such File to the same extent as all
other documents and instruments constituting a part thereof. Each Servicer shall
be responsible for recording any such assumption or substitution agreements
relating to Mortgage Loans serviced by it at the expense of the related
Servicer. In connection with any such assumption or substitution agreement, no
material term of the Mortgage Loan, including the required monthly payment on
the related Mortgage Loan shall be changed but all terms thereof shall remain as
in effect as immediately prior to the assumption or substitution, the stated
maturity or outstanding principal amount of such Mortgage Loan shall not be
changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by any Servicer for consenting to any
such conveyance or entering into an assumption or substitution agreement shall
be retained by or paid to such Servicer as additional servicing compensation.
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Notwithstanding the foregoing paragraph or any other provision of this
Agreement, no Servicer shall 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 assumption which such Servicer may be restricted
by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Mortgage Loans. (a) Each
Servicer, with respect to Mortgage Loans serviced by it, shall foreclose upon or
otherwise comparably convert the ownership on behalf of the Trust of Properties
relating to defaulted Mortgage Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the related Servicer
has not purchased pursuant to Section 8.10(b). In connection with such
foreclosure or other conversion, the Servicer of such defaulted Mortgage Loans
shall exercise such of the rights and powers vested in it hereunder, and use the
same degree of care and skill in its exercise or use as prudent mortgage lenders
would exercise or use under the circumstances in the conduct of their own
affairs, including, but not limited to, advancing funds deemed by such Servicer
in its good faith business judgment to be recoverable from the related Mortgage
Loan for the payment of taxes, amounts due with respect to senior liens and
insurance premiums. Any amounts so advanced shall constitute "Servicing
Advances" within the meaning of Section 8.09(b) hereof. Each Servicer shall sell
any REO Property managed by it within 23 months of its acquisition by the Trust,
unless such Servicer obtains for the Trustee and the Certificate Insurer an
Opinion of Counsel (the cost of which shall be advanced by the related Servicer
as a Servicing Advance) experienced in federal income tax matters and reasonably
acceptable to the Certificate Insurer, addressed to the Trustee, the Certificate
Insurer and such Servicer, to the effect that the holding by the Trust of such
REO Property for any greater period will not result in the imposition of taxes
on "Prohibited Transactions" of the Trust as defined in Section 860F of the Code
or cause the Trust to fail to qualify as a REMIC under the REMIC Provisions at
any time that any Certificates are outstanding, or the related Servicer produces
evidence that it has properly requested from the applicable tax authorities at
least 60 days before the day on which the two year grace period would otherwise
expire, an extension of the two year grace period, in which case such Servicer
shall sell any REO Property by the end of any extended period specified in any
such opinion or extension.
Notwithstanding the generality of the foregoing provisions, each
Servicer shall manage, conserve, protect and operate each REO Property managed
by it solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by the Trust of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions. Pursuant to
its efforts to sell such REO Property, the related Servicer shall either itself
or through an agent selected by such Servicer protect and conserve such REO
Property in the same manner and to such extent as is customary in the locality
where such REO Property is located and may, incident to its conservation and
protection of the interests of the Owners and the Certificate Insurer and after
consultation with the holder of a majority in interest of the Class R
Certificates, rent the same, or any part thereof, as such Servicer deems to be
in the best interest of the Owners and the Certificate Insurer for the period
prior to the sale of such REO Property.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, or
exercising control over the Mortgaged Property so that the Trust would be
considered a mortgagee-in-possession, owner or operator of the Mortgaged
Property under the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended (42 U.S.C. ss.9601 et seq.) or a comparable
law, in the event any responsible officer of a Servicer has
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actual knowledge that a Property is in any way affected by hazardous or toxic
substances or wastes and determines that it may be reasonable to convert such
Property ownership to the Trust, or if the Certificate Insurer or the holder of
a majority in interest of the Class R Certificates otherwise requests in writing
an environmental inspection to be conducted, such Servicer shall cause an
environmental inspection or review of such Property to be conducted by a
qualified inspector and shall be reimbursed for the amount of such environmental
inspection in the manner described herein for reimbursement of Servicing
Advances in the same manner as set forth in the immediately following paragraph.
Upon completion of the inspection, such Servicer shall promptly provide the
Certificate Insurer, the Owner of the majority of the Class R Certificates and
the Trustee with a written report of the environmental inspection. In the
absence of such determination or a written request from the Certificate Insurer
or the Owner of the majority of the Class R Certificates for an environmental
inspection, neither the related Servicer nor the Trustee shall be liable for any
liability, cost or expense incurred by the Trust due to the decision of such
Servicer not to cause an environmental inspection of a Property.
After reviewing the environmental inspection report, the Certificate
Insurer and the Owner of the majority of the Class R Certificates shall
determine how the related Servicer shall proceed with respect to the Property
and shall notify such Servicer within 15 Business Days of receipt of the
inspection report. In the event the environmental inspection report indicates
that the Property is in any way affected by hazardous or toxic substances or
wastes such Servicer shall only foreclose or comparably convert such Property if
the Certificate Insurer (after consultation with the Owner of the majority of
the Class R Certificates) directs such Servicer to proceed with foreclosure or
acceptance of a deed-in-lieu of foreclosure. In the event the Certificate
Insurer (after such consultation) requires such Servicer to foreclose or accept
a deed-in-lieu of foreclosure pursuant to this Section 8.13(a),(i) such Servicer
(or the Trustee and any other successor Servicer) shall be reimbursed for any
related environmental clean up costs, as applicable, from the related
Liquidation Proceeds, or if the Liquidation Proceeds are insufficient to fully
reimburse such Servicer (or the Trustee and any other successor Servicer), such
Servicer (or the Trustee and any other successor Servicer) shall be entitled to
be reimbursed from amounts in the related Principal and Interest Account, and
(ii) the Certificate Insurer and such Class R Owner hereby indemnifies the
Trust, the Trustee and such Servicer with respect to any costs, liabilities and
expenses incurred by any such party in connection with any such hazardous or
toxic substances or wastes with respect to such foreclosure or comparable
conversion. In the event the Certificate Insurer and such Class R Owner directs
such Servicer not to proceed with foreclosure or acceptance of a deed-in-lieu of
foreclosure, such Servicer (or the Trustee and any other successor Servicer)
shall be reimbursed for all Servicing Advances made with respect to the related
Property from such Principal and Interest Account pursuant to Section 8.08(d)(B)
hereof.
(b) Each Servicer shall determine, with respect to each defaulted
Mortgage Loan serviced by it, when it has recovered, whether through trustee's
sale, foreclosure sale or otherwise, all amounts it expects to recover from or
on account of such defaulted Mortgage Loan (exclusive of any possibility of a
deficiency judgment), whereupon such Mortgage Loan shall become a "Liquidated
Loan".
Upon such a determination, the related Servicer shall prepare and
submit to the Seller, the Trustee and the Certificate Insurer a Liquidation
Report in substantially the form of Exhibit K hereto.
Section 8.14 Trustee to Cooperate; Release of Files. (a) Upon the
payment in full of any Mortgage Loan (including the repurchase of any Mortgage
Loan or any liquidation of such Mortgage Loan through foreclosure or otherwise)
or the receipt by the related Servicer of a notification that payment in full
will be escrowed in a manner customary for such purposes, such Servicer shall
deliver to the Custodian a Servicer's Trust Receipt in the form of Exhibit H
hereto. Upon receipt of such
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Servicer's Trust Receipt, the Custodian shall promptly release the related File,
in trust to (i) such Servicer, (ii) an escrow agent or (iii) any employee, agent
or attorney of the Trustee, in each case pending its release by such Servicer,
such escrow agent or such employee, agent or attorney of the Trustee, as the
case may be. Upon any such payment in full or the receipt of such notification
that such funds have been placed in escrow, such Servicer is authorized to give,
as attorney-in-fact for the Trustee and the mortgagee under the Mortgage which
secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Property relating to such Mortgage, which
instrument of satisfaction or assignment, as the case may be, shall be delivered
to the Person or Persons entitled thereto against receipt therefor of payment in
full, it being understood and agreed that no expense incurred in connection with
such instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the related Principal and Interest Account. In lieu of executing
any such satisfaction or assignment, as the case may be, such Servicer may
prepare and submit to the Trustee a satisfaction (or assignment without
recourse, if requested by the Person or Persons entitled thereto) in form for
execution by the Trustee with all requisite information completed by such
Servicer; in such event, the Trustee shall execute and acknowledge such
satisfaction or assignment, as the case may be, and deliver the same with the
related File, as aforesaid.
(b) From time to time and as appropriate in the servicing of any
Mortgage Loan, including, without limitation, foreclosure or other comparable
conversion of a Mortgage Loan or collection under any applicable Insurance
Policy, the Trustee shall (except in the case of the payment or liquidation
pursuant to which the related File is released to an escrow agent or an
employee, agent or attorney of the Trustee), upon request of such Servicer and
delivery to the Custodian of a Servicer's Trust Receipt substantially in the
form of Exhibit H hereto, release the related File to such Servicer and shall
execute such documents as shall be necessary to the prosecution of any such
proceedings, including, without limitation, an assignment without recourse of
the related Mortgage to such Servicer. The Custodian shall complete in the name
of the Trustee any endorsement in blank on any Note prior to releasing such Note
to such Servicer. Such receipt shall obligate such Servicer to return the File
to the Custodian when the need therefor by such Servicer no longer exists unless
the Mortgage Loan shall be liquidated in which case, upon receipt of the
liquidation information, in physical or electronic form, such Servicer's Trust
Receipt shall be released by the Custodian to such Servicer.
(c) Each Servicer shall have the right to approve applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by any Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Originator certifies to such Servicer that the Loan-to-Value Ratio (which may,
for this purpose, be determined at the time of any such action in a manner
reasonably acceptable to the Certificate Insurer) and the Mortgagor's
debt-to-income ratio after any release does not exceed the maximum Loan-to-Value
Ratio and debt-to-income ratio specified as the then-current maximum levels
under the related Originator's underwriting guidelines for a similar credit
grade borrower; and (z) the lien priority of the related Mortgage is not
adversely affected. Upon receipt by the Trustee of an Officer's Certificate
executed on behalf of a Servicer setting forth the action proposed to be taken
in respect of a particular Mortgage Loan and certifying that the criteria set
forth in the immediately preceding sentence have been satisfied, the Trustee
shall execute and deliver to such Servicer the consent or partial release so
requested by such Servicer. A proposed form of consent or partial release, as
the case may be, shall accompany any Officer's Certificate delivered by such
Servicer pursuant to this paragraph.
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(d) Costs associated with preparing assignments, satisfactions and
releases described in this Section 8.14 shall not be an expense of the Trust or
the Trustee, but rather shall be borne directly by the related Servicer;
provided, however, that the Custodian shall be liable for the cost associated
with the shipping of documents from the Custodian to the related Servicer
pursuant to this Section 8.14.
Section 8.15 Servicing Compensation. As compensation for their
activities hereunder, each Servicer shall be entitled to the Servicing Fee for
each Mortgage Loan that it services. Such Servicing Fee shall be payable on a
monthly basis out of interest payments on the related Mortgage Loans and shall
equal one-twelfth of the related Servicing Fee Rate multiplied by the
outstanding principal amount of such Mortgage Loan as of the prior Monthly
Remittance Date. Subject to the related Servicing Fee Letter, additional
servicing compensation in the form of Prepayment Interest Excess (net of any
Compensating Interest requirements), release fees, bad check charges, assumption
fees, late payment charges, prepayment penalties, any other servicing-related
fees, and similar items may, to the extent collected from Mortgagors, be
retained by the related Servicer.
Section 8.16 Annual Statement as to Compliance. (a) Each Servicer, at
its own expense, will deliver to the Trustee, the Seller, the Depositor, the
Certificate Insurer, and the Rating Agencies on or before April 15 of each year,
commencing in 1997, an Officer's Certificate stating, as to each signer thereof,
that (i) a review of the activities of such Servicer during such preceding
calendar year and of performance under this Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based on
such review, such Servicer has fulfilled all its obligations under this
Agreement for such year, or, if there has been a default in the fulfillment of
all such obligations, specifying each such default known to such officer and the
nature and status thereof including the steps being taken by such Servicer to
remedy such defaults.
(b) Each Servicer shall deliver to the Trustee, the Certificate
Insurer, the Seller, the Depositor and the Rating Agencies promptly after a
responsible officer of the Servicer obtains actual knowledge thereof but in no
event later than five Business Days thereafter, written notice by means of an
Officer's Certificate of any event which with the giving of notice or lapse of
time, or both, such officer knows would become an Event of Servicing
Termination.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
On or before April 15 of each year, commencing in 1997, each Servicer shall
cause to be delivered to the Trustee, the Certificate Insurer and the Rating
Agencies a letter or letters of a firm of independent, nationally-recognized
certified public accountants reasonably acceptable to the Certificate Insurer
stating that such firm has, with respect to such Servicer's overall servicing
operations examined such operations in accordance with the requirements of the
Uniform Single Attestation Program for Mortgage Bankers, and in either case
stating such firm's conclusions relating thereto.
Section 8.18 Access to Certain Documentation and Information Regarding
the Mortgage Loans. Each Servicer shall provide to the Trustee, the Certificate
Insurer, the Seller, the FDIC and the supervisory agents and examiners of each
of the foregoing access to the documentation and electronic data regarding the
Mortgage Loans not in the possession of the Trustee, such access being afforded
without charge but only upon prior written reasonable request and during normal
business hours at the offices of such Servicer designated by it.
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Upon any change in the format of the computer tape by any Servicer in
respect of the Mortgage Loans, such Servicer shall deliver a copy of such
computer tape to the Trustee. In addition, each Servicer shall provide a copy of
such computer tape to the Trustee and the Certificate Insurer at such other
times as the Trustee or the Certificate Insurer may reasonably request upon
reasonable notice to such Servicer and upon payment of all reasonable expenses
associated with such request by the Trustee or the Certificate Insurer. Nothing
contained herein shall limit the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information relating to the Mortgage
Loans or Mortgagors.
Section 8.19 Assignment of Agreement. No Servicer may assign its
obligations under this Agreement (except pursuant to Section 8.27 hereof), in
whole or in part, unless it shall have first obtained the prior written consent
of the Seller, the Trustee and the Certificate Insurer, which such consent shall
not be unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 8.21(f) hereof for a successor
Servicer. Notice of any such assignment shall be given by such Servicer to the
Trustee, the Certificate Insurer and the Rating Agencies.
Section 8.20 Events of Servicing Termination. (a) The Certificate
Insurer (or the Owners pursuant to Section 6.11 hereof) or the Trustee or the
Seller (in each case with the consent of the Certificate Insurer, which consent
may not be unreasonably withheld) may immediately remove the related Servicer
(including any successor entity serving as the Servicer) upon the occurrence of
any of the following events and the expiration of the related cure period
(provided, that the occurrence of any such events with respect to one Servicer
shall be cause to remove only such Servicer):
(i) Such Servicer shall fail to deliver to the Trustee any
proceeds or required payment (including any Delinquency Advance or
Compensating Interest payment), which failure continues unremedied for
two Business Days following written notice to an Authorized Officer of
such Servicer from the Trustee or from any Owner;
(ii) Such Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (II) admit in writing
its inability to pay its debts generally as they become due, (III) make
a general assignment for the benefit of creditors, (IV) be adjudicated
a bankrupt or insolvent, (V) commence a voluntary case under the
federal bankruptcy laws of the United States of America or file a
voluntary petition or answer seeking reorganization, an arrangement
with creditors or an order for relief or seeking to take advantage of
any insolvency law or file an answer admitting the material allegations
of a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding or (VI) take corporate action for the purpose of
effecting any of the foregoing;
(iii) If without the application, approval or consent of such
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of such
Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator, custodian or similar entity with
respect to such Servicer or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by such
Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B)
continue undismissed or pending and unstayed for any period of sixty
(60) consecutive days;
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(iv) Such Servicer shall fail to perform any one or more of
its obligations hereunder (other than those specified in item (i)
above) and shall continue in default thereof for a period of forty-five
(45) days after the earlier of (x) notice by the Trustee or the
Certificate Insurer of said failure or (y) actual knowledge of a
responsible officer of such Servicer; provided, however, that if such
Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial action,
then the cure period may be extended with the written approval of the
Certificate Insurer;
(v) The failure of such Servicer to satisfy the Servicer
Termination Test; and
(vi) In the case of Option One, Fleet National Bank ceases to
own at least 51% of the issued and outstanding common stock of Option
One.
The Trustee shall determine on each Payment Date whether the Servicer
Termination Test is satisfied for the related Prepayment Period. Upon the
Trustee's determination that the Servicer Termination Test is not satisfied, or
that a payment of Compensating Interest, a Monthly Remittance Amount for the
related Group, or a required Delinquency Advance has not been made by the
relevant Servicer, the Trustee shall so notify in writing an Authorized Officer
of such Servicer, the Seller and the Certificate Insurer as soon as is
reasonably practical.
(b) Any party exercising any termination rights under Subsection (a)
above shall give notice in writing to the relevant Servicer (and a copy to the
Trustee) of the termination of all of the rights and obligations of such
Servicer under this Agreement. The Trustee shall mail a copy of any notice given
by it hereunder to the Depositor, the Seller, the Certificate Insurer, the
Owners and Rating Agencies. On or after the receipt by such Servicer of such
written notice (including any required consent of the Certificate Insurer), all
authority and power of such Servicer under this Agreement, whether with respect
to the Certificates or the Mortgage Loans or otherwise, shall without further
action pass to and be vested in the Trustee or such successor Servicer as may be
appointed hereunder, and, without limitation, the Trustee is hereby authorized
and empowered (which authority and power are coupled with an interest and are
irrevocable) to execute and deliver, on behalf of the predecessor 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 or termination, whether to complete the transfer and
endorsement of the Mortgage Loans and related documents or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer or the Trustee
in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement including the transfer to the
successor Servicer or to the Trustee for administration by it of all cash
accounts that shall at the time be held by the predecessor Servicer for deposit
or shall thereafter be received with respect to a Mortgage Loan. All reasonable
costs and expenses incurred in connection with delivering the Files to the
successor Servicer or the Trustee shall be paid by the predecessor Servicer.
(c) If any event described in subsection (a)(v) or (vi) above occurs
and is continuing, during the 30 day period following receipt of notice, the
Trustee, the Owners requesting termination, the Seller and the Certificate
Insurer shall cooperate with each other to determine if the occurrence of such
event is more likely than not the result of the acts or omissions of such
Servicer or more likely than not the result of events beyond the control of such
Servicer. If the Trustee, the Seller, the Owners requesting termination and the
Certificate Insurer conclude that the event is the result of the latter, such
Servicer may not be terminated, unless and until some other event set forth in
subsection (a) has occurred and is continuing. If the Trustee, the Seller, the
Owners requesting termination and the Certificate Insurer conclude that the
event is the result of the former, the Certificate Insurer may terminate such
Servicer in accordance with this Section, and the Trustee shall act as successor
Servicer.
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If the Trustee, the Seller and the Certificate Insurer cannot agree,
and the basis for such disagreement is not arbitrary or unreasonable, as to the
cause of the event, the decision of the Certificate Insurer shall control;
provided, however, that if the Certificate Insurer decides to terminate any
Servicer, the Trustee shall be relieved of its obligation to assume the
servicing or to appoint a successor, which shall be the exclusive obligation of
the Certificate Insurer and the Trustee shall be indemnified by the Certificate
Insurer for any liabilities, costs or expenses resulting from such decision.
The Certificate Insurer and the Seller agree to use their best efforts
to inform the Trustee each Servicer and each other of any materially adverse
information regarding such Servicer's servicing activities that comes to the
attention of such party from time to time.
(d) If the event described in (a)(vii) above occurs, then the
Certificate Insurer, or in the event of a Certificate Insurer Default, the
Trustee, the Seller and the Owners requesting termination, each shall have the
option, by notice in writing, to Option One and all other parties who have such
termination right, of terminating all of the rights and obligations of Option
One in its capacity as Servicer under this Agreement, and in and to the Mortgage
Loans and the proceeds thereof.
Section 8.21 Resignation of a Servicer and Appointment of Successor.
(a) Upon any Servicer's receipt of notice of termination pursuant to Section
8.20 or such Servicer's resignation in accordance with the terms of this Section
8.21, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or in accordance with Section 8.20(d), if
applicable, or, if no such date is specified in a notice of termination, until
receipt of such notice and, in the case of resignation, until the earlier of (x)
the date 45 days from the delivery to the Seller, the Certificate Insurer and
the Trustee of written notice of such resignation (or written confirmation of
such notice) in accordance with the terms of this Agreement and (y) the date
upon which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying opinion of counsel. All
collections then being held by the predecessor Servicer prior to its removal and
any collections received by such Servicer after removal or resignation shall be
endorsed by it to the Trustee and remitted directly and immediately to the
Trustee or the successor Servicer. In the event of any Servicer's resignation or
termination hereunder, the Trustee shall appoint a successor Servicer and the
successor Servicer shall accept its appointment by execution of a written
assumption in form acceptable to the Trustee, the Certificate Insurer and the
Seller, with copies of such assumption to the Certificate Insurer, the Trustee
and the Rating Agencies, provided that as a condition precedent to the
appointment of a successor Servicer and the execution of the related written
assumption, such successor Servicer shall, if applicable, also execute either
(i) a written assumption or termination of any of the Subservicing Agreements or
(ii) appropriate amendments to each of any Subservicing Agreements.
(b) No Servicer shall resign from the obligations and duties hereby
imposed on it, except (i) upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of such Servicer so causing such a conflict being of a type and nature carried
on by such Servicer at the date of this Agreement or (ii) upon prior written
consent of the Certificate Insurer, the Seller and the Trustee and confirmation
from the Rating Agencies that the Class A Certificate ratings are not reduced.
Any such determination referred to in clause (i) permitting the resignation of
any Servicer shall be evidenced by an Opinion of Counsel to such effect which
shall be delivered to the Trustee, the Seller and the Certificate Insurer.
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(c) No removal or resignation of any Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed such Servicer's
responsibilities and obligations in accordance with this Section. The removal or
resignation of one Servicer hereunder, shall have no effect on the status of any
other Servicer hereunder.
(d) Upon removal or resignation of any Servicer, such Servicer also
shall promptly deliver or cause to be delivered to the successor Servicer or the
Trustee all the books and records (including, without limitation, records kept
in electronic form) that such Servicer has maintained for the Mortgage Loans,
including all tax bills, assessment notices, insurance premium notices and all
other documents as well as all original documents then in such Servicer's
possession.
(e) Any collections received by any Servicer after removal or
resignation thereof shall be endorsed by it to the Trustee and remitted directly
and immediately to the Trustee or the successor Servicer.
(f) Upon removal or resignation of any Servicer, the Trustee, with the
cooperation of the Seller and the Certificate Insurer, (x) shall solicit bids
for a successor Servicer as described below and (y) pending the appointment of a
successor Servicer as a result of soliciting such bids, shall serve as Servicer
of the Mortgage Loans serviced by such predecessor Servicer. The Trustee shall,
if it is unable to obtain a qualifying bid and is prevented by law from acting
as Servicer, (I) appoint, or petition a court of competent jurisdiction to
appoint, any housing and home finance institution, bank or mortgage servicing
institution which has been designated as an approved seller-servicer by FNMA or
FHLMC for first and second mortgage loans and having equity of not less than
$5,000,000 (or such lower level as may be acceptable to the Certificate Insurer)
and is reasonably acceptable to the Seller, the Certificate Insurer and the
Owners of the Class R Certificates, as indicated in writing (provided that if
the Certificate Insurer and such Owners cannot agree as to the acceptability of
such successor Servicer, the decision of the Certificate Insurer shall control)
as the successor to such Servicer hereunder in the assumption of all or any part
of the responsibilities, duties or liabilities of such Servicer hereunder and
(II) give notice thereof to the Seller, the Owners, the Certificate Insurer and
the Rating Agencies. The compensation of any successor Servicer (including,
without limitation, the Trustee) so appointed shall be the amount agreed by the
related Servicer and the Seller and the Certificate Insurer. Any reasonable out
of pocket set-up costs or expenses incurred by the Trustee as interim successor
Servicer as specified in subclause (y) of this Section 8.21(f) shall be at the
expense of the Trust and shall be payable pursuant to Section 7.03(c)(ii).
(g) In the event that the Trustee is able to solicit bids as provided
above, the Trustee shall solicit, by public announcement, bids from housing and
home finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above (including the Trustee or any affiliate thereof).
Such public announcement shall specify that the successor Servicer shall be
entitled to the servicing compensation agreed upon between the Trustee, the
successor Servicer and the Seller; provided, however, that no such fee shall
exceed the related Servicing Fee. Within thirty days after any such public
announcement, the Trustee, with the cooperation of the Seller and the
Certificate Insurer, shall negotiate in good faith and effect the sale, transfer
and assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest satisfactory bid as to the price they
will pay to obtain such servicing. The Trustee upon receipt of the purchase
price shall pay such purchase price to the Servicer being so removed (except in
the case of subsection (h) below, in which case the Trustee shall pay such
purchase price to the Seller), after deducting from any sum received by the
Trustee from the successor to such Servicer in respect of such sale, transfer
and assignment all costs and expenses of any
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public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities reasonably incurred hereunder. After such
deductions, the remainder of such sum shall be paid by the Trustee to such
Servicer (other than Advanta) at the time of such sale.
(h) The Trustee and the successor Servicer shall take such action
consistent with this Agreement as shall be necessary to effectuate any such
succession, including the notification to all Mortgagors of the transfer of
servicing if such notification is not done by such predecessor Servicer as
required by subsection (j) below. Each predecessor Servicer agrees to cooperate
with the Trustee and any successor Servicer in effecting the termination of such
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor Servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume such Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor Servicer, as applicable, all amounts which then have been or should
have been deposited in the related Principal and Interest Account by such
Servicer, or which are thereafter received with respect to the Mortgage Loans.
Neither the Trustee nor any other successor Servicer shall be held liable by
reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the predecessor
Servicer to deliver, or any delay in delivery, cash, documents or records to it
or (ii) restrictions imposed by any regulatory authority having jurisdiction
over such Servicer.
(i) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall as soon as reasonably practicable pay all
Compensating Interest and, if applicable, Delinquency Advances which have
theretofore not been remitted to the extent required by this Agreement with
respect to the Mortgage Loans; provided, however, that if the Trustee is acting
as successor Servicer, the Trustee shall only be required to make such
Delinquency Advances if, in the Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the related Mortgage
Loans. Any Delinquency Advances and Servicing Advances previously made by the
predecessor Servicer and accrued and unpaid Servicing Fees shall be recoverable
by it and paid to it by the successor Servicer to the extent such Delinquency
Advances, Servicing Advances and accrued and unpaid Servicing Fees would
otherwise have been recoverable had the predecessor Servicer not been
terminated.
(j) Any Servicer which is being removed or is resigning shall give
notice to the Mortgagors and to the Rating Agencies of the transfer of the
servicing to the successor Servicer.
(k) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer including,
but not limited to, the maintenance of the hazard insurance policy(ies), the
fidelity bond and an errors and omissions policy pursuant to Section 8.26 and
shall be entitled to such fees as may be agreed upon between the Seller and such
successor Servicer (such amount not to exceed the Aggregate Servicing Fee Rate),
and all of the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement; provided, that if the Trustee shall be the
successor Servicer, the Trustee shall be entitled to the same fees as the
Servicer was entitled to at the time of succession. The appointment of a
successor Servicer (including the Trustee) shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer (including the Trustee) be
liable for any acts or omissions of the predecessor Servicer or for any breach
by such Servicer of any of its representations or warranties contained herein or
in any related document or agreement.
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(l) The Trustee and the Seller shall each give notice to the
Certificate Insurer, the Rating Agencies and the Owners or the Seller of the
occurrence of any event specified in Section 8.20 of which a Responsible Officer
of the Trustee has actual knowledge.
Section 8.22 Waiver of Past Events of Servicing Termination. Subject to
the rights of the Certificate Insurer, the Trustee, the Owners and the Seller
pursuant to Section 8.20 to terminate all of the rights and obligations of any
Servicer under this Agreement, the Certificate Insurer or the Owners of at least
51% of the Percentage Interests of the Class R Certificates with the consent of
the Certificate Insurer may, on behalf of all Owners of Certificates, waive any
default by such Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Servicing Termination arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon.
Section 8.23 Assumption or Termination of Subservicing Agreement By the
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of any Servicer hereunder by
the Trustee pursuant to Section 8.21, it is understood and agreed that such
Servicer's rights and obligations under any Subservicing Agreement then in force
between such Servicer and a subservicer shall be assumed simultaneously by the
Trustee without act or deed on part of the Trustee; provided, however, the
Trustee in its sole discretion may terminate any subservicer notwithstanding the
provisions of the related Subservicing Agreement.
Each Servicer shall, upon the reasonable request of the Trustee, but at
the expense of such Servicer, deliver to the assuming party documents and
records relating to each Subservicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts (through
the execution of any documents or otherwise) to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party and shall
cooperate with the Trustee in any other manner reasonably requested by the
Trustee.
Section 8.24 Powers and Duties of the Trustee as Successor Servicer.
Following the termination of any Servicer hereunder and pending the appointment
of any other Person as successor Servicer, the Trustee is hereby empowered to
perform the duties of such Servicer hereunder; it being expressly understood,
however, by all parties hereto, and the Owners, that prior to any termination of
such Servicer pursuant to Section 8.21, such Servicer shall perform such duties.
Specifically, and not in limitation of the foregoing, the Trustee shall upon
termination or resignation of any Servicer, and pending the appointment of any
other Person as successor Servicer, have the power:
(i) to collect Mortgage payments;
(ii) to foreclose on Delinquent Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into
assumption and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to
Section 8.14 hereof;
(v) to enforce the Mortgage Loans; and
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(vi) to make Servicing Advances and Delinquency Advances and
to pay Compensating Interest.
Section 8.25 Liability of the Servicers. None of the Servicers nor any
of their directors, officers, employees or agents shall be under any liability
on any Certificate or otherwise to the Seller, the Trustee, Certificate Insurer
or any Owner 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 except
as required hereunder; provided, however, that this provision shall not protect
any Servicer, its directors, officers, employees or agents or any such Person
against any liability which would otherwise be imposed by reason of negligent
action, negligent failure to act, willful misconduct in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
Each of the Servicers and any director, officer, employee or agent of each of
the Servicers 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. None of the Servicers shall be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its duties
hereunder and which in its opinion may involve it in any expense or liability;
provided, however, that each Servicer may in its discretion undertake any such
action that it may deem necessary or desirable in respect of this Agreement and
the rights and duties of the parties hereto and interests of the Trustee, the
Certificate Insurer and the Owners 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 Trust, and such Servicer shall be
entitled to be reimbursed therefor out of the Principal and Interest Account.
The Servicers and any director, officer, employee or agent of each of the
Servicers shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority or 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 negligent action, negligent failure to act, willful misconduct in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder.
Section 8.26 Inspections by Certificate Insurer, Trustee and Seller;
Errors and Omissions Insurance. (a) At any reasonable time and from time to time
(but unless there is a valid reason to do so, not more than once every six
months) upon prior written and reasonable notice, the Certificate Insurer, the
Trustee, the Seller or any agents or representatives thereof may inspect any
Servicer's servicing operations and discuss the servicing operations of such
Servicer with a responsible officer designated by the related Servicer. The
reasonable costs and expenses incurred by such Servicer or its agents or
representatives in connection with any such examinations or discussions shall be
paid by such Servicer.
(b) Each Servicer shall maintain, at its own expense, a blanket
fidelity bond and an errors and omissions insurance policy, with broad coverage
with responsible companies that meet the requirements of FNMA or FHLMC on all
officers, employees or other persons acting in any capacity with regard to the
Mortgage Loan to handle funds, money, documents and papers relating to the
Mortgage Loans it services. The fidelity bond and errors and omissions insurance
shall be in the form of Mortgage Banker's Blanket bond and shall protect and
insure such Servicer against losses, including forgery, theft, embezzlement,
fraud, errors and omissions and negligent acts of such persons. Such fidelity
bond shall also protect and insure such Servicer against losses in connection
with the failure to maintain any insurance policies required pursuant to this
Agreement and the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 8.26 requiring the fidelity bond and errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. The minimum coverage under any such
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bond and insurance policy shall be at least equal to the corresponding amounts
required by FNMA in the FNMA Servicing Guide or by FHLMC in the FHLMC Sellers'
and Servicers' Guide. Upon the written request of the Seller or the Certificate
Insurer, a Servicer shall cause to be delivered to the Seller an Officer's
Certificate as to the maintenance of the fidelity bond and insurance policy that
such fidelity bond and insurance policy are in full force and effect.
Section 8.27 Merger, Conversion, Consolidation or Succession to
Business of Servicer. Any corporation into which any Servicer may be merged or
converted or with which it may be consolidated, or corporation resulting from
any merger, conversion or consolidation to which such Servicer shall be a party
or any corporation succeeding to all or substantially all of the business of
such Servicer shall be the successor of such Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto provided that such corporation meets the qualifications set forth
in Section 8.21(f).
Section 8.28 Notices of Material Events. Upon any responsible officer
of the Servicer's actual knowledge thereof, such Servicer shall give prompt
notice to the Certificate Insurer, the Trustee, the Seller, and the Rating
Agencies of the occurrence of any of the following events:
(a) Any default or any fact or event which such officer knows
results, or which with notice or the passage of time, or both, would result in
the occurrence of a default by such Servicer under any Operative Document or
would constitute a material breach of a representation, warranty or covenant
under any Operative Document;
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against such Servicer of
which it has knowledge, in any federal, state or local court or before any
governmental body or agency or before any arbitration board or any such
proceedings threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any such Servicer's
ability to perform its obligations under any Operative Document;
(c) The commencement of any proceedings of which it has knowledge or
has received service of process by or against such Servicer under any applicable
bankruptcy, reorganization, liquidation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver, liquidator,
trustee or other similar official shall have been, or may be, appointed or
requested for such Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of such Servicer's business that such Servicer is to
cease and desist, or to undertake any practice, program, procedure or policy
employed by such Servicer in the conduct of the business of any of them, and
such cessation or undertaking will materially and adversely affect the conduct
of such Servicer's business or its ability to perform under the Operative
Documents or materially and adversely affect the financial affairs of such
Servicer.
Section 8.29 Monthly Servicing Report and Servicing Certificate. (a)
Each Servicer with respect to the Mortgage Loans serviced by it shall deliver
not later than the Reporting Date, a Monthly Servicing Report (which shall be by
tape format and, with respect to certain delinquency information, may be
delivered by hard copy), to the Trustee and, upon request, to the Seller and the
Certificate Insurer. The Monthly Servicing Report shall state as to the related
Remittance Period or Prepayment Period, as applicable, for the Mortgage Loans
serviced by such Servicer:
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(i) (a) scheduled interest due (net of the Servicing Fee); (b)
Compensating Interest paid; (c) scheduled principal due; (d)
Prepayments; (e) Loan Balance of Mortgage Loans repurchased; (f)
Substitution Amounts; and (g) Net Liquidation Proceeds (related to
principal);
(ii) The Servicing Fee withheld by the related Servicer;
(iii) The principal and interest payments remitted by such
Servicer to its Principal and Interest Account(s);
(iv) The scheduled principal and interest payments on the
Mortgage Loans that were not made by the related Mortgagors as of the
related Determination Date;
(v) The number and aggregate Loan Balances (computed in
accordance with the terms of the Mortgage Loans) and the percentage of
the total number of Mortgage Loans and of the Loan Balance which they
represent of Delinquent Mortgage Loans, if any, (i) 30 days, (ii) 31 to
60 days, (iii) 61 to 90 days and (iv) 91 days or more, respectively, as
of the last day of the related Remittance Period (taking into account
payments received on or prior to the related Determination Date);
(vi) The number and aggregate Loan Balances of Mortgage Loans,
if any, in foreclosure and the number and Book Value of any REO
Properties as of the related Determination Date;
(vii) The Loan Balances (immediately prior to being classified
as Liquidated Mortgage Loans) of Liquidated Mortgage Loans as of the
related Determination Date;
(viii) Liquidation Proceeds received during the related
Prepayment Period;
(ix) The amount of any Liquidation Expenses being deducted
from Liquidation Proceeds or otherwise being charged to the Principal
and Interest Account(s) with respect to such Monthly Remittance Date;
(x) Liquidation Expenses incurred during the related
Prepayment Period which are not being deducted from Liquidation
Proceeds or otherwise being charged to the Principal and Interest
Account with respect to such Monthly Remittance Date;
(xi) Net Liquidation Proceeds as of the related Determination
Date;
(xii) The scheduled principal balance of each Mortgage Loan as
of the first day of the related Remittance Period and the date through
which interest has been paid as of the related Determination Date;
(xiii) The number and aggregate Loan Balances and Loan
Purchase Prices of Mortgage Loans required to be repurchased by each
Originator as of the related Subsequent Cut-Off Date;
(xiv) The amount of any Delinquency Advances made by such
Servicer during the related Remittance Period and any unreimbursed
Delinquency Advances as of such Monthly Remittance Date;
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(xv) The weighted average Coupon Rates of the Mortgage Loans;
(xvi) Any additional information reasonably requested by the
Trustee or the Certificate Insurer;
(xvii) The number and aggregate Loan Balances of Mortgage
Loans, if any, currently in bankruptcy proceedings as of the related
Determination Date and any Preference Amounts to the extent the related
Servicer has knowledge;
(xviii) The amount of unreimbursed Servicing Advances; and
(xix) The amount of Compensating Interest paid during the
month by such Servicer and the unreimbursed amount of Compensating
Interest paid by such Servicer.
In addition to the reports and certificates described in this Section 8.29 to be
provided by such Servicer, information as the Trustee and such Servicer may
agree upon shall be provided by such Servicer to the Trustee or such other party
as may be requested by the Trustee by electronic transmission or hard copy.
(b) The Trustee shall, no later than the related Payment Date, provide
to the Certificate Insurer, the Underwriters, the Depositor, the Seller and the
Rating Agencies a written report setting forth the information required under
Section 7.09(b) hereof, based solely on information contained in the Monthly
Servicing Certificate.
(c) Each Servicer with respect to the Mortgage Loans in Group II agrees
that, in addition to the reports and certificates described in Section 8.29(a)
hereof, it shall upon the reasonable request of the Seller, prepare reports
detailing the Mortgage Loans serviced by it by index and in the aggregate.
(d) The Depositor shall deliver or cause to be delivered to the Trustee
on the Startup Day in hard copy and on electronic tape in a form acceptable to
the Trustee (the "Tape") detailing the information required to be set forth on
the Schedules of Mortgage Loans as of the close of business on the Cut-Off Date.
(e) Within two Business Days of receipt thereof, the Trustee shall
review the Monthly Servicing Reports against the information, as updated by the
Trustee on the basis of the current and all previous Monthly Servicing Reports
received by the Trustee. Within one Business Day following a determination by
the Trustee that inconsistencies between the Monthly Servicing Report and such
information are not reconcilable, the Trustee shall notify the related Servicer,
the Seller and the Certificate Insurer of any such material inconsistencies and
related Servicer shall rectify them.
Section 8.30 Indemnification by the Servicer. Each Servicer agrees to
indemnify and hold the Certificate Insurer, the Trustee, the Seller and the
Depositor harmless against any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, and any other costs, fees
and expenses that the Seller, the Depositor, the Trustee and the Certificate
Insurer may sustain in any way caused by or arising out of the negligent failure
of such Servicer, or Subservicer appointed by it, to perform its duties and
service the Mortgage Loans in compliance with the terms of this Agreement and
which, in the case of the Certificate Insurer, the Seller, the Trustee or the
Depositor, materially and adversely affects such party. Each Servicer shall
immediately notify the Trustee, the Certificate Insurer, the Seller, the
Depositor and the Rating Agencies if a claim is made by a third party with
respect to this Agreement, and the relevant Servicer may assume (with the
consent of the Trustee) the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly
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pay, discharge and satisfy any judgment or decree which may be entered against
the Seller, the Trustee, the Depositor and the Certificate Insurer. The Trustee
may, if necessary, reimburse such Servicer from amounts otherwise distributable
on the Class B-10 Certificates for all amounts advanced by it pursuant to the
preceding sentence except when the claim relates directly to the failure of such
Servicer to service and administer the Mortgage Loans in compliance with the
terms of this Agreement.
Section 8.31 Reserved.
Section 8.32 Servicing Standard. Each Servicer shall perform its
servicing functions with respect to the Mortgage Loans in the best interests of
and for the benefit of the Owners and the Certificate Insurer subject to the
terms hereof.
Section 8.33 No Solicitation. Each Servicer agrees that it will not
take any action or permit or cause any action to be taken by any of its agents
and Affiliates, or by any independent contractors or independent mortgage
brokerage companies on such Servicer's behalf, to personally, by telephone or
mail, solicit the borrower or Mortgagor under any Mortgage Loan for any purpose
whatsoever, including to refinance a Mortgage Loan. Notwithstanding the
foregoing, it is understood and agreed that promotions undertaken by a Servicer
or any Affiliate thereof which are directed to the general public at large,
including, without limitation, mass mailing based on commercially acquired
mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this paragraph, nor is a Servicer prohibited from
responding to unsolicited requests or inquiries made by a Mortgagor or an agent
of a Mortgager; provided further, that the Servicer may solicit any Mortgagor
(i) for whom the Servicer has received a request for verification of mortgage
from an originator of mortgage loan products similar to the Mortgage Loans that
indicates that such Mortgagor intends to refinance his or her Mortgage Loan and
(ii) otherwise in accordance with the Seller's policy, if such policy is
delivered to the related Servicer in writing. It is understood and agreed that
all rights and benefits relating to the solicitation of any Mortgagors and the
attendant rights, title and interest in and to the list of Mortgagors and data
relating to their Mortgages shall be retained by Seller.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates
(including the Certificate Insurer, pursuant to its subrogation rights), from
amounts other than those available under the Certificate Insurance Policies, of
all amounts held by the Trustee and required to be paid to such Owners pursuant
to this Agreement upon the later to occur of (a) the final payment or other
liquidation (or any advance made with respect thereto) of the last Mortgage Loan
in the Trust Estate, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Estate and (c) at any time when a
Qualified Liquidation of both Mortgage Loan Groups included within the REMIC
Estate is effected as described below. To effect a termination of this Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the REMIC Estate to adopt
a plan of complete liquidation for each of the Mortgage Loan Groups, as
contemplated by Section 860F(a)(4) of the Code and (ii) provide to the Trustee
and the Certificate Insurer an opinion of counsel experienced in federal income
tax matters acceptable to the Certificate Insurer and the Trustee to the effect
that each such liquidation constitutes a Qualified Liquidation, and the Trustee
either shall sell the Mortgage Loans and distribute the proceeds of the
liquidation of the Trust Estate, or shall distribute equitably in kind all of
the assets of the Trust Estate to the remaining Owners of the Certificates each
in accordance with such plan, so that the liquidation or distribution of the
Trust Estate, the distribution of any proceeds of the liquidation and the
termination of this Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation. In no event, however, will the Trust
created by this Agreement continue beyond the expiration of twenty-one (21)
years from the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, the late Ambassador of the United States to the Court of Saint James's,
living on the date hereof. The Trustee shall give written notice of termination
of the Agreement to each Owner and the Certificate Insurer in the manner set
forth in Section 11.05.
Section 9.02 Termination Upon Option of Owners of Class R Certificates;
Servicer Termination.
(a) On any Monthly Remittance Date on or after the Clean-Up Call Date,
the Owners of a majority of the Percentage Interests represented by the Class R
Certificates then outstanding may determine to purchase and may cause the
purchase from the Trust of all (but not fewer than all) Mortgage Loans and all
property theretofore acquired in respect of any Mortgage Loan by foreclosure,
deed in lieu of foreclosure, or otherwise then remaining in the Trust Estate (i)
on terms agreed upon between the Certificate Insurer and such Owners of the
Class R Certificates, or (ii) in the absence of such an agreement, at a price
equal to 100% of the aggregate Loan Balances of the related Mortgage Loans
(including any REO Property) as of the day of purchase minus amounts remitted
from the Principal and Interest Account to the Certificate Account representing
collections of principal on the Mortgage Loans during the current Remittance
Period, plus one month's interest on such amount computed at the Adjusted
Pass-Through Rate, plus in all cases all accrued and unpaid Servicing Fees plus
any unpaid Reimbursement Amounts plus the aggregate amount of any unreimbursed
Delinquency Advances and Servicing Advances and Delinquency Advances which the
Servicers have theretofore failed to remit; but in any event such purchase
amount shall be sufficient to retire the Class A Certificates in full. In
connection with such purchase, the related Servicer shall remit to the Trustee
all amounts then on deposit
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in the Principal and Interest Account for deposit to the Certificate Account,
which deposit shall be deemed to have occurred immediately preceding such
purchase.
(b) On any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date, the Servicers simultaneously may determine to purchase and may cause
the purchase from the Trust of all (but not fewer than all) Mortgage Loans
serviced by the related Servicer and all property theretofore acquired in
respect of any Mortgage Loan by foreclosure, deed in lieu of foreclosure, or
otherwise then remaining in the Trust Estate (i) on terms agreed upon between
the Certificate Insurer, the Servicers and the Owner of the Class R Certificate,
or (ii) in the absence of such an agreement, at a price equal to 100% of the
aggregate Loan Balances of the related Mortgage Loans (including any REO
Property) as of the day of purchase minus amounts remitted from the Principal
and Interest Account to the Certificate Account representing collections of
principal on the Mortgage Loans during the current Remittance Period, plus one
month's interest on such amount computed at the Adjusted Pass-Through Rate, plus
in all cases all accrued and unpaid Servicing Fees plus the aggregate amount of
any unreimbursed Delinquency Advances and Servicing Advances and Delinquency
Advances which the Servicer have theretofore failed to remit. In connection with
such purchase, the related Servicer shall remit to the Trustee all amounts then
on deposit in the Principal and Interest Account for deposit to the Certificate
Account, which deposit shall be deemed to have occurred immediately preceding
such purchase.
If on any such Monthly Remittance Date a Servicer does not elect to
purchase the Mortgage Loans it is servicing and one or more of the other
Servicers have so elected, the Servicer(s) having so elected may give the other
Servicer(s) notice (not less than ten days prior to the next succeeding Monthly
Remittance Date) that the electing Servicer(s) will purchase the other
Servicers' Mortgage Loans on such Monthly Remittance Date at the price set forth
in the preceding paragraph. If such other Servicer does not agree in writing to
purchase the Mortgage Loans it is servicing prior to the fifth day preceding
such Monthly Remittance Date, the electing Servicer(s) may purchase all Mortgage
Loans on such Monthly Remittance Date.
If on any such Monthly Remittance Date, none of the Servicers shall
have elected to purchase all or its portion of the Mortgage Loans, the
Certificate Insurer may give the Servicers notice (not less than ten days prior
to the next succeeding Monthly Remittance Date) that the Certificate Insurer
will purchase all of the Mortgage Loans on such Monthly Remittance Date at the
price set forth in the second preceding paragraph. If one or more of the
Servicers do not agree in writing to purchase all of the Mortgage Loans prior to
the fifth day preceding such Monthly Remittance Date, the Certificate Insurer
may purchase all of the Mortgage Loans on such Monthly Remittance Date.
If the electing Servicer(s) does not elect to purchase all of the
Mortgage Loans and the Certificate Insurer does not elect to purchase the
remaining Mortgage Loans, no Mortgage Loans may be purchased.
(c) In connection with any such purchase, such Owners of the Class R
Certificates or Servicers, as applicable, shall unanimously direct the Trustee
to adopt and the Trustee shall adopt, as to the REMIC Estate, a plan of complete
liquidation for all of the Mortgage Loan Groups as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee and the Certificate
Insurer an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that such
purchase and liquidation constitutes, as to the REMIC Estate, a Qualified
Liquidation. In addition, such Owners of the Class R Certificates or such
Servicer shall provide to the
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Trustee and the Certificate Insurer an Opinion of Counsel acceptable to the
Trustee and the Certificate Insurer to the effect that such purchase and
liquidation does not constitute a preference payment pursuant to the United
States Bankruptcy Code.
(d) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Owners of the Class R Certificates or
otherwise upon their order or to the related Servicer, if applicable, in
accordance with Section 8.14 hereof. Upon such release, the servicing of the
Mortgage Loans shall remain with the related Servicer, subject to the servicing
provisions provided for herein.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that the REMIC Estate does not and will no longer
qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination (i) the Certificate Insurer or the Owners of
a majority in Percentage Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer may direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation, as contemplated
by Section 860F(a)(4) of the Code and (ii) the Certificate Insurer may notify
the Trustee of the Certificate Insurer's determination to purchase from the
Trust all (but not fewer than all) Mortgage Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect of
any Mortgage Loan then remaining in the Trust Estate at a price equal to the sum
of (x) the greater of (i) 100% of the aggregate Loan Balances of the Mortgage
Loans as of the day of purchase minus amounts remitted from the Principal and
Interest Account representing collections of principal on the Mortgage Loans
during the current Remittance Period, and (ii) the fair market value of such
Mortgage Loans (disregarding accrued interest), (y) one month's interest on such
amount computed at the Adjusted Pass-Through Rate and (z) the aggregate amount
of any unreimbursed Delinquency Advances and Servicing Advances and any
Delinquency Advances which the related Servicer has theretofore failed to remit.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Servicers and the Owners of the Class R Certificates of
such election to liquidate or such determination to purchase, as the case may be
(the "Termination Notice"). The Owners of a majority of the Percentage Interest
of the Class R Certificates then Outstanding may, within 60 days from the date
of receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Mortgage Loans and
all property theretofore acquired by foreclosure, deed in lieu of foreclosure,
or otherwise in respect of any Mortgage Loan then remaining in the Trust Estate
at a purchase price equal to the aggregate Loan Balances of all Mortgage Loans
as of the date of such purchase, plus (a) one month's interest on such amount at
the Adjusted Pass-Through Rate, (b) the aggregate amount of any unreimbursed
Delinquency Advances, Servicing Advances and unpaid Servicing Fees, (c) any
Delinquency Advances which the related Servicer has theretofore failed to remit
and (d) any outstanding Reimbursement Amount. If, during the Purchase Option
Period, the Owners of the Class R Certificates have not exercised the option
described in the immediately preceding paragraph, then upon the expiration of
the Purchase Option Period (i) in the event that the Certificate Insurer or the
Owners of the Class A Certificates with the consent of the Certificate Insurer
have given the Trustee the direction described in clause (a)(i) above, the
Trustee shall sell the Mortgage Loans and reimburse the Servicer for
unreimbursed Delinquency Advances, Servicing Advances and Servicing Fees and
distribute the remaining proceeds of the liquidation of the Trust Estate, each
in accordance with the plan of complete liquidation,
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such that, if so directed, the liquidation of the Trust Estate, the distribution
of the proceeds of the liquidation and the termination of this Agreement occur
no later than the close of the 60th day, or such later day as the Certificate
Insurer or the Owners of the Class A Certificates with the consent of the
Certificate Insurer shall permit or direct in writing, after the expiration of
the Purchase Option Period and (ii) in the event that the Certificate Insurer
has given the Trustee notice of the Certificate Insurer's determination to
purchase the Trust Estate described in clause (a)(ii) preceding the Certificate
Insurer shall, within 60 days, purchase all (but not fewer than all) Mortgage
Loans and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure or otherwise in respect of any Mortgage Loan then remaining in the
Trust Estate. In connection with such purchase, the Servicer shall remit to the
Trustee all amounts then on deposit in the Principal and Interest Account for
deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an Opinion of Counsel
experienced in federal income tax matters acceptable to the Certificate Insurer
selected by the Owners of the Class R Certificates which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Mortgage Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in the
Trust Estate at a purchase price equal to the aggregate Loan Balances of all
Mortgage Loans as of the date of such purchase, plus (a) one month's interest on
such amount computed at the Adjusted Pass- Through Rate, (b) the aggregate
amount of unreimbursed Delinquency Advances, Servicing Advances and Servicing
Fees, (c) the interest portion of any Delinquency Advances which a related
Servicer has theretofore failed to remit and (d) any outstanding Reimbursement
Amount. In connection with such purchase, the related Servicer shall remit to
the Trustee all amounts then on deposit in the Principal and Interest Account
for deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase. The foregoing opinion shall be
deemed satisfactory unless the Certificate Insurer gives the Owners of a
majority of the Percentage Interest of the Class R Certificates notice that such
opinion is not satisfactory within thirty days after receipt of such opinion. In
connection with any such purchase, such Owners shall direct the Trustee to adopt
a plan of complete liquidation as contemplated by Section 860F(a)(4) of the Code
and shall provide to the Trustee an Opinion of Counsel experienced in federal
income tax matters to the effect that such purchase constitutes a Qualified
Liquidation.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account for application as provided in Section 7.03 hereof; provided, however,
that any amounts representing unrecovered Delinquency Advances and Servicing
Advances which a Servicer determined to be nonrecoverable and unreimbursed
Delinquency Advances and Servicing Advances and Servicing Fees theretofore
funded by a Servicer from the Servicer's own funds shall be paid by the Trustee
to the Servicer from the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
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(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B)
shall serve as the Trustee at all times under this Agreement, and (ii) in the
absence of bad faith on its part, may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(b) Notwithstanding the appointment of the Servicers hereunder, the
Trustee is hereby empowered to perform the duties of the Servicers it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee, and that all parties hereto agree that, prior to any
termination of the Servicers, the Servicers and, thereafter, the Trustee or any
other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicers, and pending the appointment of any other Person as successor
Servicer have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Mortgage Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to
pay Compensating Interest.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer or
of the Owners of a majority in Percentage Interest of the
Certificates of the affected Class or
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Classes and the Certificate Insurer relating to 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 relating to
such Certificates.
(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) 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. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicers under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicers in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) Neither the Servicers, the Seller nor the Trustee knowingly shall
take any action that would cause the Class A Certificates to fail to qualify as
"mortgage related securities" within the meaning of the Securities Exchange Act
of 1934, as amended.
Section 10.02 Removal of Trustee for Cause.
----------------------------
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for distribution
in accordance with the terms hereof (provided, however, that any such
failure which is due to circumstances beyond the control of the Trustee
shall not be a cause for removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall
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have been made, and such failure or breach shall continue or not be
cured for a period of 30 days after there shall have been given, by
registered or certified mail, to the Trustee by the Seller, the
Certificate Insurer, or by the Owners of at least 25% of the aggregate
Percentage Interests in the Trust Estate represented by the Class A
Certificates or Reimbursement Amount then Outstanding, or, if there are
no Class A Certificates or Reimbursement Amount then Outstanding, by
such Percentage Interests represented by the Class R Certificates, a
written notice specifying such failure or breach and requiring it to be
remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(4) a conservator or receiver or liquidator or sequestrator
or custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property;
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing; or
(6) the Trustee shall fail to meet the eligibility
requirements set forth in Section 10.08 herein.
The Depositor shall give to the Certificate Insurer and the Rating
Agencies notice of the occurrence of any such event of which the Depositor is
aware.
(b) If any event described in Paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates or Reimbursement Amount or if there are
no Class A Certificates or Reimbursement Amount then Outstanding by such
majority of the Percentage Interests represented by the Class R Certificates,
may, whether or not the Trustee resigns pursuant to Section 10.09(b) hereof,
immediately, concurrently with the giving of notice to the Trustee, and without
delaying the 30 days required for notice therein, appoint a successor Trustee
pursuant to the terms of Section 10.09 hereof.
(c) The Servicers shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
-----------------------------
Except as otherwise provided in Section 10.01 hereof:
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(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, note or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the
Certificate Insurer, the Servicers or the Owners of any Class of Certificates
mentioned herein shall, at the request of the Trustee, be in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting to take any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) 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, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodian;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person or within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, each Servicer is required
to furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner of a Certificate (either in writing or orally with
prompt written or telecopies confirmation), that such information or
calculations is or are incorrect, or (ii) unless there is a manifest error in
any such information; and
110
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.
--------------------------------------------------------
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Mortgage Loan or document related thereto other than as to
validity and sufficiency of its authentication of the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Seller or the Servicer in
respect of the Mortgage Loans or deposited into or withdrawn from the Principal
and Interest Account or the Certificate Account by the Depositor, the related
Servicer or the Seller, and shall have no responsibility for filing any
financing or continuation statement in any public office at any time or
otherwise to perfect or maintain the perfection of any security interest or lien
or to prepare or file any tax returns (except as provided in Section 11.16) or
Securities and Exchange Commission filings for the Trust or to record this
Agreement. The Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default unless an Authorized Officer of the Trustee
shall have received written notice thereof or an Authorized Officer has actual
knowledge thereof. In the absence of receipt of such notice, the Trustee may
conclusively assume that no default has occurred.
Section 10.05 May Hold Certificates.
---------------------
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
Section 10.06 Money Held in Trust.
-------------------
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
------------------------------------------------
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(c)(ii) and Section 7.05 hereof.
The Trustee shall have no lien on the Trust Estate for the payment of such fees
and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
----------------------------------------
There shall at all times be a Trustee hereunder which shall be a
corporation or 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 at least
$50,000,000 subject to supervision or examination by the United States of
America, acceptable to the Certificate Insurer and having a deposit rating of at
least A- from Standard & Poor's (or such lower
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rating as may be acceptable to Standard & Poor's) and A2 by Moody's (or such
lower rating as may be acceptable to Moody's). If such Trustee publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, it shall, upon
the request of the Seller with the consent of the Certificate Insurer (which
consent shall not be unreasonably withheld) or of the Certificate Insurer,
resign immediately in the manner and with the effect hereinafter specified in
this Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Certificate Insurer and the Owners at their addresses appearing on the Register;
provided, that the Trustee cannot resign solely for the failure to receive the
Trustee Fee. A copy of such notice shall be sent by the resigning Trustee to the
Rating Agencies. Upon receiving notice of resignation, the Depositor shall
promptly appoint a successor trustee or trustees acceptable to the Certificate
Insurer by written instrument, in duplicate, executed on behalf of the Trust by
an Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor trustee or
trustees. If no successor trustee shall have been appointed and 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, or any Owner may, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and appropriate, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer may remove the
Trustee and appoint a successor trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Class A Certificates with the consent of the Certificate Insurer, or, if
there are no Class A Certificates or Reimbursement Amount then Outstanding, by
such majority of the Percentage Interests represented by the Class R
Certificates, may at any time remove the Trustee and appoint a successor trustee
acceptable to the Certificate Insurer by delivering to the Trustee to be
removed, to the successor trustee so appointed, to the Depositor, to the
Servicer and to the Certificate Insurer, copies of the record of the act taken
by the Owners, as provided for in Section 11.03 hereof.
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(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor trustee by written instrument, in triplicate, signed by the
Certificate Insurer duly authorized, one complete set of which instruments shall
be delivered to the Depositor, one complete set to the Trustee so removed and
one complete set to the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Seller shall promptly appoint a successor trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, the successor trustee so appointed
shall forthwith upon its acceptance of such appointment become the successor
trustee and supersede the successor trustee appointed by the Depositor. If no
successor trustee shall have been so appointed by the Depositor or the Owners
and shall have accepted appointment in the manner hereinafter provided, any
Owner may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, to the Rating Agencies and the Servicers and to the Owners
as their names and addresses appear in the Register. Each notice shall include
the name of the successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
----------------------------------------------
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust, to the Certificate Insurer
and to its predecessor Trustee an instrument accepting such appointment
hereunder and stating its eligibility to serve as Trustee 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 vested with all the rights, powers, trusts, duties and
obligations of its predecessor hereunder; but, on request of the Depositor, the
Certificate Insurer or the successor Trustee, such predecessor Trustee shall,
upon payment of its charges then unpaid, execute and deliver an instrument
transferring to such successor trustee all of the rights, powers and trusts of
the Trustee so ceasing to act, and shall duly assign, transfer and deliver to
such successor trustee all property and money held by such Trustee so ceasing to
act hereunder. Upon request of any such successor trustee, the Depositor on
behalf of the Trust shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor trustee all such rights,
powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
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Section 10.11 Merger, Conversion, Consolidation or Succession to
-------------------------------------------------------
Business of the Trustee.
-----------------------
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 Reporting; Withholding.
-----------------------
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in (a) preceding, the Trustee shall
timely file all reports prepared by the Depositor and required to be filed by
the Trust with any federal, state or local governmental authority having
jurisdiction over the Trust, including other reports that must be filed with the
Owners, such as the Internal Revenue Service's Form 1066 and Schedule Q and the
form required under Section 6050J and 6050K of the Code, if applicable to
REMICs. The Trustee shall, upon request of the Tax Matters Person, collect any
forms or reports from the Owners determined by the Tax Matters Person to be
required under applicable federal, state and local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a) and (b) above.
(d) Except as otherwise provided, the Depositor shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Trustee's responsibility shall be
to execute such documents.
Section 10.13 Liability of the Trustee.
------------------------
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Certificate Account, the Depositor, the Seller, the Servicers
or any Owner for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement and the Insurance Agreement, or
for errors in judgment; provided, however, that this provision shall not protect
the Trustee, its directors, officers, employees or agents or any such Person
against any liability which would otherwise be imposed by reason of negligent
action, negligent failure to act or willful misconduct in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
In addition,
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the Depositor and the Seller covenant and agree to indemnify the Trustee in its
capacity as Trustee and not as successor Servicer (unless resulting from failure
of the related predecessor Servicer to perform in accordance with this
Agreement), from, and hold it harmless against, any and all losses, liabilities,
damages, claims or expenses (including legal fees and expenses) of whatsoever
kind arising out of or in connection with the performance of the Trustee's
duties hereunder other than those resulting from the negligence or bad faith of
the Trustee, and the Depositor shall pay all amounts not otherwise paid pursuant
to Sections 2.05 and 7.06 hereof. The Trustee and any director, officer,
employee or agent of the Trustee may rely and shall be protected in acting or
refraining from acting in good faith on any certificate, notice or other
document of any kind prima facie properly executed and submitted by the
Authorized Officer of any Person respecting any matters arising hereunder. The
provisions of this Section 10.13 shall survive the termination of this Agreement
and the payment of the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee .
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and reasonably acceptable to the Certificate Insurer to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners, such title to the Trust Estate, or any part thereof, and,
subject to the other provisions of this Section 10.14, such powers, duties,
obligations, rights and trusts as the Depositor and the Trustee may consider
necessary or desirable. If the Depositor shall not have joined in such
appointment within 15 days after the receipt by it of a request so to do, the
Trustee subject to reasonable approval of the Certificate Insurer 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 10.08 and no notice to Owner of the appointment of any
co-Trustee or separate Trustee shall be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder; and
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(iii) The Servicers, and the Certificate Insurer and the
Trustee acting jointly may at any time accept the resignation of or
remove any separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicers.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 10.15 Appointment of Custodians.
-------------------------
The Trustee may appoint one or more Custodians to hold all or a portion
of the Trustee's Files as agent for the Trustee, by entering into a Custodial
Agreement acceptable to the Certificate Insurer in the form of Exhibit L.
Subject to this Article X, the Trustee agrees to comply with the terms of each
Custodial Agreement and to enforce the terms and provisions thereof against the
Custodian for the benefit of the Owners of the Certificates and the Certificate
Insurer.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
------------------------------------
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, the Seller, the Certificate Insurer
or the Owners, as the case may be, shall furnish to the Trustee a certificate
stating that all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
------------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion with respect to the matters upon which his
certificate or opinion is based is erroneous. Any such certificate or opinion of
an Authorized Officer of the Trustee or any Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Depositor, the Seller
or the Servicers, stating that the information with respect to such factual
matters is in the possession of the Depositor, the Seller or such Servicer,
unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any Opinion of Counsel may also be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer of the Trustee, stating that
the information with respect to such matters is in the possession of the
Trustee, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or
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opinion or representations with respect to such matters are erroneous. Any
Opinion of Counsel may be based on the written opinion of other counsel, in
which event such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion and shall include a statement to the effect that such counsel
believes that such counsel and the Trustee may reasonably rely upon the opinion
of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
--------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Certificate Insurer, the Depositor, the Seller and the Servicers shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Trustee at its corporate trust office as
set forth in Section 2.02 hereof.
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Section 11.05 Notices and Reports to Owners; Waiver of Notices.
------------------------------------------------
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if a Servicer
has been removed or resigned or the Trust is terminated, notice of any such
events shall be made by overnight courier, registered mail or telecopy followed
by a telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
----------------
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
---------------------
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
------------
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
---------------------
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
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Section 11.10 Legal Holidays.
--------------
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or such
other date for the payment of any distribution to any Owner or the mailing of
such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full on
such next succeeding Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
-----------------------------------------
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, the Seller, the Servicers or the Certificate Insurer or other
third-party beneficiary hereunder, as the case may be, to serve process in any
other manner permitted by law or to start legal proceedings relating to any of
the Mortgage Loans against any Mortgagor in the courts of any jurisdiction.
Section 11.12 Counterparts.
-------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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Section 11.13 Usury.
-----
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
---------
(a) The Trustee, the Depositor, the Seller and the Servicers may at any
time and from time to time, and without notice to or the consent of the Owners
but with the consent of the Certificate Insurer (such consent not to be
unreasonably withheld), amend this Agreement, subject to the provisions of
Section 11.16 and 11.17 and the Trustee shall consent to such amendment, for the
purpose of (i) curing any ambiguity, typographical error, or mistake, correcting
or supplementing any provision hereof which may be inconsistent with any other
provision hereof, or to add provisions hereto which are not inconsistent with
the provisions hereof; or (ii) upon receipt of an Opinion of Counsel experienced
in federal income tax matters to the effect that no entity-level tax will be
imposed on the Trust, the REMIC Estate or upon the transferor of a Class R
Certificate as a result of the ownership of any Class R Certificate by a
Disqualified Organization, removing the restriction on transfer set forth in
Section 5.08(b) hereof; or (iii) complying with the requirements of the Code and
the regulations proposed or promulgated thereunder including any amendments
necessary to maintain REMIC status or (iv) for any other purpose, provided that
in the case of this clause (iv) the Seller delivers to the Trustee and the
Certificate Insurer an Opinion of Counsel acceptable to the Trustee that (A)
such amendment will not adversely affect in any material respect the interest of
the Owners and (B) such amendment will not result in a withdrawal or reduction
of the rating of the Class A Certificates without regard to the Certificate
Insurance Policies. This Agreement may also be amended by the Trustee, the
Depositor, the Seller and the Servicers at any time and from time to time, with
the prior written approval of the Certificate Insurer and not less than a
majority of the Percentage Interest represented by each affected Class of
Certificates then Outstanding, for the purpose of adding any provisions or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Owners hereunder. Notwithstanding
anything to the contrary herein, no such amendment shall (a) change in any
manner the amount of, or change the timing of, payments which are required to be
distributed to any Owner without the consent of the Owner of such Certificate,
(b) reduce the aforesaid percentages of Percentage Interests which are required
to consent to any such amendments, without the consent of the Owners of all
Certificates of the Class or Classes affected then Outstanding, (c) affect in
any the manner the terms or provisions of the Certificate Insurance Policy or
(d) adversely affect the qualification of the REMIC Estate or subject the REMIC
Estate to tax, as evidenced by an Opinion of Counsel satisfactory to the Trustee
at the expense of the party requesting such amendment.
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(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Owner in the manner set forth in Section 11.05, and to the Rating Agencies.
(c) The Certificate Insurer, the Owners and the Rating Agencies shall
be provided with copies of any amendments to this Agreement, together with
copies of any opinions or other documents or instruments executed in connection
therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
--------------------------------------------------
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, with the consent of the Certificate Insurer appoint one or more
other Paying Agents or successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners
of Certificates of each Class for which it is acting as Paying Agent on
each Payment Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer, the Servicers and the
Owners by mailing notice thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
------------
(a) The parties hereto intend that the REMIC Estate shall constitute,
and that the affairs of the REMIC Estate shall be conducted so as to qualify it
as a REMIC in accordance with the REMIC
122
Provisions. In furtherance of such intention, The Chase Manhattan Bank or such
other person designated pursuant to Section 11.18 hereof shall act as agent for
the Trust and as Tax Matters Person for the Trust and that in such capacity it
shall: (i) prepare or cause to be prepared and filed, in a timely manner, annual
tax returns and any other tax return required to be filed by the REMIC Estate
established hereunder using a calendar year as the taxable year for the REMIC
Estate established hereunder; (ii) in the related first such tax return, make
(or cause to be made) an election satisfying the requirements of the REMIC
Provisions, on behalf of the REMIC Estate for it to be treated as a REMIC; (iii)
prepare and forward, or cause to be prepared and forwarded, to the Owners all
information, reports or tax returns required with respect to the REMIC Estate
as, when and in the form required to be provided to the Owners, and to the
Internal Revenue Service and any other relevant governmental taxing authority in
accordance with the REMIC Provisions and any other applicable federal, state or
local laws, including without limitation information reports relating to
"original issue discount" as defined in the Code based upon the prepayment
assumption and calculated by using the "Issue Price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; (iv) not
take any action or omit to take any action that would cause the termination of
the REMIC status of the REMIC Estate, except as provided under this Agreement;
(v) represent the Trust or of the REMIC Estate in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to a taxable year of the
Trust or the REMIC Estate, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust or the REMIC Estate, and otherwise act on behalf of the
Trust or the REMIC Estate therein in relation to any tax matter involving the
Trust or the REMIC therein; (vi) comply with all statutory or regulatory
requirements with regard to its conduct of activities pursuant to the foregoing
clauses of this Section 11.16, including, without limitation, providing all
notices and other information to the Internal Revenue Service and Owners of
Class R Certificates required of a "tax matters person" pursuant to subtitle F
of the Code and the Treasury Regulations thereunder; (vii) make available
information necessary for the computation of any tax imposed (A) on transferor
of residual interests to certain Disqualified Organizations or (B) on
pass-through entities, any interest in which is held by a Disqualified
Organization; and (viii) acquire and hold the Tax Matters Person Residual
Interest. The obligations of The Chase Manhattan Bank or such other designated
Tax Matters Person pursuant to this Section 11.16 shall survive the termination
or discharge of this Agreement.
(b) The Seller, the Depositor, the Trustee and each Servicer covenant
and agree for the benefit of the Owners and the Certificate Insurer (i) to take
no action which would result in the termination of "REMIC" status for the REMIC
Estate, (ii) not to engage in any "prohibited transaction", as such term is
defined in Section 860F(a)(2) of the Code, and (iii) not to engage in any other
action which may result in the imposition on the Trust of any other taxes under
the Code and the Seller in addition covenants to cause each Servicer not to take
or engage in any such action, to the extent the Seller is aware of any such
proposed action by the Servicer.
(c) The REMIC Estate shall, for federal income tax purposes, maintain
books on a calendar year basis and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, the Seller nor the Trustee shall enter into
any arrangement by which the Trustee will receive a fee or other compensation
for services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
123
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
the Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee and the Certificate Insurer shall have received an
Opinion of Counsel experienced in federal income tax matters acceptable to the
Certificate Insurer to the effect that such transaction does not result in a tax
imposed on the Trust or cause a termination of REMIC status for the REMIC
Estate; provided, however, that such transaction is otherwise permitted under
this Agreement.
(g) The Trustee, each of the Servicers and Tax Matters Person each
agree to indemnify the Trust for any tax imposed on the Trust or the REMIC
Estate as a result of their own negligence.
Section 11.17 Additional Limitation on Action and Imposition of Tax.
-----------------------------------------------------
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained for itself and the Certificate
Insurer an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer to the effect that such transaction does
not result in a tax imposed on the Trust or the REMIC Estate or cause a
termination of REMIC status for the REMIC Estate, (i) sell any assets in the
Trust Estate (except as specifically provided in this Agreement), (ii) accept
any contribution of assets after the Startup Day in violation of the REMIC
Provisions or (iii) agree to any modification of this Agreement. To the extent
that sufficient amounts cannot be so retained to pay or provide for the payment
of such tax, the Trustee is hereby authorized to and shall segregate, into a
separate non-interest bearing account, the net income from any such Prohibited
Transactions of the REMIC Estate and use such income, to the extent necessary,
to pay such tax; provided that, to the extent that any such income is paid to
the Internal Revenue Service, the Trustee shall retain an equal amount from
future amounts otherwise distributable to the Owners of Class R Certificates and
shall distribute such retained amounts to the Owners of Class A Certificates to
the extent they are fully reimbursed and then to the Owners of the Class R
Certificates. If any tax, including interest penalties or assessments,
additional amounts or additions to tax, is imposed on the Trust, such tax shall
be charged against amounts otherwise distributable to the owners of the Class R
Certificates on a pro rata basis. The Trustee is hereby authorized to and shall
retain from amounts otherwise distributable to the Owners of the Class R
Certificates sufficient funds to pay or provide for the payment of, and to
actually pay, such tax as is legally owed by the Trust (but such authorization
shall not prevent the Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
---------------------------------
A Tax Matters Person will be appointed for the REMIC Estate for all
purposes of the Code and such Tax Matters Person will perform, or cause to be
performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Tax Matters Person for the REMIC Estate shall be The Chase Manhattan Bank as
long as it owns a Class R Certificate. If The Chase Manhattan Bank does not own
a Class R Certificate, the Tax Matters Person may be any other entity that owns
a Class R Certificate and accepts a designation hereunder as Tax Matters person
by delivering an affidavit in the form of Exhibit I. The Seller shall notify the
Trustee in writing of the name and address of another person who accepts a
designation as Tax Matters Person hereunder.
124
Section 11.19 The Certificate Insurer.
-----------------------
Any right conferred to the Certificate Insurer hereunder shall be
suspended and shall run to the benefit of the Owners during the occurrence and
continuance of a Certificate Insurer Default. At such time as the Class A
Certificates, the Class S Certificates and all Reimbursement Amounts are no
longer Outstanding hereunder, the Certificate Insurer's rights hereunder shall
terminate.
Section 11.20 Reserved.
--------
Section 11.21 Third Party Rights.
------------------
The Trustee, the Seller and the Owners agree that the Certificate
Insurer shall be deemed a third-party beneficiary of this Agreement as if it
were a party hereto.
Section 11.22 Attorneys' Fees.
---------------
Any party successfully asserting a claim for a breach of this Agreement
against another party is entitled to receive all reasonable attorneys' fees
incurred by such party in asserting such claim.
Section 11.23 Notices.
-------
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: The Chase Manhattan Bank
-----------
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Structured Finance/MBS
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Depositor: AMRESCO Residential Securities Corporation
-------------
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Seller: AMRESCO Residential Capital Markets, Inc.
---------
c/o AMRESCO Residential Credit Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
125
The Servicers: Advanta Mortgage Corp. USA
-------------
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Senior Vice President - Loan Servicing
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Option One Mortgage Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Certificate
Insurer: MBIA Insurance Corporation
---------------
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Insured Portfolio AMRESCO
Residential Securities Corporation
Mortgage Loan Trust 1996-5
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Moody's: ▇▇▇▇▇'▇ Investors Service
-------
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: The Mortgage Monitoring Department
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Standard & Poor's: Standard & Poor's, a division of the McGraw
----------------- Hill Companies
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Residential Mortgage Group
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Fitch: Fitch Investors Service, L.P.
-----
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
126
Underwriters: Prudential Securities Incorporated
------------ One ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ Low
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
CS First Boston
▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, Sachs & Co.
▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Owners: As set forth in the Register.
------
END OF ARTICLE XI
127
IN WITNESS WHEREOF, the Depositor, the Seller, each Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor
By:
--------------------------------------
Title:
----------------------------------
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller
By:
------------------------------------
Title:
-----------------------------------
ADVANTA MORTGAGE CORP. USA
as Servicer
By:
-------------------------------------
Title:
----------------------------------
OPTION ONE MORTGAGE CORPORATION
as Servicer
By:
------------------------------------
Title:
-----------------------------------
THE CHASE MANHATTAN BANK,
as Trustee
By:
--------------------------------------
Title:
-----------------------------------
STATE OF TEXAS )
: ss.:
COUNTY OF DALLAS )
On the 18th day of December, 1996, before me personally came ▇▇▇▇▇▇
▇.Cott, to me known, who, being by me duly sworn, did depose and say that he/she
resides at Huntington Beach,California; that she is a Vice President of AMRESCO
Residential Securities Corporation, a Delaware corporation; and that she signed
her name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public
STATE OF TEXAS )
: ss.:
COUNTY OF DALLAS )
On the 18th day of December, 1996, before me personally came ▇▇▇▇▇▇ ▇.
Cott, to me known, who, being by me duly sworn, did depose and say that he/she
resides at Huntington Beach, California; that she is a Vice President of AMRESCO
Residential Capital Markets, Inc., a Delaware corporation; and that she signed
her name thereto by order of the Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public
STATE OF CALIFORNIA )
: ss.:
COUNTY OF _________ )
On the ___ day of December, 1996, before me personally came
____________________________, to me known, who, being by me duly sworn, did
depose and say that he resides at __________________________,
____________________, _______________________; that he is the
__________________________________ of Advanta Mortgage Corp. USA, a Delaware
Corporation; and that he signed his name thereto by order of the respective
Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public
STATE OF TEXAS )
: ss.:
COUNTY OF ORANGE )
On the ___ day of December, 1996, before me personally came
____________________________, to me known, who, being by me duly sworn, did
depose and say that he resides at __________________________,
____________________, _______________________; that he is the Chief Financial
Officer of Option One Mortgage Corporation, a _______________ corporation; and
that he signed his name thereto by order of the Board of Directors of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public
STATE OF TEXAS )
): ss.:
COUNTY OF DALLAS )
On the 18th day of December, 1996, before me personally came ▇▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, to me known, who, being by me duly sworn did depose and say that
he/she resides at Morristown, New Jersey; that she is a Second Vice President of
The Chase Manhattan Bank, a New York banking corporation described in and that
executed the above instrument as Trustee; and that she signed her name thereto
by order of the Board of Directors of said national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public
SCHEDULE I-A
SCHEDULE OF GROUP I MORTGAGE LOANS
[BY ORIGINATOR]
SCHEDULE I-B
SCHEDULE OF GROUP II MORTGAGE LOANS
[BY ORIGINATOR]
SCHEDULE II
SCHEDULE OF CLASS S MORTGAGE LOANS
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-5
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(6.425% Pass-Through Rate)
Representing Certain Interests in the Group I
Mortgage Loans Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc. or the Servicers. This Certificate represents a fractional ownership
interest in the Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5") or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is 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.
No: A-1-1 CUSIP: ▇▇▇▇▇▇▇▇▇
▇▇▇▇: US03215PAY51
COMMON CODE: 7214570
August 25, 2011
December 18, 1996 ---------------------
----------------- Final Scheduled
Date Payment Date
$42,200,000
------------------------
Original Certificate Principal Balance
Cede & Co.
---------------------
Registered Owner
A-1-1
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Mortgage Loans in Group I (other than
any principal and interest payments due thereon on or prior to the Cut-Off Date
on any Mortgage Loan that is current as of Cut-Off Date) listed in Schedule I-A
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04, 3.05
and 3.06 of the Pooling and Servicing Agreement), together with the related
Mortgage Loan documents and the Depositor's interest in any Property which
secured a Mortgage Loan but which has been acquired by foreclosure or deed in
lieu of foreclosure, and all payments thereon and proceeds of the conversion,
voluntary or involuntary, of the foregoing; (b) such amounts as may be held by
the Trustee in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on such amounts
and such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided in the Pooling and Servicing Agreement), whether in the form
of cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer); (c) the Certificate Insurance Policies issued
under the Insurance Agreement; (d) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing); and (e)
certain of the Seller's rights under the Transfer Agreements that are being
assigned to the Trust in the Pooling and Servicing Agreement to pay the
Certificates as specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-1 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to January 27, 1997 (the first Payment Date) be less than
the original Certificate Principal Balance set forth above.
The Owner hereof is required to send this Certificate to the
Trustee prior to receiving the final distribution hereon. The Pooling and
Servicing Agreement (as defined below) provides that, in any event, upon the
making of the final distribution due on this Certificate, this Certificate shall
be deemed cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS
ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY
OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JANUARY 27, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT
OF ANY PERSON IS REPRESENTED HEREBY.
A-1-2
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class A-1 (the "Class A-1
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of December
1, 1996 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and The Chase
Manhattan Bank, a New York banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 Mortgage Loan Pass- Through Certificates, Class A-2 (the "Class A-2
Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class
A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8
(the "Class A-8 Certificates"), Class S (the "Class S Certificates"), Class B-10
(the "Class B-10 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates and the Class A-8
Certificates shall be together referred to as the "Class A Certificates" and the
Class A Certificates, the Class S Certificates, the Class B-10 Certificates and
the Class R Certificates are together referred to herein as the "Certificates."
The Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates, Class A-6 Certificates and Class
A-7 Certificates are known as the "Group I Certificates." Terms capitalized
herein and not otherwise defined herein shall have the respective meanings set
forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, the Owners of the Class A-1 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-1 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-1
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-1 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-1 Certificates. The Percentage Interest of each
Class A-1 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-1 Certificate on the Startup Day by the aggregate Class A-1
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing
A-1-3
Agreement such amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, AMRESCO Residential Securities Corporation, AMRESCO Residential Capital
Markets, Inc. or the Servicers or any of their affiliates or any governmental
agency. This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as otherwise
provided in the Pooling and Servicing Agreement) and payments received by the
Trustee pursuant to the related Certificate Insurance Policy, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-1
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-1 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-1 Certificates and shall receive all future distributions of the Class
A-1 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Mortgage Loan in the Trust Estate, (b)
the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate and (c) at any time when a Qualified Liquidation
of both Mortgage Loan Groups included within the REMIC Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the REMIC to adopt a plan
of complete liquidation for
A-1-4
each of the Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the
Code and (ii) provide to the Trustee an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that each such liquidation constitutes a Qualified Liquidation,
and the Trustee shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, or shall distribute equitably in kind all of
the assets of the Trust Estate to the remaining Owners of the Certificates, each
in accordance with such plan, so that the liquidation or distribution of the
Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Monthly Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers
may, at their option, purchase from the Trust all remaining Mortgage Loans
serviced by the related Servicer and any other related property remaining in the
Trust Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and (iii) under certain circumstances relating to the qualification of
the REMIC as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of Certificates then
Outstanding, and in certain other circumstances provided for in the Pooling and
Servicing Agreement may be amended without the consent of the Owners. Any such
consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
A-1-5
The Class A-1 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-1 Certificates are exchangeable
for new Class A-1 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-1-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
THE CHASE MANHATTAN BANK
as Trustee
By:
-----------------------------------
Name:
--------------------------------
Title:
------------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
A-1-7
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions, such Policy
being on file at The Chase Manhattan Bank, New York, New York, as trustee (the
"Trustee").
The Insurer, in consideration of the payment of the premium
and subject to the terms of the Certificate Guaranty Insurance Policy (the
"Policy"), thereby unconditionally and irrevocably guarantees to any Owner (as
defined below) that an amount equal to each full and complete Insured Payment
will be received by the Trustee, or its successor, as trustee for the Owners on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligation under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the Insured Payment are received by
the Trustee, whether or not such funds are properly applied by the Trustee.
Insured Payments shall be made only at the time set forth in the Policy, and no
accelerated Insured Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of the Insurer.
"Obligations" shall mean:
$42,200,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5
Class A-1 Certificates
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Trust, the REMIC
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference
Amount on the second Business Day following receipt on a Business Day by the
Fiscal Agent (as described below) of (i) a certified copy of the order requiring
the return of such Preference Amount, (ii) an opinion of counsel satisfactory to
the Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Insurer, irrevocably
assigning to the Insurer all rights and claims of the Owner relating to or
arising under the Obligations against the debtor which made such preference
payment or otherwise with respect to such preference payment, (iv) appropriate
instruments to effect the appointment of the Insurer as agent for such Owner in
any legal proceeding related to such preference payment, such instruments being
in a form satisfactory to the Insurer and (v) a Notice (as described below),
provided that if such documents are received after 5:00 p.m. New York City time
on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the receiver or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Owner and not to any Owner directly unless such Owner has returned
principal or interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy
no later than 12:00 noon, New York City time, on the later of the Payment Date
on which the Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as described below);
provided that, if such Notice is received after 5:00 p.m. New York City time on
such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under the Policy, it
shall be deemed not to have
A-1-8
been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the
Fiscal Agent shall in no event be liable to the Owners for any acts of the
Fiscal Agent or any failure of the Insurer to deposit, or cause to be deposited,
sufficient funds to make payments due under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Pooling and Servicing Agreement dated as
of December 1, 1996 among AMRESCO Residential Securities Corporation, as
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller, Advanta
Mortgage Corp. USA and Option One Mortgage Corporation, as Servicers and The
Chase Manhattan Bank, as Trustee, without regard to any amendment or supplement
thereto, unless the Insurer shall have consented in writing thereto.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in California, Rhode Island, New York
City or in the city in which the corporate trust office of the Trustee under the
Agreement is located are authorized or obligated by law or executive order to
close.
"Class A-7 Termination Date" means November 25, 2026.
"Class A-8 Termination Date" means November 25, 2026.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum of the related
Current Interest and the then existing Subordination Deficit for the Related
Mortgage Loan Group, if any, over (ii) the Total Available Funds (net of the
Premium Amount for such Related Mortgage Loan Group) for such Related Mortgage
Loan Group.
"Insured Payment" means, as of any Payment Date, an amount
equal to the sum of (i) the Deficiency Amount plus (ii) any Preference Amount
then due and owing under the Policy plus (iii) as of the Class A-7 Termination
Date and with respect to the Class A-7 Certificates, an amount sufficient to
reduce the Certificate Principal Balance of the Class A-7 Certificates to zero
plus (iv) as of the Class A-8 Termination Date and with respect to the Class A-8
Certificates, an amount sufficient to reduce the Certificate Principal Balance
of the Class A-8 Certificates to zero.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement) who, on
the applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment under the Policy.
A-1-9
"Preference Amount" means any amount previously distributed to
an Owner that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the United States Bankruptcy Code (11
U.S.C.), as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I.
Capitalized terms used herein and not otherwise defined in the
Policy shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the
Fiscal Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 15th Floor, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on
the Policy is not refundable for any reason, including payment, or provision
being made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-5
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-2
(6.275% Pass-Through Rate)
Representing Certain Interests in the Group I
Mortgage Loans Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital Markets, Inc. or
the Servicers. This Certificate represents a fractional ownership interest in
the Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5") or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
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.
No: A-2-1 CUSIP: ▇▇▇▇▇▇▇▇▇
▇▇▇▇: US03215PAZ27
COMMON CODE: 7214618
$29,000,000 December 18, 1996 April 25, 2018
--------------------- ----------------------------------- ------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
Cede & Co.
------------------------------
Registered Owner
A-2-1
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Mortgage Loans in Group I (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date on
any Mortgage Loan that is current as of Cut-Off Date) listed in Schedule I-A to
the Pooling and Servicing Agreement which the Seller has caused to be delivered
to the Depositor and the Depositor has caused to be delivered to the Trustee
(and all substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06
of the Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Certificate Insurance Policies issued under the Insurance
Agreement; (d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing); and (e) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement to pay the Certificates as
specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-2 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to January 27, 1997 (the first Payment Date) be less than
the original Certificate Principal Balance set forth above.
The Owner hereof is required to send this Certificate to the Trustee
prior to receiving the final distribution hereon. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION,
THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER
GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JANUARY 27, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-2-2
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class A-2 (the "Class A-2
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of December
1, 1996 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and The Chase
Manhattan Bank, a New York banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 Mortgage Loan Pass- Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class
A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8
(the "Class A-8 Certificates"), Class S (the "Class S Certificates"), Class B-10
(the "Class B-10 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, Class A-7 Certificates and Class A-8 Certificates
shall be together referred to as the "Class A Certificates" and the Class A
Certificates, Class S Certificates, the Class B-10 Certificates and the Class R
Certificates are together referred to herein as the "Certificates." The Class
A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class A-4
Certificates, Class A-5 Certificates, Class A-6 and Class A-7 Certificates are
known as the "Group I Certificates." Terms capitalized herein and not otherwise
defined herein shall have the respective meanings set forth in the Pooling and
Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, the Owners of the Class A-2 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-2 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-2
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-2 Certificates. The Percentage Interest of each
Class A-2 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-2 Certificate on the Startup Day by the aggregate Class A-2
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
A-2-3
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, AMRESCO Residential Securities Corporation, AMRESCO Residential Capital
Markets, Inc. or the Servicers or any of their affiliates or any governmental
agency. This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as otherwise
provided in the Pooling and Servicing Agreement) and payments received by the
Trustee pursuant to the related Certificate Insurance Policy, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-2
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-2 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-2 Certificates and shall receive all future distributions of the Class
A-2 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Mortgage Loan in the Trust Estate, (b)
the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate and (c) at any time when a Qualified Liquidation
of both Mortgage Loan Groups included within the REMIC Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the REMIC to adopt a plan
of complete liquidation for each of the Mortgage Loan Groups, as contemplated by
Section 860F(a)(4) of the Code and (ii) provide to the Trustee an opinion of
counsel experienced in federal income tax matters acceptable to the
A-2-4
Certificate Insurer and the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee shall either sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust, or
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Mortgage Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers may, at
their option, purchase from the Trust all remaining Mortgage Loans serviced by
the related Servicer and any other related property remaining in the Trust
Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and (iii) under certain circumstances relating to the qualification of
the REMIC as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, and in
certain other circumstances provided for in the Pooling and Servicing Agreement
may be amended without the consent of the Owners. Any such consent by the Owner
at the time of the giving thereof, of this Certificate shall be conclusive and
binding upon such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the registration of Transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-2 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement
A-2-5
and subject to certain limitations therein set forth, Class A-2 Certificates are
exchangeable for new Class A-1 Certificates of authorized denominations
evidencing the same aggregate principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-2-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-------------------------------
Name:
-------------------------------
Title:
-----------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
A-2-7
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions, such Policy
being on file at The Chase Manhattan Bank, New York, New York, as trustee (the
"Trustee").
The Insurer, in consideration of the payment of the premium
and subject to the terms of the Certificate Guaranty Insurance Policy (the
"Policy"), thereby unconditionally and irrevocably guarantees to any Owner (as
defined below) that an amount equal to each full and complete Insured Payment
will be received by the Trustee, or its successor, as trustee for the Owners on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligation under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the Insured Payment are received by
the Trustee, whether or not such funds are properly applied by the Trustee.
Insured Payments shall be made only at the time set forth in the Policy, and no
accelerated Insured Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of the Insurer.
"Obligations" shall mean:
$29,000,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5
Class A-2 Certificates
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Trust, the REMIC
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference
Amount on the second Business Day following receipt on a Business Day by the
Fiscal Agent (as described below) of (i) a certified copy of the order requiring
the return of such Preference Amount, (ii) an opinion of counsel satisfactory to
the Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Insurer, irrevocably
assigning to the Insurer all rights and claims of the Owner relating to or
arising under the Obligations against the debtor which made such preference
payment or otherwise with respect to such preference payment, (iv) appropriate
instruments to effect the appointment of the Insurer as agent for such Owner in
any legal proceeding related to such preference payment, such instruments being
in a form satisfactory to the Insurer and (v) a Notice (as described below),
provided that if such documents are received after 5:00 p.m. New York City time
on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the receiver or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Owner and not to any Owner directly unless such Owner has returned
principal or interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy
no later than 12:00 noon, New York City time, on the later of the Payment Date
on which the Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as described below);
provided that, if such Notice is received after 5:00 p.m. New York City time on
such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under the Policy, it
shall be deemed not to have
A-2-8
been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the
Fiscal Agent shall in no event be liable to the Owners for any acts of the
Fiscal Agent or any failure of the Insurer to deposit, or cause to be deposited,
sufficient funds to make payments due under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Pooling and Servicing Agreement dated as
of December 1, 1996 among AMRESCO Residential Securities Corporation, as
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller, Advanta
Mortgage Corp. USA and Option One Mortgage Corporation, as Servicers and The
Chase Manhattan Bank, as Trustee, without regard to any amendment or supplement
thereto, unless the Insurer shall have consented in writing thereto.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in California, Rhode Island, New York
City or in the city in which the corporate trust office of the Trustee under the
Agreement is located are authorized or obligated by law or executive order to
close.
"Class A-7 Termination Date" means November 25, 2026.
"Class A-8 Termination Date" means November 25, 2026.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum of the related
Current Interest and the then existing Subordination Deficit for the Related
Mortgage Loan Group, if any, over (ii) the Total Available Funds (net of the
Premium Amount for such Related Mortgage Loan Group) for such Related Mortgage
Loan Group.
"Insured Payment" means, as of any Payment Date, an amount
equal to the sum of (i) the Deficiency Amount plus (ii) any Preference Amount
then due and owing under the Policy plus (iii) as of the Class A-7 Termination
Date and with respect to the Class A-7 Certificates, an amount sufficient to
reduce the Certificate Principal Balance of the Class A-7 Certificates to zero
plus (iv) as of the Class A-8 Termination Date and with respect to the Class A-8
Certificates, an amount sufficient to reduce the Certificate Principal Balance
of the Class A-8 Certificates to zero.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement) who, on
the applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment under the Certificate Insurance Policy.
A-2-9
"Preference Amount" means any amount previously distributed to
an Owner that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the United States Bankruptcy Code (11
U.S.C.), as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I or Group II, as
the case may be.
Capitalized terms used herein and not otherwise defined in the
Policy shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the
Fiscal Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 15th Floor, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on
the Policy is not refundable for any reason, including payment, or provision
being made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-5
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(6.400% Pass-Through Rate)
Representing Certain Interests in the Group I
Mortgage Loans Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital Markets, Inc. or
the Servicers. This Certificate represents a fractional ownership interest in
the Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5") or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
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.
No: A-3-1 CUSIP: ▇▇▇▇▇▇▇▇▇
ISIN: US03215PBA66
COMMON CODE: 7214626
$16,500,000 December 18, 1996 October 25, 2020
---------------------- --------------------------------- ---------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
Cede & Co.
-----------------------
Registered Owner
A-3-1
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Mortgage Loans in Group I (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date on
any Mortgage Loan that is current as of Cut-Off Date) listed in Schedule I-A to
the Pooling and Servicing Agreement which the Seller has caused to be delivered
to the Depositor and the Depositor has caused to be delivered to the Trustee
(and all substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06
of the Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Certificate Insurance Policies issued under the Insurance
Agreement; (d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing); and (e) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement to pay the Certificates as
specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-3 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to January 27, 1997 (the first Payment Date) be less than
the original Certificate Principal Balance set forth above.
The Owner hereof is required to send this Certificate to the Trustee
prior to receiving the final distribution hereon. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JANUARY 27, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-3-2
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class A-3 (the "Class A-3
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of December
1, 1996 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and The Chase
Manhattan Bank, a New York banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 Mortgage Loan Pass- Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-4 (the "Class
A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8
(the "Class A-8 Certificates"), Class S (the "Class S Certificates"), Class B-10
(the "Class B-10 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates and the Class A-8
Certificates shall be together referred to as the "Class A Certificates" and the
Class A Certificates, the Class S Certificates, the Class B-10 Certificates and
the Class R Certificates are together referred to herein as the "Certificates."
The Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates, Class A-6 Certificates and Class
A-7 Certificates are known as the "Group I Certificates." Terms capitalized
herein and not otherwise defined herein shall have the respective meanings set
forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, the Owners of the Class A-3 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-3 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-3
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-3 Certificates. The Percentage Interest of each
Class A-3 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-3 Certificate on the Startup Day by the aggregate Class A-3
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
Upon receipt of amounts under the related Policy on behalf of the
Owners of the Class A Certificates, the Trustee shall distribute in accordance
with the Pooling and Servicing Agreement such
A-3-3
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, AMRESCO Residential Securities Corporation, AMRESCO Residential Capital
Markets, Inc. or the Servicers or any of their affiliates or any governmental
agency. This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as otherwise
provided in the Pooling and Servicing Agreement) and payments received by the
Trustee pursuant to the related Certificate Insurance Policy, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-3
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-3 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-3 Certificates and shall receive all future distributions of the Class
A-3 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Mortgage Loan in the Trust Estate, (b)
the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate and (c) at any time when a Qualified Liquidation
of both Mortgage Loan Groups included within the REMIC Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the REMIC to adopt a plan
of complete liquidation for
A-3-4
each of the Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the
Code and (ii) provide to the Trustee an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that each such liquidation constitutes a Qualified Liquidation,
and the Trustee shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, or shall distribute equitably in kind all of
the assets of the Trust Estate to the remaining Owners of the Certificates, each
in accordance with such plan, so that the liquidation or distribution of the
Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Mortgage Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers may, at
their option, purchase from the Trust all remaining Mortgage Loans serviced by
the related Servicer and any other related property remaining in the Trust
Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and (iii) under certain circumstances relating to the qualification of
the REMIC as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, and in
certain other circumstances provided for in the Pooling and Servicing Agreement
may be amended without the consent of the Owners. Any such consent by the Owner
at the time of the giving thereof, of this Certificate shall be conclusive and
binding upon such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the registration of Transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
A-3-5
The Class A-3 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-3 Certificates are exchangeable for new
Class A-3 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-3-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK,
as Trustee
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
A-3-7
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions, such Policy
being on file at The Chase Manhattan Bank, New York, New York, as trustee (the
"Trustee").
The Insurer, in consideration of the payment of the premium
and subject to the terms of the Certificate Guaranty Insurance Policy (the
"Policy"), thereby unconditionally and irrevocably guarantees to any Owner (as
defined below) that an amount equal to each full and complete Insured Payment
will be received by the Trustee, or its successor, as trustee for the Owners on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligation under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the Insured Payment are received by
the Trustee, whether or not such funds are properly applied by the Trustee.
Insured Payments shall be made only at the time set forth in the Policy, and no
accelerated Insured Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of the Insurer.
"Obligations" shall mean:
$16,500,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5
Class A-3 Certificates
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Trust, the REMIC
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference
Amount on the second Business Day following receipt on a Business Day by the
Fiscal Agent (as described below) of (i) a certified copy of the order requiring
the return of such Preference Amount, (ii) an opinion of counsel satisfactory to
the Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Insurer, irrevocably
assigning to the Insurer all rights and claims of the Owner relating to or
arising under the Obligations against the debtor which made such preference
payment or otherwise with respect to such preference payment, (iv) appropriate
instruments to effect the appointment of the Insurer as agent for such Owner in
any legal proceeding related to such preference payment, such instruments being
in a form satisfactory to the Insurer and (v) a Notice (as described below),
provided that if such documents are received after 5:00 p.m. New York City time
on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the receiver or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Owner and not to any Owner directly unless such Owner has returned
principal or interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy
no later than 12:00 noon, New York City time, on the later of the Payment Date
on which the Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as described below);
provided that, if such Notice is received after 5:00 p.m. New York City time on
such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under the Policy, it
shall be deemed not to have
A-3-8
been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the
Fiscal Agent shall in no event be liable to the Owners for any acts of the
Fiscal Agent or any failure of the Insurer to deposit, or cause to be deposited,
sufficient funds to make payments due under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Pooling and Servicing Agreement dated as
of December 1, 1996 among AMRESCO Residential Securities Corporation, as
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller, Advanta
Mortgage Corp. USA and Option One Mortgage Corporation, as Servicers and The
Chase Manhattan Bank, as Trustee, without regard to any amendment or supplement
thereto, unless the Insurer shall have consented in writing thereto.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in California New York City or in the
city in which the corporate trust office of the Trustee under the Agreement is
located are authorized or obligated by law or executive order to close.
"Class A-7 Termination Date" means November 25, 2026.
"Class A-8 Termination Date" means November 25, 2026.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum of the related
Current Interest and the then existing Subordination Deficit for the Related
Mortgage Loan Group, if any, over (ii) the Total Available Funds (net of the
Premium Amount for such Related Mortgage Loan Group) for such Related Mortgage
Loan Group.
"Insured Payment" means, as of any Payment Date, an amount
equal to the sum of (i) the Deficiency Amount plus (ii) any Preference Amount
then due and owing under the Policy plus (iii) as of the Class A-7 Termination
Date and with respect to the Class A-7 Certificates, an amount sufficient to
reduce the Certificate Principal Balance of the Class A-7 Certificates to zero
plus (iv) as of the Class A-8 Termination Date and with respect to the Class A-8
Certificates, an amount sufficient to reduce the Certificate Principal Balance
of the Class A-8 Certificates to zero.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Payment Date.
"Owner" means each Owner of a Class A Certificate (as defined
in the Agreement) who, on the applicable Payment Date, is entitled under the
terms of the applicable Obligations to payment thereunder.
A-3-9
"Preference Amount" means any amount previously distributed to
an Owner that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the United States Bankruptcy Code (11
U.S.C.), as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I.
Capitalized terms used herein and not otherwise defined in the
Policy shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the
Fiscal Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 15th Floor, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on
the Policy is not refundable for any reason, including payment, or provision
being made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-5
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(6.575% Pass-Through Rate)
Representing Certain Interests in the Group I
Mortgage Loans Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital Markets, Inc. or
the Servicers. This Certificate represents a fractional ownership interest in
the Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5") or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
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.
No: A-4-1 CUSIP: ▇▇▇▇▇▇▇▇▇
▇▇▇▇: US03215PBB40
COMMON CODE: 7214642
$17,000,000 December 18, 1996 September 25, 2022
--------------------- ---------------------------- ---------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
Cede & Co.
-----------------------------
Registered Owner
A-4-1
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Mortgage Loans in Group I (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date on
any Mortgage Loan that is current as of Cut-Off Date) listed in Schedule I-A to
the Pooling and Servicing Agreement which the Seller has caused to be delivered
to the Depositor and the Depositor has caused to be delivered to the Trustee
(and all substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06
of the Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Certificate Insurance Policies issued under the Insurance
Agreement; (d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing); and (e) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement to pay the Certificates as
specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-4 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to January 27, 1997 (the first Payment Date) be less than
the original Certificate Principal Balance set forth above.
The Owner hereof is required to send this Certificate to the Trustee
prior to receiving the final distribution hereon. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JANUARY 27, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-4-2
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class A-4 (the "Class A-4
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of December
1, 1996 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and The Chase
Manhattan Bank, a New York banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 Mortgage Loan Pass- Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8
(the "Class A-8 Certificates"), the Class S (the "Class S Certificates"), Class
B-10 (the "Class B-10 Certificates") and Class R (Residual Interest) (the "Class
R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates and the Class A-8
Certificates shall be together referred to as the "Class A Certificates" and the
Class A Certificates, the Class S Certificates, the Class B-10 Certificates and
the Class R Certificates are together referred to herein as the "Certificates."
The Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates, Class A-6 Certificates and Class
A-7 Certificates are known as the "Group I Certificates." Terms capitalized
herein and not otherwise defined herein shall have the respective meanings set
forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, the Owners of the Class A-4 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-4 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-4
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-4 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-4 Certificates. The Percentage Interest of each
Class A-4 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-4 Certificate on the Startup Day by the aggregate Class A-4
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
Upon receipt of amounts under the related Policy on behalf of the
Owners of the Class A Certificates, the Trustee shall distribute in accordance
with the Pooling and Servicing Agreement such
A-4-3
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, AMRESCO Residential Securities Corporation, AMRESCO Residential Capital
Markets, Inc. or the Servicers or any of their affiliates or any governmental
agency. This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as otherwise
provided in the Pooling and Servicing Agreement) and payments received by the
Trustee pursuant to the related Certificate Insurance Policy, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-4
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-4 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-4 Certificates and shall receive all future distributions of the Class
A-4 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Mortgage Loan in the Trust Estate, (b)
the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate and (c) at any time when a Qualified Liquidation
of both Mortgage Loan Groups included within the REMIC Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the REMIC to adopt a plan
of complete liquidation for
A-4-4
each of the Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the
Code and (ii) provide to the Trustee an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that each such liquidation constitutes a Qualified Liquidation,
and the Trustee shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, or shall distribute equitably in kind all of
the assets of the Trust Estate to the remaining Owners of the Certificates, each
in accordance with such plan, so that the liquidation or distribution of the
Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Mortgage Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers may, at
their option, purchase from the Trust all remaining Mortgage Loans serviced by
the related Servicer and any other related property remaining in the Trust
Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and (iii) under certain circumstances relating to the qualification of
the REMIC as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, and in
certain other circumstances provided for in the Pooling and Servicing Agreement
may be amended without the consent of the Owners. Any such consent by the Owner
at the time of the giving thereof, of this Certificate shall be conclusive and
binding upon such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the registration of Transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
A-4-5
The Class A-4 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-4 Certificates are exchangeable for new
Class A-4 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-4-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK,
as Trustee
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
A-4-7
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions, such Policy
being on file at The Chase Manhattan Bank, New York, New York, as trustee (the
"Trustee").
The Insurer, in consideration of the payment of the premium
and subject to the terms of the Certificate Guaranty Insurance Policy (the
"Policy"), thereby unconditionally and irrevocably guarantees to any Owner (as
defined below) that an amount equal to each full and complete Insured Payment
will be received by the Trustee, or its successor, as trustee for the Owners on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligation under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the Insured Payment are received by
the Trustee, whether or not such funds are properly applied by the Trustee.
Insured Payments shall be made only at the time set forth in the Policy, and no
accelerated Insured Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of the Insurer.
"Obligations" shall mean:
$17,000,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5
Class A-4 Certificates
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Trust, the REMIC
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference
Amount on the second Business Day following receipt on a Business Day by the
Fiscal Agent (as described below) of (i) a certified copy of the order requiring
the return of such Preference Amount, (ii) an opinion of counsel satisfactory to
the Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Insurer, irrevocably
assigning to the Insurer all rights and claims of the Owner relating to or
arising under the Obligations against the debtor which made such preference
payment or otherwise with respect to such preference payment, (iv) appropriate
instruments to effect the appointment of the Insurer as agent for such Owner in
any legal proceeding related to such preference payment, such instruments being
in a form satisfactory to the Insurer and (v) a Notice (as described below),
provided that if such documents are received after 5:00 p.m. New York City time
on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the receiver or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Owner and not to any Owner directly unless such Owner has returned
principal or interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy
no later than 12:00 noon, New York City time, on the later of the Payment Date
on which the Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as described below);
provided that, if such Notice is received after 5:00 p.m. New York City time on
such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under the Policy, it
shall be deemed not to have
A-4-8
been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the
Fiscal Agent shall in no event be liable to the Owners for any acts of the
Fiscal Agent or any failure of the Insurer to deposit, or cause to be deposited,
sufficient funds to make payments due under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Pooling and Servicing Agreement dated as
of December 1, 1996 among AMRESCO Residential Securities Corporation, as
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller, Advanta
Mortgage Corp. USA and Option One Mortgage Corporation, as Servicers and The
Chase Manhattan Bank, as Trustee, without regard to any amendment or supplement
thereto, unless the Insurer shall have consented in writing thereto.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in California, Rhode Island, New York
City or in the city in which the corporate trust office of the Trustee under the
Agreement is located are authorized or obligated by law or executive order to
close.
"Class A-7 Termination Date" means November 25, 2026.
"Class A-8 Termination Date" means November 25, 2026.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum of the related
Current Interest and the then existing Subordination Deficit for the Related
Mortgage Loan Group, if any, over (ii) the Total Available Funds (net of the
Premium Amount for such Related Mortgage Loan Group) for such Related Mortgage
Loan Group.
"Insured Payment" means, as of any Payment Date, an amount
equal to the sum of (i) the Deficiency Amount plus (ii) any Preference Amount
then due and owing under the Policy plus (iii) as of the Class A-7 Termination
Date and with respect to the Class A-7 Certificates, an amount sufficient to
reduce the Certificate Principal Balance of the Class A-7 Certificates to zero
plus (iv) as of the Class A-8 Termination Date and with respect to the Class A-8
Certificates, an amount sufficient to reduce the Certificate Principal Balance
of the Class A-8 Certificates to zero.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement) who, on
the applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder under the Certificate Insurance Policy.
A-4-9
"Preference Amount" means any amount previously distributed to
an Owner that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the United States Bankruptcy Code (11
U.S.C.), as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I.
Capitalized terms used herein and not otherwise defined in the
Policy shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the
Fiscal Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 15th Floor, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on
the Policy is not refundable for any reason, including payment, or provision
being made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-5
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(6.700% Pass-Through Rate)
Representing Certain Interests in the Group I
Mortgage Loans Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital Markets, Inc. or
the Servicers. This Certificate represents a fractional ownership interest in
the Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5") or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
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.
No: A-5-1 CUSIP: ▇▇▇▇▇▇▇▇
ISIN: US03215PBC23
COMMON CODE: 7214685
$15,000,000 December 18, 1996 March 25, 2024
----------------------- -------------------------------- ----------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
Cede & Co.
-------------------------
Registered Owner
A-5-1
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Mortgage Loans in Group I (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date on
any Mortgage Loan that is current as of Cut-Off Date) listed in Schedule I-A to
the Pooling and Servicing Agreement which the Seller has caused to be delivered
to the Depositor and the Depositor has caused to be delivered to the Trustee
(and all substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06
of the Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Certificate Insurance Policies issued under the Insurance
Agreement; (d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing); and (e) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement to pay the Certificates as
specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-5 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to January 27, 1997 (the first Payment Date) be less than
the original Certificate Principal Balance set forth above.
The Owner hereof is required to send this Certificate to the Trustee
prior to receiving the final distribution hereon. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JANUARY 27, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-5-2
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class A-5 (the "Class A-5
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of December
1, 1996 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and The Chase
Manhattan Bank, a New York banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 Mortgage Loan Pass- Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8
(the "Class A-8 Certificate"), Class S (the "Class S Certificates"), Class B-10
(the "Class B-10 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates and the Class A-8
Certificates shall be together referred to as the "Class A Certificates" and the
Class A Certificates, the Class S Certificates, the Class B-10 Certificates and
the Class R Certificates are together referred to herein as the "Certificates."
The Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates, Class A-6 Certificates and Class
A-7 Certificates are known as the "Group I Certificates." Terms capitalized
herein and not otherwise defined herein shall have the respective meanings set
forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, the Owners of the Class A-5 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-5 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-5
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-5 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-5 Certificates. The Percentage Interest of each
Class A-5 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-5 Certificate on the Startup Day by the aggregate Class A-5
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
Upon receipt of amounts under the related Policy on behalf of the
Owners of the Class A Certificates, the Trustee shall distribute in accordance
with the Pooling and Servicing Agreement such
A-5-3
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, AMRESCO Residential Securities Corporation, AMRESCO Residential Capital
Markets, Inc. or the Servicers or any of their affiliates or any governmental
agency. This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as otherwise
provided in the Pooling and Servicing Agreement) and payments received by the
Trustee pursuant to the related Certificate Insurance Policy, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-5
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-5 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-5 Certificates and shall receive all future distributions of the Class
A-5 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Mortgage Loan in the Trust Estate, (b)
the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate and (c) at any time when a Qualified Liquidation
of both Mortgage Loan Groups included within the REMIC Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the REMIC to adopt a plan
of complete liquidation for
A-5-4
each of the Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the
Code and (ii) provide to the Trustee an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that each such liquidation constitutes a Qualified Liquidation,
and the Trustee shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, or shall distribute equitably in kind all of
the assets of the Trust Estate to the remaining Owners of the Certificates, each
in accordance with such plan, so that the liquidation or distribution of the
Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Mortgage Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers may, at
their option, purchase from the Trust all remaining Mortgage Loans serviced by
the related Servicer and any other related property remaining in the Trust
Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and (iii) under certain circumstances relating to the qualification of
the REMIC as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, and in
certain other circumstances provided for in the Pooling and Servicing Agreement
may be amended without the consent of the Owners. Any such consent by the Owner
at the time of the giving thereof, of this Certificate shall be conclusive and
binding upon such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the registration of Transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
A-5-5
The Class A-5 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-5 Certificates are exchangeable for new
Class A-5 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-5-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
A-5-7
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions, such Policy
being on file at The Chase Manhattan Bank, New York, New York, as trustee (the
"Trustee").
The Insurer, in consideration of the payment of the premium
and subject to the terms of the Certificate Guaranty Insurance Policy (the
"Policy"), thereby unconditionally and irrevocably guarantees to any Owner (as
defined below) that an amount equal to each full and complete Insured Payment
will be received by the Trustee, or its successor, as trustee for the Owners on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligation under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the Insured Payment are received by
the Trustee, whether or not such funds are properly applied by the Trustee.
Insured Payments shall be made only at the time set forth in the Policy, and no
accelerated Insured Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of the Insurer.
"Obligations" shall mean:
$15,000,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5
Class A-5 Certificates
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Trust, the REMIC
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference
Amount on the second Business Day following receipt on a Business Day by the
Fiscal Agent (as described below) of (i) a certified copy of the order requiring
the return of such Preference Amount, (ii) an opinion of counsel satisfactory to
the Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Insurer, irrevocably
assigning to the Insurer all rights and claims of the Owner relating to or
arising under the Obligations against the debtor which made such preference
payment or otherwise with respect to such preference payment, (iv) appropriate
instruments to effect the appointment of the Insurer as agent for such Owner in
any legal proceeding related to such preference payment, such instruments being
in a form satisfactory to the Insurer and (v) a Notice (as described below),
provided that if such documents are received after 5:00 p.m. New York City time
on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the receiver or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Owner and not to any Owner directly unless such Owner has returned
principal or interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy
no later than 12:00 noon, New York City time, on the later of the Payment Date
on which the Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as described below);
provided that, if such Notice is received after 5:00 p.m. New York City time on
such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under the Policy, it
shall be deemed not to have
A-5-8
been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the
Fiscal Agent shall in no event be liable to the Owners for any acts of the
Fiscal Agent or any failure of the Insurer to deposit, or cause to be deposited,
sufficient funds to make payments due under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Pooling and Servicing Agreement dated as
of December 1, 1996 among AMRESCO Residential Securities Corporation, as
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller, Advanta
Mortgage Corp. USA and Option One Mortgage Corporation, as Servicers and The
Chase Manhattan Bank, as Trustee, without regard to any amendment or supplement
thereto, unless the Insurer shall have consented in writing thereto.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in California, Rhode Island, New York
City or in the city in which the corporate trust office of the Trustee under the
Agreement is located are authorized or obligated by law or executive order to
close.
"Class A-7 Termination Date" means November 25, 2026.
"Class A-8 Termination Date" means November 25, 2026.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum of the related
Current Interest and the then existing Subordination Deficit for the Related
Mortgage Loan Group, if any, over (ii) the Total Available Funds (net of the
Premium Amount for such Related Mortgage Loan Group) for such Related Mortgage
Loan Group.
"Insured Payment" means, as of any Payment Date, an amount
equal to the sum of (i) the Deficiency Amount plus (ii) any Preference Amount
then due and owing under the Policy plus (iii) as of the Class A-7 Termination
Date and with respect to the Class A-7 Certificates, an amount sufficient to
reduce the Certificate Principal Balance of the Class A-7 Certificates to zero
plus (iv) as of the Class A-8 Termination Date and with respect to the Class A-8
Certificates, an amount sufficient to reduce the Certificate Principal Balance
of the Class A-8 Certificates to zero.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement) who, on
the applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder under the Certificate Insurance Policy.
A-5-9
"Preference Amount" means any amount previously distributed to
an Owner that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the United States Bankruptcy Code (11
U.S.C.), as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I.
Capitalized terms used herein and not otherwise defined in the
Policy shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the
Fiscal Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 15th Floor, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on
the Policy is not refundable for any reason, including payment, or provision
being made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS A-6 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-5
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-6
(6.925% Pass-Through Rate)
Representing Certain Interests in the Group I
Mortgage Loans Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital Markets, Inc. or
the Servicers. This Certificate represents a fractional ownership interest in
the Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5") or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
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.
No: A-6-1 CUSIP: ▇▇▇▇▇▇▇▇▇
ISIN: US03215PBD06
COMMON CODE: 7214693
$15,900,000 December 18, 1996 June 25, 2025
----------------------- ------------------------------ ----------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
Cede & Co.
-----------------------------
Registered Owner
A-6-1
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Mortgage Loans in Group I (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date on
any Mortgage Loan that is current as of Cut-Off Date) listed in Schedule I-A to
the Pooling and Servicing Agreement which the Seller has caused to be delivered
to the Depositor and the Depositor has caused to be delivered to the Trustee
(and all substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06
of the Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Certificate Insurance Policies issued under the Insurance
Agreement; (d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing); and (e) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement to pay the Certificates as
specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-6 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to January 27, 1997 (the first Payment Date) be less than
the original Certificate Principal Balance set forth above.
The Owner hereof is required to send this Certificate to the Trustee
prior to receiving the final distribution hereon. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JANUARY 27, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-6-2
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class A-6 (the "Class A-6
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of December
1, 1996 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and The Chase
Manhattan Bank, a New York banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 Mortgage Loan Pass- Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class A-8
(the "Class A-8 Certificate"), Class S (the "Class S Certificates"), Class B-10
(the "Class B-10 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates and the Class A-8
Certificates shall be together referred to as the "Class A Certificates" and the
Class A Certificates, the Class S Certificates, the Class B-10 Certificates and
the Class R Certificates are together referred to herein as the "Certificates."
The Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates, Class A-6 Certificates and Class
A-7 Certificates are known as the "Group I Certificates." Terms capitalized
herein and not otherwise defined herein shall have the respective meanings set
forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, the Owners of the Class A-6 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-6 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-6
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-6 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-6 Certificates. The Percentage Interest of each
Class A-6 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-6 Certificate on the Startup Day by the aggregate Class A-6
Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
Upon receipt of amounts under the related Policy on behalf of the
Owners of the Class A Certificates, the Trustee shall distribute in accordance
with the Pooling and Servicing Agreement such
A-6-3
amounts (directly or through a Paying Agent) to the Owners of the appropriate
Class of the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, AMRESCO Residential Securities Corporation, AMRESCO Residential Capital
Markets, Inc. or the Servicers or any of their affiliates or any governmental
agency. This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as otherwise
provided in the Pooling and Servicing Agreement) and payments received by the
Trustee pursuant to the related Certificate Insurance Policy, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-6
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-6 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-6 Certificates and shall receive all future distributions of the Class
A-6 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final payment or other liquidation (or any advance
made with respect thereto) of the last Mortgage Loan in the Trust Estate, (b)
the disposition of all property acquired in respect of any Mortgage Loan
remaining in the Trust Estate and (c) at any time when a Qualified Liquidation
of both Mortgage Loan Groups included within the REMIC Estate is effected as
described below. To effect a termination of the Pooling and Servicing Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall (i) unanimously direct the Trustee on behalf of the REMIC to adopt a plan
of complete liquidation for
A-6-4
each of the Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the
Code and (ii) provide to the Trustee an opinion of counsel experienced in
federal income tax matters acceptable to the Certificate Insurer and the Trustee
to the effect that each such liquidation constitutes a Qualified Liquidation,
and the Trustee shall either sell the Mortgage Loans and distribute the proceeds
of the liquidation of the Trust, or shall distribute equitably in kind all of
the assets of the Trust Estate to the remaining Owners of the Certificates, each
in accordance with such plan, so that the liquidation or distribution of the
Trust Estate, the distribution of any proceeds of the liquidation and the
termination of the Pooling and Servicing Agreement occur no later than the close
of the 90th day after the date of adoption of the plan of liquidation and such
liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Mortgage Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers may, at
their option, purchase from the Trust all remaining Mortgage Loans serviced by
the related Servicer and any other related property remaining in the Trust
Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and (iii) under certain circumstances relating to the qualification of
the REMIC as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, and in
certain other circumstances provided for in the Pooling and Servicing Agreement
may be amended without the consent of the Owners. Any such consent by the Owner
at the time of the giving thereof, of this Certificate shall be conclusive and
binding upon such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the registration of Transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
A-6-5
The Class A-6 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-6 Certificates are exchangeable for new
Class A-5 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-6-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
A-6-7
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions, such Policy
being on file at The Chase Manhattan Bank, New York, New York, as trustee (the
"Trustee").
The Insurer, in consideration of the payment of the premium
and subject to the terms of the Certificate Guaranty Insurance Policy (the
"Policy"), thereby unconditionally and irrevocably guarantees to any Owner (as
defined below) that an amount equal to each full and complete Insured Payment
will be received by the Trustee, or its successor, as trustee for the Owners on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligation under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the Insured Payment are received by
the Trustee, whether or not such funds are properly applied by the Trustee.
Insured Payments shall be made only at the time set forth in the Policy, and no
accelerated Insured Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of the Insurer.
"Obligations" shall mean:
$15,900,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5
Class A-6 Certificates
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Trust, the REMIC
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference
Amount on the second Business Day following receipt on a Business Day by the
Fiscal Agent (as described below) of (i) a certified copy of the order requiring
the return of such Preference Amount, (ii) an opinion of counsel satisfactory to
the Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Insurer, irrevocably
assigning to the Insurer all rights and claims of the Owner relating to or
arising under the Obligations against the debtor which made such preference
payment or otherwise with respect to such preference payment, (iv) appropriate
instruments to effect the appointment of the Insurer as agent for such Owner in
any legal proceeding related to such preference payment, such instruments being
in a form satisfactory to the Insurer and (v) a Notice (as described below),
provided that if such documents are received after 5:00 p.m. New York City time
on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the receiver or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Owner and not to any Owner directly unless such Owner has returned
principal or interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy
no later than 12:00 noon, New York City time, on the later of the Payment Date
on which the Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as described below);
provided that, if such Notice is received after 5:00 p.m. New York City time on
such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under the Policy, it
shall be deemed not to have
A-6-8
been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the
Fiscal Agent shall in no event be liable to the Owners for any acts of the
Fiscal Agent or any failure of the Insurer to deposit, or cause to be deposited,
sufficient funds to make payments due under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Pooling and Servicing Agreement dated as
of December 1, 1996 among AMRESCO Residential Securities Corporation, as
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller, Advanta
Mortgage Corp. USA and Option One Mortgage Corporation, as Servicers and The
Chase Manhattan Bank, as Trustee, without regard to any amendment or supplement
thereto, unless the Insurer shall have consented in writing thereto.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in California, Rhode Island, New York
City or in the city in which the corporate trust office of the Trustee under the
Agreement is located are authorized or obligated by law or executive order to
close.
"Class A-7 Termination Date" means November 25, 2026.
"Class A-8 Termination Date" means November 25, 2026.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum of the related
Current Interest and the then existing Subordination Deficit for the Related
Mortgage Loan Group, if any, over (ii) the Total Available Funds (net of the
Premium Amount for such Related Mortgage Loan Group) for such Related Mortgage
Loan Group.
"Insured Payment" means, as of any Payment Date, an amount
equal to the sum of (i) the Deficiency Amount plus (ii) any Preference Amount
then due and owing under the Policy plus (iii) as of the Class A-7 Termination
Date and with respect to the Class A-7 Certificates, an amount sufficient to
reduce the Certificate Principal Balance of the Class A-7 Certificates to zero
plus (iv) as of the Class A-8 Termination Date and with respect to the Class A-8
Certificates, an amount sufficient to reduce the Certificate Principal Balance
of the Class A-8 Certificates to zero.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement) who, on
the applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder under the Certificate Insurance Policy.
A-6-9
"Preference Amount" means any amount previously distributed to
an Owner that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the United States Bankruptcy Code (11
U.S.C.), as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I.
Capitalized terms used herein and not otherwise defined in the
Policy shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the
Fiscal Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 15th Floor, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on
the Policy is not refundable for any reason, including payment, or provision
being made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS A-7 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-5
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-7
(7.075% Pass-Through Rate)*
Representing Certain Interests in the Group I
Mortgage Loans Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital Markets, Inc. or
the Servicers. This Certificate represents a fractional ownership interest in
the Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5") or its
agent for registration of transfer, exchange, or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
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.
------------------------
* Subject to certain limitations
No: A-7-1 CUSIP: ▇▇▇▇▇▇▇▇▇
ISIN: 03215PBE88
COMMON CODE: 7214707
$14,400,000 December 18, 1996 November 25, 2026
--------------------- ---------------------------------- ----------------------
Original Certificate Date Final Scheduled
Principal Balance Payment Date
Cede & Co.
-----------------------------
Registered Owner
A-7-1
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Mortgage Loans in Group I (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date on
any Mortgage Loan that is current as of Cut-Off Date) listed in Schedule I-A to
the Pooling and Servicing Agreement which the Seller has caused to be delivered
to the Depositor and the Depositor has caused to be delivered to the Trustee
(and all substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06
of the Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Certificate Insurance Policies issued under the Insurance
Agreement; (d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing); and (e) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement to pay the Certificates as
specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-7 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to January 27, 1997 (the first Payment Date) be less than
the original Certificate Principal Balance set forth above.
The Owner hereof is required to send this Certificate to the Trustee
prior to receiving the final distribution hereon. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JANUARY 27, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-7-2
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class A-7 (the "Class A-7
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of December
1, 1996 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and The Chase
Manhattan Bank, a New York banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 Mortgage Loan Pass- Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-8
(the "Class A-8 Certificate"), Class S (the "Class S Certificates"), Class B-10
(the "Class B-10 Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates and the Class A-8
Certificates shall be together referred to as the "Class A Certificates" and the
Class A Certificates, the Class S Certificates, the Class B-10 Certificates and
the Class R Certificates are together referred to herein as the "Certificates."
The Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class A-4 Certificates, Class A-5 Certificates, Class A-6 Certificates and Class
A-7 Certificates are known as the "Group I Certificates." Terms capitalized
herein and not otherwise defined herein shall have the respective meanings set
forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, the Owners of the Class A-7 Certificates as of the
close of business on the last day of the calendar month immediately preceding
the calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Class A-7 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original Class A-7
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-7 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-7 Certificates. The Percentage Interest of each
Class A-7 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-7 Certificate on the Startup Day by the aggregate Class A-7
Certificate Principal Balance on the Startup Day.
"Class A-7 Pass-Through Rate": On any Payment Date or prior to the
Clean-Up Call Date, the lesser of (i) 7.075% per annum and (ii) the Group I
Available Fund Cap Rate for such Payment Date and on any Payment Date in any
month following the month in which the Clean-Up Call Date occurs, the lesser of
(i) 7.575% per annum and (ii) the Group I Available Fund Cap Rate for such
Payment Date.
A-7-3
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
Upon receipt of amounts under the related Policy on behalf of the
Owners of the Class A Certificates, the Trustee shall distribute in accordance
with the Pooling and Servicing Agreement such amounts (directly or through a
Paying Agent) to the Owners of the appropriate Class of the Class A Certificates
or Class S Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, AMRESCO Residential Securities Corporation, AMRESCO Residential Capital
Markets, Inc. or the Servicers or any of their affiliates or any governmental
agency. This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as otherwise
provided in the Pooling and Servicing Agreement) and payments received by the
Trustee pursuant to the related Certificate Insurance Policy, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-7
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-7 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-7 Certificates and shall receive all future distributions of the Class
A-7 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final
A-7-4
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan in the Trust Estate, (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate and (c)
at any time when a Qualified Liquidation of both Mortgage Loan Groups included
within the REMIC Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the Owners
of all Certificates then Outstanding shall (i) unanimously direct the Trustee on
behalf of the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee an opinion of counsel experienced in federal income tax
matters acceptable to the Certificate Insurer and the Trustee to the effect that
each such liquidation constitutes a Qualified Liquidation, and the Trustee shall
either sell the Mortgage Loans and distribute the proceeds of the liquidation of
the Trust, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Mortgage Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers may, at
their option, purchase from the Trust all remaining Mortgage Loans serviced by
the related Servicer and any other related property remaining in the Trust
Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and (iii) under certain circumstances relating to the qualification of
the REMIC as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, and in
certain other circumstances provided for in the Pooling and Servicing Agreement
may be amended without the consent of the Owners. Any such consent by the Owner
at the time of the giving thereof, of this Certificate shall be conclusive and
binding upon such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the
A-7-5
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-7 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000 original Certificate Principal Balance. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-7 Certificates are exchangeable for new
Class A-5 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-7-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------
Name:
-----------------------
Title:
-----------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
A-7-7
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions, such Policy
being on file at The Chase Manhattan Bank, New York, New York, as trustee (the
"Trustee").
The Insurer, in consideration of the payment of the premium
and subject to the terms of the Certificate Guaranty Insurance Policy (the
"Policy"), thereby unconditionally and irrevocably guarantees to any Owner (as
defined below) that an amount equal to each full and complete Insured Payment
will be received by the Trustee, or its successor, as trustee for the Owners on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligation under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the Insured Payment are received by
the Trustee, whether or not such funds are properly applied by the Trustee.
Insured Payments shall be made only at the time set forth in the Policy, and no
accelerated Insured Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of the Insurer.
"Obligations" shall mean:
$14,400,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5
Class A-7 Certificates
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Trust, the REMIC
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability).
The Insurer will pay any Insured Payment that is a Preference
Amount on the second Business Day following receipt on a Business Day by the
Fiscal Agent (as described below) of (i) a certified copy of the order requiring
the return of such Preference Amount, (ii) an opinion of counsel satisfactory to
the Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Insurer, irrevocably
assigning to the Insurer all rights and claims of the Owner relating to or
arising under the Obligations against the debtor which made such preference
payment or otherwise with respect to such preference payment, (iv) appropriate
instruments to effect the appointment of the Insurer as agent for such Owner in
any legal proceeding related to such preference payment, such instruments being
in a form satisfactory to the Insurer and (v) a Notice (as described below),
provided that if such documents are received after 5:00 p.m. New York City time
on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the receiver or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Owner and not to any Owner directly unless such Owner has returned
principal or interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy
no later than 12:00 noon, New York City time, on the later of the Payment Date
on which the Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as described below);
provided that, if such Notice is received after 5:00 p.m. New York City time on
such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under the Policy, it
shall be deemed not to have
A-7-8
been received by the Fiscal Agent for purposes of this paragraph, and the
Insurer or the Fiscal Agent, as the case may be, shall promptly so advise the
Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the
Fiscal Agent shall in no event be liable to the Owners for any acts of the
Fiscal Agent or any failure of the Insurer to deposit, or cause to be deposited,
sufficient funds to make payments due under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Pooling and Servicing Agreement dated as
of December 1, 1996 among AMRESCO Residential Securities Corporation, as
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller, Advanta
Mortgage Corp. USA and Option One Mortgage Corporation, as Servicers and The
Chase Manhattan Bank, as Trustee, without regard to any amendment or supplement
thereto, unless the Insurer shall have consented in writing thereto.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in California, Rhode Island, New York
City or in the city in which the corporate trust office of the Trustee under the
Agreement is located are authorized or obligated by law or executive order to
close.
"Class A-7 Termination Date" means November 25, 2026.
"Class A-8 Termination Date" means November 25, 2026.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum of the related
Current Interest and the then existing Subordination Deficit for the Related
Mortgage Loan Group, if any, over (ii) the Total Available Funds (net of the
Premium Amount for such Related Mortgage Loan Group) for such Related Mortgage
Loan Group.
"Insured Payment" means, as of any Payment Date, an amount
equal to the sum of (i) the Deficiency Amount plus (ii) any Preference Amount
then due and owing under the Policy plus (iii) as of the Class A-7 Termination
Date and with respect to the Class A-7 Certificates, an amount sufficient to
reduce the Certificate Principal Balance of the Class A-7 Certificates to zero
plus (iv) as of the Class A-8 Termination Date and with respect to the Class A-8
Certificates, an amount sufficient to reduce the Certificate Principal Balance
of the Class A-8 Certificates to zero.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Payment Date.
"Owner" means each Owner (as defined in the Agreement) who, on
the applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder under the Certificate Insurance Policy.
A-7-9
"Preference Amount" means any amount previously distributed to
an Owner that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the United States Bankruptcy Code (11
U.S.C.), as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group I.
Capitalized terms used herein and not otherwise defined in the
Policy shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the
Fiscal Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 15th Floor, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on
the Policy is not refundable for any reason, including payment, or provision
being made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS A-8 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE
REPRESENTS A CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT" ("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING
COMPLIANCE WITH THE REMIC PROVISIONS OF THE CODE.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-5
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS A-8
(Adjustable Pass-Through Rate)
Representing Certain Interests in the Group II
Mortgage Loans Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
AMRESCO Residential Securities Corporation, AMRESCO Residential Capital Markets,
Inc. or the Servicers. This Certificate represents a fractional ownership
interest in the Mortgage Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to the Issuer ("AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5") or its agent for registration of transfer, exchange, or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is 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.
No: A-8-1 USIP: ▇▇▇▇▇▇▇▇▇
SIN: US03215PBF53
COMMON CODE: 7214715
November 25, 2026
---------------------
December 18, 1996 Final Scheduled
---------------------- Payment Date
Date
$200,000,000
---------------------
Original Certificate
Principal Balance Cede & Co.
------------------------
Registered Owner
$550,000,000
---------------------
Total Certificate
Principal Balance
A-8-1
The registered Owner named above is the registered beneficial
Owner of a fractional interest in (a) the Mortgage Loans in Group II (other than
any principal and interest payments due thereon on or prior to the Cut-Off Date
on any Mortgage Loan that is current as of Cut-Off Date) listed in Schedule I-B
to the Pooling and Servicing Agreement which the Seller has caused to be
delivered to the Depositor and the Depositor has caused to be delivered to the
Trustee (and all substitutions therefor as provided by Section 3.03, 3.04, 3.05
and 3.06 of the Pooling and Servicing Agreement), together with the related
Mortgage Loan documents and the Depositor's interest in any Property which
secured a Mortgage Loan but which has been acquired by foreclosure or deed in
lieu of foreclosure, and all payments thereon and proceeds of the conversion,
voluntary or involuntary, of the foregoing; (b) such amounts as may be held by
the Trustee in the Certificate Account, the Pre-Funding Account and the
Capitalized Interest Account together with investment earnings on such amounts
and such amounts as may be held in the name of the Trustee in the Principal and
Interest Account, if any, exclusive of investment earnings thereon (except as
otherwise provided in the Pooling and Servicing Agreement), whether in the form
of cash, instruments, securities or other properties (including any Eligible
Investments held by the Servicer); (c) the Certificate Insurance Policy issued
under the Insurance Agreement; (d) proceeds of all the foregoing (including, but
not by way of limitation, all proceeds of any mortgage insurance, hazard
insurance and title insurance policy relating to the Mortgage Loans, cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, rights to payment of any and every kind, and
other forms of obligations and receivables which at any time constitute all or
part of or are included in the proceeds of any of the foregoing); and (e)
certain of the Seller's rights under the Transfer Agreements that are being
assigned to the Trust in the Pooling and Servicing Agreement to pay the
Certificates as specified in the Pooling and Servicing Agreement.
The Owner hereof is entitled to principal payments on each
Payment Date, as hereinafter described, which will fully amortize such original
Certificate Principal Balance over the period from the date of initial issuance
of the Certificates to the final Payment Date for the Class A-8 Certificates.
Therefore, the actual Outstanding principal amount of this Certificate may, on
any date subsequent to January 27, 1997 (the first Payment Date) be less than
the original Certificate Principal Balance set forth above.
The Owner hereof is required to send this Certificate to the
Trustee prior to receiving the final distribution hereon. The Pooling and
Servicing Agreement (as defined below) provides that, in any event, upon the
making of the final distribution due on this Certificate, this Certificate shall
be deemed cancelled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO JANUARY 27, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN
ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
A-8-2
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class A-8 (the "Class A-8
Certificates" or the "Group II Certificates") and issued under and subject to
the terms, provisions and conditions of that certain Pooling and Servicing
Agreement dated as of December 1, 1996 (the "Pooling and Servicing Agreement")
by and among AMRESCO Residential Capital Markets, Inc., in its capacity as the
Seller (the "Seller"), AMRESCO Residential Securities Corporation, in its
capacity as Depositor (the "Depositor"), Advanta Mortgage Corp. USA, as a
Servicer and Option One Mortgage Corporation, as a Servicer (collectively, the
"Servicers") and The Chase Manhattan Bank, a New York banking corporation, in
its capacity as the Trustee (the "Trustee"), to which Pooling and Servicing
Agreement the Owner of this Certificate by virtue of acceptance hereof assents
and by which such Owner is bound. Also issued under the Pooling and Servicing
Agreement are Certificates designated as AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-5 Mortgage Loan Pass-Through Certificates,
Class A-1 (the "Class A-1 Certificates"), Class A-2 (the "Class A-2
Certificates"), Class A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class
A-4 Certificates"), Class A-5 (the "Class A-5 Certificates"), Class A-6 (the
"Class A-6 Certificates"), Class A-7 (the "Class A-7 Certificates"), Class S
(the "Class S Certificates"), Class B-10 (the "Class B-10 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates and the Class A-8 Certificates shall be together referred
to as the "Class A Certificates" and the Class A Certificates, the Class S
Certificates, the Class B-10 Certificates and the Class R Certificates are
together referred to herein as the "Certificates." The Class A-1 Certificates,
Class A-2 Certificates, Class A-3 Certificates, Class A-4 Certificates, Class
A-5 Certificates, Class A-6 Certificates, Class A-7 Certificates are known as
the "Group I Certificates." Terms capitalized herein and not otherwise defined
herein shall have the respective meanings set forth in the Pooling and Servicing
Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, the Owners of the Class A-8 Certificates as of the
close of business on the day immediately preceding such Payment Date (the
"Record Date") will be entitled to receive the Class A-8 Distribution Amount
relating to such Certificate on such Payment Date. Distributions will be made in
immediately available funds to Owners of Certificates having an aggregate
original Class A-8 Certificate Principal Balance of at least $1,000,000 (by wire
transfer or otherwise) to the account of an Owner at a domestic bank or other
entity having appropriate facilities therefor, if such Owner has so notified the
Trustee, or by check mailed to the address of the person entitled thereto as it
appears on the Register.
Each Owner of record of a Class A-8 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-8 Certificates. The Percentage Interest of each
Class A-8 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-8 Certificate on the Startup Day by the aggregate Class A-8
Certificate Principal Balance on the Startup Day.
"Class A-8 Pass-Through Rate": For the initial Payment Date, 5.7875%.
Thereafter, for any Payment Date in any month up to and including the month in
which the Clean-Up Call Date occurs, the lesser of (i) One-Month LIBOR plus
0.225% per annum and (ii) the Group II Available Funds Cap Rate for such Payment
Date; and for any Payment Date in any month following the month in which the
CleanUp Call Date occurs, the lesser of (i) One-Month LIBOR plus 0.450% per
annum and (ii) the Group II Available Funds Cap Rate for such Payment Date.
A-8-3
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners.
Upon receipt of amounts under the related Policy on behalf of the
Owners of the Class A-8 Certificates, the Trustee shall distribute in accordance
with the Pooling and Servicing Agreement such amounts (directly or through a
Paying Agent) to the Owners of the Class A-8 Certificates or Class S
Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, AMRESCO Residential Securities Corporation, AMRESCO Residential Capital
Markets, Inc. or the Servicers or any of their affiliates or any governmental
agency. This Certificate is limited in right of payment to certain collections
and recoveries relating to the Mortgage Loans and amounts on deposit in the
Certificate Account and the Principal and Interest Account (except as otherwise
provided in the Pooling and Servicing Agreement) and payments received by the
Trustee pursuant to the related Certificate Insurance Policy, all as more
specifically set forth hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the owners of such Class A-8
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class A-8 Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class A-8 Certificates and shall receive all future distributions of the Class
A-8 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the related
Certificate Insurance Policy of all amounts held by the Trustee and required to
be paid to such Owners pursuant to the Pooling and Servicing Agreement upon the
later to occur of (a) the final
A-8-4
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan in the Trust Estate, (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate and (c)
at any time when a Qualified Liquidation of both Mortgage Loan Groups included
within the REMIC Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the Owners
of all Certificates then Outstanding shall (i) unanimously direct the Trustee on
behalf of the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee an opinion of counsel experienced in federal income tax
matters acceptable to the Certificate Insurer and the Trustee to the effect that
each such liquidation constitutes a Qualified Liquidation, and the Trustee shall
either sell the Mortgage Loans and distribute the proceeds of the liquidation of
the Trust, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that
(i) the Owners of the Class R Certificates may, at their option, purchase from
the Trust all remaining Mortgage Loans and other property then constituting the
Trust Estate, and thereby effect early retirement of the Certificates, on any
Monthly Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers
may, at their option, purchase from the Trust all remaining Mortgage Loans
serviced by the related Servicer and any other related property remaining in the
Trust Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and (iii) under certain circumstances relating to the qualification of
the REMIC as a REMIC under the Code the Mortgage Loans may be sold, thereby
effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the
Pooling and Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the
Percentage Interests represented by the Class A Certificates with the prior
written consent of the Certificate Insurer have the right to exercise any trust
or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject
to certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain
exceptions as therein provided, the amendment thereof and the modifications of
rights and obligations of the parties provided therein by the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and not less than a majority of the
Percentage Interest represented by each affected Class of Certificates then
Outstanding, and in certain other circumstances provided for in the Pooling and
Servicing Agreement may be amended without the consent of the Owners. Any such
consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued
A-8-5
upon the registration of Transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each
Payment Date to the Owner of this Certificate, as more fully described in the
Pooling and Servicing Agreement.
The Class A-8 Certificates are issuable only as registered
Certificates in minimum denominations of $1,000 original Certificate Principal
Balance. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class A-8 Certificates are exchangeable
for new Class A-8 Certificates of authorized denominations evidencing the same
aggregate principal amount.
No service charge will be made for any such registration of
transfer or exchange, but the Registrar or Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
The Trustee and any agent of the Trustee may treat the Person
in whose name this Certificate is registered as the owner hereof for all
purposes, and neither the Trustee or any such agent shall be affected by notice
to the contrary, except as may otherwise be specifically provided in the Pooling
and Servicing Agreement with respect to the Certificate Insurer.
A-8-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed on behalf of the Trust.
THE CHASE MANHATTAN BANK
as Trustee
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------
Name:
------------------------
Title:
------------------------
A-8-7
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a
certificate insurance policy containing the following provisions, such Policy
being on file at The Chase Manhattan Bank, New York, New York, as trustee (the
"Trustee").
The Insurer, in consideration of the payment of the premium
and subject to the terms of the Certificate Guaranty Insurance Policy (the
"Policy"), thereby unconditionally and irrevocably guarantees to any Owner (as
defined below) that an amount equal to each full and complete Insured Payment
will be received by the Trustee, or its successor, as trustee for the Owners on
behalf of the Owners from the Insurer, for distribution by the Trustee to each
Owner of each Owner's proportionate share of the Insured Payment. The Insurer's
obligation under the Policy with respect to a particular Insured Payment shall
be discharged to the extent funds equal to the Insured Payment are received by
the Trustee, whether or not such funds are properly applied by the Trustee.
Insured Payments shall be made only at the time set forth in the Policy, and no
accelerated Insured Payments shall be made regardless of any acceleration of the
Obligations, unless such acceleration is at the sole option of the Insurer.
"Obligations" shall mean:
$550,000,000
AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5
Class A-8 Adjustable Rate Certificates
Notwithstanding the foregoing paragraph, the Policy does not
cover shortfalls, if any, attributable to the liability of the Trust, the REMIC
or the Trustee for withholding taxes, if any (including interest and penalties
in respect of any such liability). Insured Payments do not include the payment
on the Obligations of any Available Funds Cap Carry-Forward Amount.
The Insurer will pay any Insured Payment that is a Preference
Amount on the second Business Day following receipt on a Business Day by the
Fiscal Agent (as described below) of (i) a certified copy of the order requiring
the return of such Preference Amount, (ii) an opinion of counsel satisfactory to
the Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Insurer, irrevocably
assigning to the Insurer all rights and claims of the Owner relating to or
arising under the Obligations against the debtor which made such preference
payment or otherwise with respect to such preference payment, (iv) appropriate
instruments to effect the appointment of the Insurer as agent for such Owner in
any legal proceeding related to such preference payment, such instruments being
in a form satisfactory to the Insurer and (v) a Notice (as described below),
provided that if such documents are received after 5:00 p.m. New York City time
on such Business Day, they will be deemed to be received on the following
Business Day. Such payments shall be disbursed to the receiver or trustee in
bankruptcy named in the final order of the court exercising jurisdiction on
behalf of the Owner and not to any Owner directly unless such Owner has returned
principal or interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable under the Policy
no later than 12:00 noon, New York City time, on the later of the Payment Date
on which the Deficiency Amount is due or the second Business Day following
receipt in New York, New York on a Business Day by State Street Bank and Trust
Company, N.A. as Fiscal Agent for the Insurer or any successor fiscal agent
appointed by the Insurer (the "Fiscal Agent") of a Notice (as described below);
provided that, if such Notice is received after 5:00 p.m. New York City time on
such Business Day, it will be deemed to be received on the following Business
Day. If any such Notice received by the Fiscal Agent is not in proper form or is
A-8-8
otherwise insufficient for the purpose of making a claim under the Policy, it
shall be deemed not to have been received by the Fiscal Agent for purposes of
this paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Policy, unless otherwise stated
in the Policy, will be disbursed by the Fiscal Agent to the Trustee on behalf of
the Owners by wire transfer of immediately available funds in the amount of the
Insured Payment less, in respect of Insured Payments related to Preference
Amounts, any amount held by the Trustee for the payment of such Insured Payment
and legally available therefor.
The Fiscal Agent is the agent of the Insurer only, and the
Fiscal Agent shall in no event be liable to the Owners for any acts of the
Fiscal Agent or any failure of the Insurer to deposit, or cause to be deposited,
sufficient funds to make payments due under the Policy.
As used in the Policy, the following terms shall have the
following meanings:
"Agreement" means the Pooling and Servicing Agreement dated as
of December 1, 1996 among AMRESCO Residential Securities Corporation, as
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller, Advanta
Mortgage Corp. USA and Option One Mortgage Corporation, as Servicers and The
Chase Manhattan Bank, as Trustee, without regard to any amendment or supplement
thereto, unless the Insurer shall have consented in writing thereto.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in California, Rhode Island, New York
City or in the city in which the corporate trust office of the Trustee under the
Agreement is located are authorized or obligated by law or executive order to
close.
"Class A-7 Termination Date" means November 25, 2026.
"Class A-8 Termination Date" means November 25, 2026.
"Deficiency Amount" means, with respect to the Related
Mortgage Loan Group and Payment Date, the excess of (i) the sum of the related
Current Interest and the then existing Subordination Deficit for the Related
Mortgage Loan Group, if any, over (ii) the Total Available Funds (net of the
Premium Amount for such Related Mortgage Loan Group) for such Mortgage Loan
Group.
"Insured Payment" means, as of any Payment Date, an amount
equal to the sum of (i) the Deficiency Amount plus (ii) any Preference Amount
then due and owing under the Policy plus (iii) as of the Class A-7 Termination
Date and with respect to the Class A-7 Certificates, an amount sufficient to
reduce the Certificate Principal Balance of the Class A-7 Certificates to zero
plus (iv) as of the Class A-8 Termination Date and with respect to the Class A-8
Certificates, an amount sufficient to reduce the Certificate Principal Balance
of the Class A-8 Certificates to zero.
"Notice" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Policy, the original of which is subsequently delivered by registered or
certified mail, from the Trustee specifying the Insured Payment which shall be
due and owing on the applicable Payment Date.
A-8-9
"Owner" means each Owner (as defined in the Agreement) who, on
the applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder under the Policy.
"Preference Amount" means any amount previously distributed to
an Owner that is recoverable and sought to be recovered as a voidable preference
by a trustee in bankruptcy pursuant to the United States Bankruptcy Code (11
U.S.C.), as amended from time to time, in accordance with a final nonappealable
order of a court having competent jurisdiction.
"Related Mortgage Loan Group" means Group II.
Capitalized terms used herein and not otherwise defined in the
Policy shall have the respective meanings set forth in the Agreement as of the
date of execution of the Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or modification
has been approved in writing by the Insurer.
Any notice under the Policy or service of process on the
Fiscal Agent may be made at the address listed below for the Fiscal Agent of the
Insurer or such other address as the Insurer shall specify in writing to the
Trustee.
The notice address of the Fiscal Agent is 15th Floor, ▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Municipal Registrar and Paying
Agency or such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Policy is being issued under and pursuant to, and shall be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.
The insurance provided by the Policy is not covered by the
Property/Casualty Insurance Security Fund specified in Article 76 of the New
York Insurance Law.
The Policy is not cancelable for any reason. The premium on
the Policy is not refundable for any reason, including payment, or provision
being made for payment, prior to the maturity of the Obligations.
MBIA INSURANCE CORPORATION
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF CLASS S CERTIFICATE
AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1996-5 MORTGAGE LOAN
PASS-THROUGH CERTIFICATE
INTEREST-ONLY CLASS S CERTIFICATE
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by AMRESCO Residential Securities Corporation
and Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
as Servicers
This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital Markets, Inc. or
the Servicers. This certificate represents a fractional ownership interest in
the Mortgage Loans as described herein, moneys in certain Accounts created
pursuant to the Pooling and Servicing Agreement and certain other rights
relating thereto and is payable only from amounts received by the Trustee
relating to the Mortgage Loans held by the Trust.
No.: S-1
December 18, 1996
--------------------------
Date
100% November 25, 2026
-------------------------- -----------------------
Percentage Interest Final Scheduled
Distribution Date
AMRESCO Residential Capital Markets, Inc.
-------------------------------------------------------
Registered Owner
Trustee Authentication
The Chase Manhattan Bank,
as Trustee
By: _____________________
Name: ___________________
Title: ____________________
Date of Authentication: _________________________
S-1
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Mortgage Loans (other than any principal and
interest payments due thereon on or prior to the Cut-Off Date on any Mortgage
Loan that is current as of Cut-Off Date) listed in Schedule II to the Pooling
and Servicing Agreement which the Seller has caused to be delivered to the
Depositor and the Depositor has caused to be delivered to the Trustee (and all
substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06 of the
Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Certificate Insurance Policies issued under the Insurance
Agreement; (d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policies relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing); and (e) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement to pay the Certificates as
specified in the Pooling and Servicing Agreement.
The Owner hereof is required to send this Certificate to the Trustee
prior to receiving the final distribution hereon. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY
STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
S-3
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE THE HOLDER OF THIS
CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTION OF PRINCIPAL WITH RESPECT
TO THE MORTGAGE LOANS.
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class S (the "Class S
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of December
1, 1996 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor, (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and The Chase
Manhattan Bank, a New York banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 Mortgage Loan Pass- Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates"), Class A-8 (the "Class A-8 Certificates"), Class
B-10 (the "Class B-10 Certificates") and Class R (Residual Interest) (the "Class
R Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates, the Class A-7 Certificates shall be together
referred to as "Group I Certificates" and together with the Class A-8
Certificates, "Class A Certificates" and the Class A Certificates, the Class S
Certificates, the Class B-10 Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall have
the respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, the Owners of the Class S Certificates as of the
close of business on the last business day of the calendar month immediately
preceding the calendar month in which such Payment Date occurs (the "Record
Date") will be entitled to receive the Class S Distribution Amount (as defined
in the Pooling and Servicing Agreement) relating to such Payment Date.
Distributions will be made in immediately available funds to such Owners, by
wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least 5 business days prior to the related record date,
or by check mailed to the address of the person entitled thereto as it appears
on the Register.
Each Owner of record of a Class S Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class S Certificates. The Percentage Interest of each Class
S Certificate as of any date of determination will be equal to the percentage
interest set forth on such Class S Certificate.
"Class S Distribution Amount": With respect to any Payment Date, the
sum of (a) the product of (x) the outstanding Loan Balance of each Mortgage Loan
listed on Schedule II as of such Payment Date and (y) one-twelfth of the
difference between the Aggregate Servicing Fee Rate and the Servicing
S-4
Fee Rate for such Mortgage Loan, (b) any unpaid Preference Amount, if any, for
the Class S Certificates and (c) the Class S Carry Forward Amount, if any. The
Class S Distribution Amount shall be calculated on a loan by loan basis.
The Certificate Insurer is required, subject to the terms of the
Certificate Insurance Policy to make Insured Payments available to the Trustee
on or prior to the related Payment Date for distribution to the Owners.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates or Class S Certificates, the
Trustee shall distribute in accordance with the Pooling and Servicing Agreement
such amounts (directly or through a Paying Agent) to the Owners of the
appropriate Class A Certificates or Class S Certificates.
The Trustee or any duly appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Holder shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, the AMRESCO Residential Securities Corporation or AMRESCO Residential
Capital Markets, Inc. or the Servicers or any of their subsidiaries and
affiliates or any governmental agency. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Accounts (except as otherwise provided in the Pooling
and Servicing Agreement) and payments received by the Trustee pursuant to this
Certificate Insurance Policies, all as more specifically set forth hereinabove
and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class S
Certificates, the Certificate Insurer will be subrogated to the rights of such
Owners of Class S Certificates with respect to such Insured Payment, shall be
deemed to the extent of the payments so made to be a registered Owner of such
Class S Certificates and shall receive all future distributions of the Class S
Distribution Amount until all such Insured Payments by the Certificate Insurer
have been fully reimbursed.
S-5
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the Policy of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
the Pooling and Servicing Agreement upon the later to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan in the Trust Estate, (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate and (c)
at any time when a Qualified Liquidation of both Mortgage Loan Groups included
within the REMIC Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the Owners
of all Certificates then Outstanding shall (i) unanimously direct the Trustee on
behalf of the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee an opinion of counsel experienced in federal income tax
matters acceptable to the Certificate Insurer and the Trustee to the effect that
each such liquidation constitutes a Qualified Liquidation, and the Trustee shall
either sell the Mortgage Loans and distribute the proceeds of the liquidation of
the Trust, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing Agreement occur no later than the close of the 90th day
after the date of adoption of the plan of liquidation and such liquidation
qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Mortgage Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers may, at
their option, purchase from the Trust all remaining Mortgage Loans serviced by
the related Servicer and any other related property remaining in the Trust
Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and if such option is not exercised, the Certificate Insurer may
exercise such option and (iii) under certain circumstances relating to the
qualification of the REMIC as a REMIC under the Code the Mortgage Loans may be
sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then outstanding with the
prior written consent of the Certificate Insurer have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval
S-6
of the Certificate Insurer and of each Account Party and not less than a
majority of the Percentage Interest represented by each affected Class of
Certificates then Outstanding, and in certain other circumstances provided for
in the Pooling and Servicing Agreement may be amended without the consent of the
Owners. Any such consent by the Owner at the time of the giving thereof, of this
Certificate shall be conclusive and binding upon such Owner and upon all future
Owners of the Certificate and of any Certificate issued upon the registration of
Transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class S Certificates are issuable only as registered Certificates
in minimum percentage interests of all interests in the Class S Certificates. As
provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class S Certificates are exchangeable for new
Class S Certificates of the same percentage interest as the Class S Certificates
exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
S-7
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK,
as Trustee
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
S-8
EXHIBIT B-2
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE 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 BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A ▇▇▇▇▇▇'▇ COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE CLASS R
CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF THE FORM
OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND AVAILABLE FROM
THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO
A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR
GENERALLY WILL BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF
(A) THE AMOUNT OF EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS
CERTIFICATE OWNED THROUGH SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED
ORGANIZATION, AND (B) THE HIGHEST MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR
PURPOSES OF THE PRECEDING SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES
REGULATED INVESTMENT COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST
FUNDS, PARTNERSHIPS, TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER
1T OF THE CODE APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
B-2-1
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 1996-5
MORTGAGE LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to a Pool of
Conventional Mortgage Loans Originated or Purchased
and Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital Markets, Inc. or
the Servicers. This Certificate represents a fractional residual ownership
interest in the Trust Estate.)
No: R - 1 December 18, 1996
-----------------------------
Date
Percentage Interest 99.999 % November 25, 2026
---------- ---------------------------
Final Scheduled Payment Date
AMRESCO Residential Capital Markets, Inc.
----------------------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of a
fractional interest in (a) the Mortgage Loans (other than any principal and
interest payments due thereon on or prior to the Cut-Off Date on any Mortgage
Loan that is current as of Cut-Off Date) listed in Schedule I-A and I-B to the
Pooling and Servicing Agreement which the Seller has caused to be delivered to
the Depositor and the Depositor has caused to be delivered to the Trustee (and
all substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06 of
the Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Certificate Insurance Policies issued under the Insurance
Agreement; (d) proceeds of all the foregoing (including, but not by way of
limitation, all proceeds of any mortgage insurance, hazard insurance and title
insurance policy relating to the Mortgage Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other
B-2-2
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing); and (e) certain of the
Seller's rights under the Transfer Agreements that are being assigned to the
Trust in the Pooling and Servicing Agreement to pay the Certificates as
specified in the Pooling and Servicing Agreement.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
Trustee Authentication
THE CHASE MANHATTAN BANK, as Trustee
By:
----------------------------------
Name:
----------------------------------
Title:
----------------------------------
Date of Authentication:
------------------------------
B-2-3
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class R (the "Class R
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of December
1, 1996 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor, (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and The Chase
Manhattan Bank, a New York banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 Mortgage Loan Pass- Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates"), Class A-8 (the "Class A-8 Certificates"), Class
S (the "Class S Certificates") and Class B-10 (the "Class B-10 Certificates").
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates, the Class A-5 Certificates, the Class
A-6 Certificates, the Class A-7 Certificates and the Class A-8 Certificates
shall be together referred to as the "Class A Certificates" and the Class A
Certificates, the Class S Certificates, the Class B-10 Certificates and the
Class R Certificates are together referred to herein as the "Certificates." The
Class A-1 Certificates, the Class A-2 Certificates, the Class A-3 Certificates,
the Class A-4 Certificates, the Class A-5 Certificates, the Class A-6
Certificates and the Class A-7 Certificates are known as the "Group I
Certificates." Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, each Owner of a Class R Certificate as of the close
of business on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (by wire transfer or otherwise) to the account of an
Owner at a domestic bank or other entity having appropriate facilities therefor,
if such Owner has so notified the Trustee, or by check mailed to the address of
the person entitled thereto as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, AMRESCO Residential Securities Corporation,
B-2-4
AMRESCO Residential Capital Markets, Inc. or the Servicers or any of their
affiliates or any governmental agency. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Certificate Account and the Principal and Interest
Account (except as otherwise provided in the Pooling and Servicing Agreement)
and payments received by the Trustee pursuant to the Certificate Insurance
Policies, all as more specifically set forth hereinabove and in the Pooling and
Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the later to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Mortgage Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Mortgage Loan remaining
in the Trust Estate and (c) at any time when a Qualified Liquidation of both
Mortgage Loan Groups included within the REMIC Estate is effected as described
below. To effect a termination of the Pooling and Servicing Agreement pursuant
to clause (c) above, the Owners of all Certificates then Outstanding shall (i)
unanimously direct the Trustee on behalf of the REMIC to adopt a plan of
complete liquidation for each of the Mortgage Loan Groups, as contemplated by
Section 860F(a)(4) of the Code and (ii) provide to the Trustee an opinion of
counsel experienced in federal income tax matters acceptable to the Certificate
Insurer and the Trustee to the effect that each such liquidation constitutes a
Qualified Liquidation, and the Trustee shall either sell the Mortgage Loans and
distribute the proceeds of the liquidation of the Trust, or shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates, each in accordance with such plan, so that the liquidation
or distribution of the Trust Estate, the distribution of any proceeds of the
liquidation and the termination of the Pooling and Servicing Agreement occur no
later than the close of the 90th day after the date of adoption of the plan of
liquidation and such liquidation qualifies as a Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Mortgage Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers may, at
their option, purchase from the Trust all remaining Mortgage Loans serviced by
the related Servicer and any other related property remaining in the Trust
Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and if such option is not exercised, the Certificate Insurer may
exercise such option and (iii) under certain circumstances relating to the
qualification of the REMIC as a REMIC under the Code the Mortgage Loans may be
sold, thereby effecting the early retirement of the Certificates.
B-2-5
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates, Class B-10 Certificates and
the Class R Certificates, then outstanding with the prior written consent of the
Certificate Insurer have the right to exercise any trust or power set forth in
Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the REMIC will be issued to the designated
transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and not less than a majority of the Percentage Interest
represented by each affected Class of Certificates then Outstanding, and in
certain other circumstances provided for in the Pooling and Servicing Agreement
may be amended without the consent of the Owners. Any such consent by the Owner
at the time of the giving thereof, of this Certificate shall be conclusive and
binding upon such Owner and upon all future Owners of the Certificate and of any
Certificate issued upon the registration of Transfer hereof or in exchange
hereof or in lieu hereof whether or not notation of such consent or waiver is
made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
B-2-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------------
Name:
-----------------------------
Title:
------------------------
B-2-7
[STATEMENT OF INSURANCE TO FOLLOW]
B-2-8
EXHIBIT B-10
FORM OF CLASS B-10 CERTIFICATE
AMRESCO Residential Securities Corporation
Mortgage Loan Trust 1996-5 MORTGAGE LOAN
PASS-THROUGH CERTIFICATE
INTEREST-ONLY CLASS B-10 CERTIFICATE
Representing Certain Interests Relating to a Pool of
Mortgage Loans formed by AMRESCO Residential Securities Corporation
and Serviced by
ADVANTA MORTGAGE CORP. USA
OPTION ONE MORTGAGE CORPORATION
as Servicers
This certificate does not represent an interest in, or an obligation
of, nor are the underlying Mortgage Loans insured or guaranteed by, AMRESCO
Residential Securities Corporation, AMRESCO Residential Capital Markets, Inc. or
the Servicers. This certificate represents a fractional ownership interest in
the Mortgage Loans as described herein, moneys in certain Accounts created
pursuant to the Pooling and Servicing Agreement and certain other rights
relating thereto and is payable only from amounts received by the Trustee
relating to the Mortgage Loans held by the Trust.
No.: B-1O-1
December 18, 1996
----------------------
Date
100% November 25, 2026
---------------------- -----------------------------------
Percentage Interest Final Scheduled
Distribution Date
AMRESCO Residential Capital Markets, Inc.
----------------------------------------
Registered Owner
Trustee Authentication
The Chase Manhattan Bank,
as Trustee
By: _____________________
Name: ___________________
Title: ____________________
Date of Authentication: _________________________
B-10-1
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Mortgage Loans (other than any principal and
interest payments due thereon on or prior to the Cut-Off Date on any Mortgage
Loan that is current as of Cut-Off Date) listed in Schedule I-A and I-B to the
Pooling and Servicing Agreement which the Seller has caused to be delivered to
the Depositor and the Depositor has caused to be delivered to the Trustee (and
all substitutions therefor as provided by Section 3.03, 3.04, 3.05 and 3.06 of
the Pooling and Servicing Agreement), together with the related Mortgage Loan
documents and the Depositor's interest in any Property which secured a Mortgage
Loan but which has been acquired by foreclosure or deed in lieu of foreclosure,
and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts as may be held by the Trustee in
the Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer); (c) the Policy issued under the Insurance Agreement; (d) proceeds of
all the foregoing (including, but not by way of limitation, all proceeds of any
mortgage insurance, hazard insurance and title insurance policies relating to
the Mortgage Loans, cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, rights to payment of any
and every kind, and other forms of obligations and receivables which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing); and (e) certain of the Seller's rights under the Transfer Agreements
that are being assigned to the Trust in the Pooling and Servicing Agreement to
pay the Certificates as specified in the Pooling and Servicing Agreement.
The Owner hereof is required to send this Certificate to the Trustee
prior to receiving the final distribution hereon. The Pooling and Servicing
Agreement provides that, in any event, upon the making of the final distribution
due on this Certificate, this Certificate shall be deemed cancelled for all
purposes under the Pooling and Servicing Agreement.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES OF THIS
SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY
STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT
SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES
NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
B-10-2
NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE GOVERNMENT
NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THIS CERTIFICATE IS AN INTEREST ONLY CERTIFICATE THE HOLDER OF THIS
CERTIFICATE SHALL NOT BE ENTITLED TO ANY DISTRIBUTION OF PRINCIPAL WITH
RESPECT TO THE MORTGAGE LOANS.
This Certificate is one of a Class of duly-authorized Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, Mortgage Loan Pass-Through Certificates, Class B-10 (the "Class B-10
Certificates") and issued under and subject to the terms, provisions and
conditions of that certain Pooling and Servicing Agreement dated as of December
1, 1996 (the "Pooling and Servicing Agreement") by and among AMRESCO Residential
Capital Markets, Inc., in its capacity as the Seller (the "Seller"), AMRESCO
Residential Securities Corporation, in its capacity as Depositor, (the
"Depositor"), Advanta Mortgage Corp. USA, as a Servicer and Option One Mortgage
Corporation, as a Servicer (collectively, the "Servicers") and The Chase
Manhattan Bank, a New York banking corporation, in its capacity as the Trustee
(the "Trustee"), to which Pooling and Servicing Agreement the Owner of this
Certificate by virtue of acceptance hereof assents and by which such Owner is
bound. Also issued under the Pooling and Servicing Agreement are Certificates
designated as AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 Mortgage Loan Pass- Through Certificates, Class A-1 (the "Class A-1
Certificates"), Class A-2 (the "Class A-2 Certificates"), Class A-3 (the "Class
A-3 Certificates"), Class A-4 (the "Class A-4 Certificates"), Class A-5 (the
"Class A-5 Certificates"), Class A-6 (the "Class A-6 Certificates"), Class A-7
(the "Class A-7 Certificates"), Class A-8 (the "Class A-8 Certificates"), Class
S (the "Class S Certificates") and Class R (Residual Interest) (the "Class R
Certificates"). The Class A-1 Certificates, the Class A-2 Certificates, the
Class A-3 Certificates, the Class A-4 Certificates, the Class A-5 Certificates,
the Class A-6 Certificates and the Class A-7 Certificates shall be together
referred to as "Group I Certificates" and together with the Class A-8
Certificates, "Class A Certificates" and the Class A Certificates, the Class S
Certificates, the Class B-1O Certificates and the Class R Certificates are
together referred to herein as the "Certificates." Terms capitalized herein and
not otherwise defined herein shall have the respective meanings set forth in the
Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined herein shall have
the respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing January 27, 1997, the Owners of the Class B-10 Certificates as of the
close of business on the last business day of the calendar month immediately
preceding the calendar month in which such Payment Date occurs (the "Record
Date") will be entitled to receive the Class B-10 Distribution Amount (as
defined in the Pooling and Servicing Agreement) relating to such Payment Date.
Distributions will be made in immediately available funds to such Owners, by
wire transfer or otherwise, to the account of an Owner at a domestic bank or
other entity having appropriate facilities therefor, if such Owner has so
notified the Trustee at least 5 business days prior to the related record date,
or by check mailed to the address of the person entitled thereto as it appears
on the Register.
Each Owner of record of a Class B-1O Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class B-1O
B-10-3
Certificates. The Percentage Interest of each Class B-10 Certificate as of any
date of determination will be equal to the percentage interest set forth on such
Class B-10 Certificate.
The Trustee or any duly appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code or applicable to any Holder shall be considered as having been paid by
the Trustee to such Owner for all purposes of the Pooling and Servicing
Agreement.
The Mortgage Loans will be serviced by the Servicers pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Subservicing Agreements with certain institutions
eligible for appointment as Subservicers for the servicing and administration of
certain Mortgage Loans. No appointment of any Subservicer shall release the
Servicer from any of its obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Mortgage Loans insured or guaranteed
by, the AMRESCO Residential Securities Corporation or AMRESCO Residential
Capital Markets, Inc. or the Servicers or any of their subsidiaries and
affiliates or any governmental agency. This Certificate is limited in right of
payment to certain collections and recoveries relating to the Mortgage Loans and
amounts on deposit in the Accounts (except as otherwise provided in the Pooling
and Servicing Agreement), all as more specifically set forth hereinabove and in
the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms hereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the earlier of the payment to the Owners of
all Certificates from amounts other than those available under the Policy of all
amounts held by the Trustee and required to be paid to such Owners pursuant to
the Pooling and Servicing Agreement upon the later to occur of (a) the final
payment or other liquidation (or any advance made with respect thereto) of the
last Mortgage Loan in the Trust Estate, (b) the disposition of all property
acquired in respect of any Mortgage Loan remaining in the Trust Estate and (c)
at any time when a Qualified Liquidation of both Mortgage Loan Groups included
within the REMIC Estate is effected as described below. To effect a termination
of the Pooling and Servicing Agreement pursuant to clause (c) above, the Owners
of all Certificates then Outstanding shall (i) unanimously direct the Trustee on
behalf of the REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee an opinion of counsel experienced in federal income tax
matters acceptable to the Certificate Insurer and the Trustee to the effect that
each such liquidation constitutes a Qualified Liquidation, and the Trustee shall
either sell the Mortgage Loans and distribute the proceeds of the liquidation of
the Trust, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates, each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of the
Pooling and Servicing
B-10-4
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that (i) the
Owners of the Class R Certificates may, at their option, purchase from the Trust
all remaining Mortgage Loans and other property then constituting the Trust
Estate, and thereby effect early retirement of the Certificates, on any Monthly
Remittance Date, on or after the Clean-Up Call Date (ii) the Servicers may, at
their option, purchase from the Trust all remaining Mortgage Loans serviced by
the related Servicer and any other related property remaining in the Trust
Estate (or if the Servicers fail to exercise such option, the Certificate
Insurer may exercise such option) and thereby effect early retirement of the
Certificates on any Monthly Remittance Date on or after the Servicer Clean-Up
Call Date and if such option is not exercised, the Certificate Insurer may
exercise such option and (iii) under certain circumstances relating to the
qualification of the REMIC as a REMIC under the Code the Mortgage Loans may be
sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then outstanding with the
prior written consent of the Certificate Insurer have the right to exercise any
trust or power set forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage Interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Trustee, the Seller and the
Servicer at any time and from time to time, with the prior written approval of
the Certificate Insurer and of each Account Party and not less than a majority
of the Percentage Interest represented by each affected Class of Certificates
then Outstanding, and in certain other circumstances provided for in the Pooling
and Servicing Agreement may be amended without the consent of the Owners. Any
such consent by the Owner at the time of the giving thereof, of this Certificate
shall be conclusive and binding upon such Owner and upon all future Owners of
the Certificate and of any Certificate issued upon the registration of Transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class B-10 Certificates are issuable only as registered
Certificates in minimum percentage interests of all interests in the Class B-10
Certificates. As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, Class B-10 Certificates are exchangeable
for new Class B-10 Certificates of the same percentage interest as the Class
B-10 Certificates exchanged.
B-10-5
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
B-10-6
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
THE CHASE MANHATTAN BANK,
as Trustee
By:
----------------------------
Name:
-----------------------
Title:
-----------------------
▇-▇▇-▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ TRANSFER AGREEMENT
AMRESCO Residential Securities Corporation (the "Depositor"), as
Depositor, AMRESCO Residential Capital Markets, Inc., as Seller (the "Seller"),
as Seller, and AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5, as Purchaser, pursuant to the Pooling and Servicing Agreement dated as
of December 1, 1996 among the Seller, the Depositor, Advanta Mortgage Corp. USA,
as a Servicer and Option One Mortgage Corporation, as a Servicer and The Chase
Manhattan Bank, as Trustee (the "Pooling and Servicing Agreement"), hereby
confirm their understanding with respect to the sale by the Depositor and the
purchase by the Purchaser of those Mortgage Loans (the "Subsequent Mortgage
Loans") listed on the attached Schedule of Mortgage Loans for deposit to Group I
or Group II as designated in the Schedule of Mortgage Loans.
Conveyance of Subsequent Mortgage Loans. As of _____________, 199__
(the "Subsequent CutOff Date"), the Seller does hereby irrevocably transfer,
assign, setover and otherwise convey to the Depositor and the Depositor does
hereby irrevocably transfer, assign, set over and otherwise convey to the
Purchaser, without recourse (except as otherwise explicitly provided for herein)
all right, title and interest in and to any and all benefits accruing from the
Subsequent Mortgage Loans (other than any principal and interest payments
received thereon on or prior to the Subsequent Cut-Off Date) which are delivered
to the Trustee herewith (and all substitutions therefor as provided by Sections
3.03, 3.04, 3.05 and 3.06 of the Pooling and Servicing Agreement), together with
the related Subsequent Mortgage Loan documents and the interest in any Property
which secured a Subsequent Mortgage Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; and
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Subsequent Mortgage Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing). The Depositor shall deliver the original
Mortgage or mortgage assignment with evidence of recording thereon (except as
otherwise provided by the Pooling and Servicing Agreement) and other required
documentation in accordance with the terms set forth in Sections 3.05 and 3.07
of the Pooling and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement shall be
borne by the Depositor.
Additional terms of the sale are attached hereto as Attachment A.
The Depositor hereby affirms the representations and warranties set
forth in the Pooling and Servicing Agreement that relate to the Depositor and
the Subsequent Mortgage Loans as of the date hereof. The Depositor hereby
delivers notice and confirms that each of the conditions set forth in Section
3.08(b) to the Pooling and Servicing Agreement are satisfied as of the date
hereof.
All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified, confirmed and incorporated herein, provided that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Pooling and Servicing Agreement.
C-1
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
AMRESCO RESIDENTIAL SECURITIES CORPORATION
as Depositor
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.
as Seller
By:
------------------------------
Name:
-----------------------------
Title:
-----------------------------
THE CHASE MANHATTAN BANK, as Trustee for
AMRESCO Residential Securities Corporation Mortgage Loan
Trust 1996-5
By:
--------------------------------
Name:
-----------------------------
Title:
-----------------------------
Dated:
--------------------------------
C-2
EXHIBIT D
FORM OF CERTIFICATE RE: MORTGAGE LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
I, __________________________, _______________ of AMRESCO Residential
Capital Markets, Inc., hereby certify that between the Cut-Off Date and the
Startup Day, the following Schedule of Mortgage Loans have been prepaid in full.
Capitalized terms not defined herein shall have the meanings ascribed thereto in
the Pooling and Servicing Agreement dated as of December 1, 1996 among AMRESCO
Residential Securities Corporation, as Depositor, AMRESCO Residential Capital
Markets, Inc., as Seller, Advanta Mortgage Corp., USA and Option One Mortgage
Corporation, as the Servicers and The Chase Manhattan Bank, as Trustee).
Account Original Current Date Paid
Number Name Amount Balance Off
------ ---- ------ ------- ---
Dated: December __, 1996
AMRESCO RESIDENTIAL MORTGAGE
CORPORATION
By:
---------------------------
Title:
---------------------------
D-1
EXHIBIT E
FORM OF CUSTODIAN'S RECEIPT
CUSTODIAN'S ACKNOWLEDGEMENT OF RECEIPT
Bankers Trust Company of California, N.A., a national banking
association, in its capacity as custodian (the "Custodian") under that certain
Custodial Agreement dated as of December 1, 1996 (the "Custodial Agreement")
among AMRESCO Residential Securities Corporation, as Depositor, AMRESCO
Residential Capital Markets, Inc., as Seller (the "Seller"), Advanta Mortgage
Corp. USA and Option One Mortgage Corporation, as Servicers, The Chase Manhattan
Bank, as Trustee and the Custodian, hereby acknowledges receipt (subject to
review as required by Section 2.3(c) of the Custodial Agreement) of the items
delivered to it by the Seller and the Depositor with respect to the Mortgage
Loans pursuant to Section 2.3 of the Custodial Agreement.
The Schedule of Mortgage Loans for the Initial Mortgage Loans in Group
I and Group II is attached to this Receipt.
The Custodian hereby additionally acknowledges that it shall review
such items as required by Section 2.3 of the Custodial Agreement and shall
otherwise comply with Section 2.3 of the Custodial Agreement as required
thereby.
BANKERS TRUST OF CALIFORNIA, N.A., as
Custodian
By:
-----------------------------------
Title:
------------------------------
Dated: December __, 1996
E
EXHIBIT F
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
WHEREAS, the undersigned is an Authorized Officer of Bankers Trust
Company of California, N.A., a national banking association, acting in its
capacity as custodian (the "Custodian") of a certain pool of mortgage loans (the
"Pool") heretofore conveyed in trust to The Chase Manhattan Bank, as trustee
(the "Trustee"), pursuant to that certain Custodial Agreement dated as of
December 1, 1996 (the "Custodial Agreement") among the Custodian, AMRESCO
Residential Securities Corporation, as Depositor, AMRESCO Residential Capital
Markets, Inc., as Seller (the "Seller"), Advanta Mortgage Corp. USA and Option
One Mortgage Corporation, as Servicers, and the Trustee; and
WHEREAS, the Custodian is required, pursuant to Section 2.3(c) of the
Custodial Agreement, to review the Mortgage Files relating to the Pool within a
specified period following the Startup Day and to notify the Seller promptly of
any defects with respect to the Pool, and the Seller is required to remedy such
defects or take certain other action, all as set forth in Section 2.3(b) of the
Custodial Agreement; and
WHEREAS, Section 2.3(c) of the Custodial Agreement requires the
Custodian to deliver this Pool Certification upon the satisfaction of certain
conditions set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined
that all required documents (or certified copies of documents listed in Section
2.3(b) of the Custodial Agreement) other than Mortgage Loan paid in full or
otherwise specified on the Exception Report attached hereto have been executed
or received, and that such documents relate to the Mortgage Loans identified in
the Schedules of Mortgage Loans pursuant to Section 2.3(b) of the Custodial
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Mortgage Loans, any remedial action by the
Seller pursuant to Section 2.3(b) of the Custodial Agreement has been completed.
The Custodian makes no certification hereby, however, with respect to any
intervening assignments or assumption and modification agreements.
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.
By:
-----------------------------------
Title:
------------------------------
Dated: December 18, 1996
F
EXHIBIT G
FORM OF DELIVERY ORDER
DELIVERY ORDER
The Chase Manhattan Bank, as Trustee
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trustee Department
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated
as of December 1, 1996 (the "Pooling and Servicing Agreement") among AMRESCO
Residential Securities Corporation, as Depositor, AMRESCO Residential Capital
Markets, Inc., as Seller, Advanta Mortgage Corp. USA and Option One Mortgage
Corporation, as Servicers, and The Chase Manhattan Bank, a New York banking
corporation, as Trustee (the "Trustee"), the Depositor HEREBY CERTIFIES that all
conditions precedent to the issuance of the AMRESCO Residential Securities
Corporation Mortgage Loan Trust 1996-5, Mortgage Loan Pass-Through Certificate,
Class A, Class S, Class B-10 and Class R (the "Certificates"), HAVE BEEN
SATISFIED, and HEREBY REQUESTS YOU TO AUTHENTICATE AND DELIVER said Certificates
in accordance with Schedule 1 attached hereto, and to RELEASE said Certificates
to the owners thereof, or otherwise upon their order.
Very truly yours,
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
By:
------------------------------------
Title:
-------------------------------
Dated: December __, 1996
G-1
EXHIBIT H
[RESERVED]
H-1
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of ] [the United States], on behalf of which he
makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will
not be a "disqualified organization" as of [date of transfer] (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any foreign government, any international organization, any
agency or instrumentality of any of the foregoing (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this day of , .
[NAME OF INVESTOR]
By:
---------------------------
[Name of Officer]
[Title of Officer]
I-1
[Corporate Seal]
Attest:
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known
or proved to be the same person who executed the foregoing instrument and to be
the [Title of Officer] of the Investor, and acknowledged to me that he executed
the same as his free act and deed and the free act and deed of the Investor.
Subscribed and sworn before me this day of , .
----- ------------- ----
NOTARY PUBLIC
COUNTY OF
STATE OF
My commission expires the day of , .
--- ---------------- ----
I-2
EXHIBIT J
FORM OF NOTICE
TO: [_________________________________]
RE: AMRESCO Residential Securities Corporation Mortgage Loan Trust 1996-5
Mortgage Loan Pass-Through Certificate, Class A
Policy No.
Determination Date:
Payment Date:
We refer to that certain Pooling and Servicing Agreement by and between AMRESCO
Residential Capital Markets, Inc., as Seller, AMRESCO Residential Securities
Corporation, as Depositor, and Advanta Mortgage Corp. USA and Option One
Mortgage Corporation, as Servicers, The Chase Manhattan Bank, as Trustee (the
"Trustee"), relating to AMRESCO Residential Securities Corporation Mortgage Loan
Trust 1996-5 and dated as of December 1, 1996; all capitalized terms not
otherwise defined herein shall have the same respective meanings as set forth in
such Pooling and Servicing Agreement.
An Insured Payment, as defined in the Pooling and Servicing Agreement, is
required to be paid and, pursuant to Section 7.08(b) of the Pooling and
Servicing Agreement, this statement constitutes a claim for such Insured Payment
in the amount of $ under the Policy.
THE CHASE MANHATTAN BANK, as Trustee
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Telephone Number:
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EXHIBIT L
FORM OF CUSTODIAL AGREEMENT
CUSTODIAL AGREEMENT
THIS CUSTODIAL AGREEMENT (as amended and supplemented from time to time, the
"Agreement"), dated as of December 1, 1996 by and among The Chase Manhattan
Bank, not individually, but solely as Trustee (including its successors under
the Pooling and Servicing Agreement defined below, the "Trustee"), AMRESCO
Residential Capital Markets, Inc. (the "Seller"), Option One Mortgage
Corporation as a Servicer and Advanta Mortgage Corp. USA as a Servicer
(including their successors under the Pooling and Servicing Agreement,
collectively, the "Servicers"), AMRESCO Residential Securities Corporation (the
"Depositor") and Bankers Trust Company of California, N.A. (together with any
successor in interest or any successor appointed hereunder, the "Custodian").
W I T N E S S E T H T H A T
WHEREAS, the Seller, the Servicers, the Trustee and the Depositor have entered
into a Pooling and Servicing Agreement dated as of December 1, 1996 relating to
the issuance of AMRESCO Residential Securities Corporation Mortgage Loan
Pass-Through Certificates, Series 1996-5 (as amended and supplemented from time
to time, the "Pooling and Servicing Agreement"); and
WHEREAS, the Custodian has agreed to act as agent for the Trustee for the
purposes of receiving and holding certain documents and other instruments
delivered by the Depositor, the Seller and the Servicers under the Pooling and
Servicing Agreement, all upon the terms and conditions and subject to the
limitations hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter set forth, the Trustee, the Seller, the Servicers, the
Depositor and the Custodian hereby agree as follows:
ARTICLE I Definitions
Capitalized terms used in this Agreement and not defined herein shall
have the meanings assigned in the Pooling and Servicing Agreement, unless
otherwise required by the context herein.
ARTICLE II Custody of Mortgage Documents
Section 2.1. Custodian to Act as Agent; Acceptance of Custodial Files.
The Custodian, as the duly appointed agent of the Trustee for these
purposes, acknowledges receipt of the Notes, the Mortgages, the assignments and
other documents relating to the Mortgage Loans identified on the schedule
attached hereto and delivered to it and declares that it holds and will hold
such Notes, Mortgages, assignments and other documents and any similar documents
received by the Custodian subsequent to the date hereof (the "Custodial Files")
as agent for the Trustee, in trust, for the use and benefit of all present and
future Owners of the Certificates and MBIA Insurance Corporation (the
"Certificate Insurer").
Section 2.2. Recordation of Assignments.
If any Custodial File includes one or more assignments to the Trustee
of Notes and related Mortgages that have not been recorded, each such assignment
shall be delivered by the Custodian to the Seller for the purpose of recording
it in the appropriate public office for real property records (unless the
Originator is Option One, in which case Option One shall so submit such
assignments), and the Seller or Option One, as applicable, at no expense to the
Custodian, shall promptly cause to be recorded in the appropriate public office
for real property records each such assignment and, upon receipt thereof from
such public office, shall return each such assignment to the Custodian.
Section 2.3. Review of Custodial Files.
(a) The Custodian agrees, for the benefit the Certificate Insurer and
the Owners of the Certificates, to review, in accordance with the provisions of
Section 2.3(b) hereof each Custodial File. If in performing the review required
by this Section 2.3 the Custodian finds any document or documents constituting a
part of a Custodial File to be missing or defective, the Custodian shall
promptly so notify the Seller, the Servicers, the Depositor, the Trustee and the
Certificate Insurer.
(b) In connection with the transfer and assignment of the Initial
Mortgage Loans and prior to each Subsequent Transfer Date with respect to the
Qualified Replacement Mortgage or Subsequent Mortgage Loan, the Depositor agrees
to:
(i) deliver without recourse to the Custodian, on behalf of
the Trustee, on the Startup Day with respect to each Initial Mortgage
Loan or on each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgage or Subsequent Mortgage Loans, (A) the original
Notes endorsed in blank or to the order of the Trustee, (B) the
original title insurance policy or any one of an original title binder,
an original preliminary title report or an original title commitment or
a copy of any of the foregoing certified by the issuer of the title
insurance policy, or the attorney's opinion of title, (C) originals or
certified copies of all intervening recorded assignments, showing a
complete chain of title from origination to the Trustee, if any, with
evidence of recording thereon, (D) originals of all assumption,
modification, written assurance or substitution agreements, if any and
(E) either: (1) the original Mortgage, with evidence of recording
thereon, (2) a certified copy if such original Mortgage has not been
returned by the applicable recording office, or (3) a copy of the
Mortgage certified by the public recording office in those instances
where the original recorded Mortgage has been lost;
(ii) cause the Custodian on behalf Trustee, within 60 days
following the Startup Day with respect to the Initial Mortgage Loans or
on each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgages or Subsequent Mortgage Loans to complete the
assignments of the Mortgages to "The Chase Manhattan Bank, as Trustee
of AMRESCO Residential Securities Corporation Mortgage Loan Trust
1996-5 under the Pooling and Servicing Agreement dated as of December
1, 1996" to be submitted to the Seller for recording in the appropriate
jurisdictions (unless the Originator is Option One, in which case
Option One shall so submit such assignments for recording in the
appropriate jurisdictions); provided, however, that the Depositor shall
not be required to cause the Trustee to complete and cause the related
Originator (if the Originator is Option One) or the Seller to record an
assignment for any Mortgage with respect to a Property located in
California or with respect to which the original recording information
is lacking;
(iii) if not delivered on the Startup Day, deliver the title
insurance policy or title searches, the original Mortgages and such
recorded assignments, together with originals or duly
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certified copies of any and all prior assignments, to the Custodian on
behalf of the Trustee within 15 days of receipt thereof by the
Depositor (but in any event, with respect to any Mortgage as to which
original recording information has been made available to the
Depositor, within one year after the Startup Day with respect to the
Initial Mortgage Loans or on each Subsequent Transfer Date with respect
to the Qualified Replacement Mortgages or Subsequent Mortgage Loans);
and
(iv) furnish to the Trustee and the Certificate Insurer at the
Depositor's expense, an opinion of counsel with respect to the sale and
perfection of the Subsequent Mortgage Loans delivered to the Trust,
corporate and enforceability matters and an opinion of counsel as to
the tax consequences to the Trust, if any, resulting from the
conveyance of Subsequent Mortgage Loans, each in form and substance
satisfactory to the Trustee and the Certificate Insurer.
Notwithstanding anything to the contrary contained in this Section, in
those instances where the public recording office retains the original Mortgage,
the assignment of a Mortgage or the intervening assignments of the Mortgage
after it has been recorded, the Depositor shall be deemed to have satisfied its
obligations upon delivery to the Custodian on behalf of the Trustee of a copy of
such Mortgage, such assignment or assignments of such Mortgage certified by the
public recording office to be a true copy of the recorded original thereof.
Copies of all Mortgage assignments received by the Custodian on behalf
of the Trustee shall be kept in the related File.
All recording required pursuant to this Section shall be accomplished
at the expense of the Seller.
(c) The Trustee agrees to execute and deliver and to cause the
Custodian to execute and deliver on the Startup Day an acknowledgment of receipt
of the items delivered by the Seller or the Depositor in the form attached as
Exhibit E to the Pooling and Servicing Agreement, and declares that it will hold
such documents and any amendments, replacement or supplements thereto, as well
as any other assets included in the definition of Trust Estate and which are
delivered to the Trustee, as Trustee in trust upon and subject to the conditions
set forth herein for the benefit of the Owners and the Certificate Insurer. The
Trustee, and the Custodian on behalf of the Trustee agree, for the benefit of
the Owners and the Certificate Insurer, to review such items within 45 days
after the Startup Day (or, with respect to any document delivered after the
Startup Day, within 45 days of receipt and with respect to any Subsequent
Mortgage Loan or Qualified Replacement Mortgage, within 45 days after the
Subsequent Transfer Date) and to deliver to the Depositor, the Seller, the
related Servicer and the Certificate Insurer a certification in the form
attached to the Pooling and Servicing Agreement as Exhibit F thereto (a "Pool
Certification") to the effect that, as to each Mortgage Loan listed in the
Schedule of Mortgage Loans (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in such Pool Certification as not covered
by such Pool Certification), (i) all documents required to be delivered to it
pursuant to Section 3.05(b)(i) of the Pooling and Servicing Agreement are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing documents, the information set
forth on items (1), (3) and (4) of the Schedule of Mortgage Loans accurately
reflects the information set forth in the File. Neither the Trustee nor the
Custodian shall have any responsibility for reviewing any File except as
expressly provided in subsection 3.06(a) of the Pooling and Servicing Agreement.
Without limiting the effect of the preceding sentence, in reviewing any File,
neither the Trustee nor the Custodian shall have any responsibility for
determining whether any document is valid and binding, whether the text of any
assignment is in proper form (except to determine if the Trustee is the
assignee), whether any document (other than the assignments) has been recorded
in accordance with the requirements of any applicable jurisdiction or whether a
blanket assignment is permitted in any applicable
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jurisdiction, but shall only be required to determine whether a document has
been executed, that it appears to be what it purports to be, and, where
applicable, that it purports to be recorded. Neither the Trustee nor the
Custodian shall be under any duty or obligation to inspect, review or examine
any such documents, instruments, certificates or other papers to determine that
they are genuine, enforceable, or appropriate for the represented purpose or
that they are other than what they purport to be on their face, nor shall either
the Trustee or the Custodian be under any duty to determine independently
whether there are any intervening assignments or assumption or modification
agreements with respect to any Mortgage Loan.
Section 2.4. Custodian to Cooperate; Release of Custodial Files.
Upon the payment in full of any Mortgage Loan, or the receipt by either
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, such Servicer shall immediately notify the
Custodian by a certification (which certification shall include a statement to
the effect that all amounts received or to be received in connection with such
payment which are required to be deposited in the Principal and Interest Account
pursuant to Section 8.8 of the Pooling and Servicing Agreement have been or will
be so deposited) of an officer of the Servicer and shall request delivery to it
of the Custodial File. The Custodian agrees, upon receipt of such certification
and request, promptly to release the related Custodial File to such Servicer
within three days.
From time to time as is appropriate for the servicing or foreclosure of
any Mortgage Loan, each Servicer shall deliver to the Custodian a certificate of
an officer of the related Servicer requesting that possession of all or any
document constituting part of the Custodial File be released to such Servicer
and certifying as to the reason for such release and that such release will not
invalidate any insurance coverage provided in respect of the Mortgage Loan. With
such certificate, the related Servicer shall deliver to the Custodian a receipt
signed by an officer of the Servicer on behalf of the Servicer, and within three
days of receipt of the foregoing, the Custodian shall deliver the Custodial File
or such document to such Servicer and the Servicer shall hold the Custodial File
or such document in trust for the benefit of the Certificate Insurer and the
Owners of the Certificates. The related Servicer shall cause each Custodial File
or any document therein so released to be returned to the Custodian when the
need therefor by such Servicer no longer exists, unless (i) the Mortgage Loan
has been liquidated and the Liquidation Proceeds relating to the Mortgage Loan
have been deposited in the Principal and Interest Account to the extent required
by the Pooling and Servicing Agreement or (ii) the Custodial File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal
action or other proceedings for the foreclosure of the Property either
judicially or non-judicially, and such Servicer has delivered to the Custodian a
certificate of an officer of the Servicer certifying as to the name and address
of the Person to which such Custodial File or such document were delivered and
the purpose or purposes of such delivery. The Custodian shall deliver such
receipt with respect thereto to the related Servicer upon receipt of notice from
such Servicer that it has deposited the related Liquidation Proceeds in the
Principal and Interest Account to the extent required by the Pooling and
Servicing Agreement.
Section 2.5. Assumption Agreements.
In the event that any assumption agreement or substitution of liability
agreement is entered into with respect to any Mortgage Loan subject to this
Agreement in accordance with the terms and provisions of the Pooling and
Servicing Agreement, the related Servicer shall notify the Custodian and the
Certificate Insurer that such assumption or substitution agreement has been
completed by forwarding to the Custodian and the Certificate Insurer the
original of such assumption or substitution agreement, which copy shall
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be added to the related Custodial File and, for all purposes, shall be
considered a part of such Custodial File to the same extent as all other
documents and instruments constituting parts thereof.
ARTICLE III Concerning the Custodian
Section 3.1. Custodian a Bailee and Agent of the Trustee.
With respect to each Note, Mortgage and other documents constituting
each Custodial File which are delivered to the Custodian, the Custodian is
exclusively the bailee and agent of the Trustee, holds such documents for the
benefit of the Owners of the Certificates and the Certificate Insurer and
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. Except upon compliance with the provisions of Section
2.4 of this Agreement, no Note, Mortgage or other document constituting a part
of a Custodial File shall be delivered by the Custodian to a Servicer or
otherwise released from the possession of the Custodian.
Section 3.2. Indemnification.
Neither the Custodian nor any of its directors, officers, agents or
employees, shall be liable for any action taken or omitted to be taken by it or
them hereunder or in connection herewith in good faith and believed by it or
them to be within the purview of this Custodial Agreement, except for its or
their own negligence, lack of good faith or willful misconduct. In no event
shall the Custodian or its directors, officers, agents and employees be held
liable for any special, indirect or consequential damages resulting from any
action taken or omitted to be taken by it or them hereunder or in connection
herewith even if advised of the possibility of such damages.
The Seller agrees to indemnify and hold the Custodian and its
directors, officers, agents and employees harmless against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including
reasonable attorney's fees, that may be imposed on, incurred by or asserted
against it or them in any way relating to or arising out of this Custodial
Agreement or any action taken or not taken by it or them hereunder unless such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements were imposed upon, incurred by or asserted
against the Custodian because of the breach by the Custodian of its obligations
hereunder, which breach was caused by negligence, lack of good faith or willful
misconduct on the part of the Custodian or any of its directors, officers,
agents or employees. The foregoing indemnification shall survive any termination
of this Custodial Agreement and the resignation or termination of the Custodian
hereunder.
Section 3.3 Reliance of Custodian.
In the absence of bad faith on the part of the Custodian, the Custodian
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any request, instructions, certificate,
opinion or other document furnished to the Custodian, reasonably believed by the
Custodian to be genuine and to have been signed or presented by the proper party
or parties and conforming to the requirements of this Agreement; but in the case
of any loan document or other request, instruction, document or certificate
which by any provision hereof is specifically required to be furnished to the
Custodian, the Custodian shall be under a duty to examine the same to determine
whether or not it conforms to the requirements of this Agreement.
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Section 3.4. Custodian May Own Certificates.
The Custodian 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 Custodian.
Section 3.5. Custodian's Fees and Expenses.
The Seller covenants and agrees to pay to the Custodian from time to
time, and the Custodian shall be entitled to, reasonable compensation for all
services rendered by it in the exercise and performance of any of the powers and
duties hereunder of the Custodian, and the Seller will pay or reimburse the
Custodian upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Custodian in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ), except any such expense, disbursement or advance as may arise from
its negligence or bad faith.
Section 3.6. Custodian May Resign; Trustee May Remove Custodian.
The Custodian may, with the consent of the Certificate Insurer, resign
from the obligations and duties hereby imposed upon it as such obligations and
duties relate to its acting as Custodian of the Mortgage Loans upon giving 60
days written notice to the Trustee. Upon receiving such notice of resignation,
the Trustee shall either take custody of the Custodial Files itself and give
prompt notice thereof to the Seller, the Servicers, the Depositor, the
Certificate Insurer and the Custodian or promptly appoint a successor Custodian
acceptable to the Certificate Insurer by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Custodian and one
copy to the successor Custodian. If the Trustee shall not have taken custody of
the Custodial Files and no successor Custodian shall have been so appointed and
have accepted resignation, the resigning Custodian may petition any court of
competent jurisdiction for the appointment of a successor Custodian.
The Trustee may, with the consent of the Certificate Insurer, or shall
at the direction of the Certificate Insurer, remove the Custodian at any time
for cause, or otherwise the Trustee may remove the Custodian at any time upon
giving 60 days written notice. In such event, the Trustee shall appoint, or
petition a court of competent jurisdiction to appoint, a successor Custodian
hereunder. Any successor Custodian shall be a depository institution subject to
supervision or examination by federal or state authority, shall be approved by
the Certificate Insurer and shall be able to satisfy the other requirements
contained in Section 3.8.
Any resignation or removal of the Custodian and appointment of a
successor Custodian pursuant to any of the provisions of this Section 3.6 shall
become effective upon acceptance of appointment by the successor Custodian. The
Trustee shall give prompt notice to the Depositor, the Seller, the Servicers,
the Certificate Insurer and the Custodian of the appointment of any successor
Custodian. No successor Custodian shall have been appointed and accepted
appointment by the Trustee without the prior approval of the Depositor, the
Seller, the Servicers, the Certificate Insurer, and the Custodian.
Section 3.7. Merger or Consolidation of Custodian.
Any Person into which the Custodian may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Custodian shall be a party, or any
Person succeeding to the business of the Custodian, shall be the
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successor of the Custodian 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.
Section 3.8. Representations of the Custodian.
The Custodian hereby represents that it is a depository institution
subject to supervision or examination by a federal or state authority, has a
combined capital and surplus of at least $50,000,000 and is qualified to do
business in the jurisdiction in which it will hold any Custodian File.
ARTICLE IV Miscellaneous Provisions
Section 4.1. Notices.
All notices, requests, consents and demands and other communications
required under this Agreement or pursuant to any other instrument or document
delivered hereunder shall be in writing and shall be deemed given when properly
delivered, at the addresses specified below (unless changed by the particular
party whose address is stated herein by similar notice in writing):
The Trustee: The Chase Manhattan Bank
-----------
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Structured Finance/MBS
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Depositor: AMRESCO Residential Securities Corporation
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▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ #▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Seller: AMRESCO Residential Capital Markets, Inc.
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c/o AMRESCO Residential Credit Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Servicers: Advanta Mortgage Corp. USA
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▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Senior Vice President - Loan Servicing
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: 619) ▇▇▇-▇▇▇▇
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The Servicers: (cont.) Option One Mortgage Corporation
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▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Custodian: Bankers Trust Company of California, N.A.
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▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: AMRESCO Residential Securities
Corporation 96-5 Custodian
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Certificate
Insurer: MBIA Insurance Corporation
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▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Insured Portfolio AMRESCO
Residential Securities Corporation
Mortgage Loan Trust 1996-5
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 4.2. Amendments.
No modification or amendment of or supplement to this Agreement shall
be valid or effective unless the same is in writing and signed by the
Certificate Insurer and all parties hereto, and neither the Seller, the
Servicers, the Depositor nor the Trustee shall enter into any amendment hereof
except as permitted by the Pooling and Servicing Agreement. The Trustee shall
give prompt notice to the Custodian of any amendment or supplement to the
Pooling and Servicing Agreement and furnish the Custodian with written copies
thereof.
Section 4.3. Governing Law.
This Agreement shall be deemed a contract made under the laws of the
State of [California] and shall be construed and enforced in accordance with and
governed by the laws of the State of [California].
Section 4.4. Recordation of Agreement.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicers and at their expense on direction by the Trustee, but only upon
direction accompanied by an opinion of counsel to the effect that such
recordation materially and beneficially affects the interests of the Owners of
the Certificates.
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
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counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
Section 4.5. 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 Owners thereof.
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IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
THE CHASE MANHATTAN BANK,
as Trustee
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
AMRESCO RESIDENTIAL CAPITAL
MARKETS, INC., as Seller
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
OPTION ONE MORTGAGE
CORPORATION,
as a Servicer
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
ADVANTA MORTGAGE CORP. USA,
as a Servicer
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
AMRESCO RESIDENTIAL SECURITIES
CORPORATION, as Depositor
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A. , as Custodian
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
STATE OF )
): ss.:
COUNTY OF )
On the ___ day of December, 1996, before me personally came
______________, to me known, who, being by me duly sworn did depose and say that
he/she resides at ____________________; that he/she is a ____________________ of
The Chase Manhattan Bank, a New York banking corporation described in and that
executed the above instrument as Trustee; and that he/she signed his/her name
thereto by order of the Board of Directors of said banking corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of December, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________, _____________________________; that
he/she is a ____________________ of AMRESCO Residential Capital Markets, Inc., a
Delaware Corporation; and that he signed his name thereto by order of the Board
of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of December, 1996, before me personally came ___________
____________________________, to me known, who, being by me duly sworn, did
depose and say that he/she resides at __________________________,
____________________, _______________________; that he/she is the
____________________ of Option One Mortgage Corporation, a _______________
corporation; and that he signed his name thereto by order of the Board of
Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of December, 1996, before me personally came____________
____________________________, to me known, who, being by me duly sworn, did
depose and say that he/she resides at __________________________,
____________________, _______________________; that he is the
__________________________________ of Advanta Mortgage Corp. USA, a Delaware
Corporation; and that he/she signed his name thereto by order of the respective
Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of December, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________, _____________________________; that
he/she is a ____________________ of AMRESCO Residential Securities Corporation,
a Delaware Corporation; and that he signed his name thereto by order of the
Board of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public
STATE OF )
: ss.:
COUNTY OF )
On the ___ day of December, 1996, before me personally came
__________________, to me known, who, being by me duly sworn, did depose and say
that he/she resides at ________________, _____________________________; that
he/she is a ____________________ of Bankers Trust Company of California, N.A, a
national banking association; and that he signed his name thereto by order of
the Board of Directors of said national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
Notary Public