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Exhibit 4.3.3
DB Draft 12/3/98
TRUST C
SALE AND SERVICING AGREEMENT
Among
ADVANTA MORTGAGE LOAN TRUST 1998-4C,
as Issuer,
ADVANTA MORTGAGE CONDUIT SERVICES, INC.,
as Sponsor,
ADVANTA MORTGAGE CORP. USA,
as Master Servicer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
Dated as of November 1, 1998
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TABLE OF CONTENTS
(Not a Part of this Agreement)
Page
Parties................................................................................................. 1
Recitals................................................................................................ 1
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION............................................................ 2
Section 1.1. Definitions........................................................................... 2
Section 1.2. Use of Words and Phrases.............................................................. 14
Section 1.3. Captions; Table of Contents........................................................... 14
Section 1.4. Opinions.............................................................................. 14
ARTICLE II CONVEYANCE OF MORTGAGE LOANS................................................................. 14
Section 2.1. Conveyance of the Mortgage Loans...................................................... 14
Section 2.2. Acceptance by the Issuer; Certain Substitutions of Mortgage Loans; Certification by
Indenture Trustee.................................................................. 16
Section 2.3. Cooperation Procedures................................................................ 18
Section 2.4. [Reserved]............................................................................ 18
Section 2.5. Retransfers of Mortgage Loans at Election of Sponsor.................................. 18
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SPONSOR AND THE MASTER SERVICER............ 19
Section 3.1. Representations and Warranties of the Sponsor......................................... 19
Section 3.2. Representations and Warranties of the Master Servicer................................ 21
Section 3.3. Representations and Warranties of the Sponsor with Respect to the Mortgage Loans...... 23
Section 3.4. Covenants of Sponsor to Take Certain Actions with Respect to the Mortgage Loans In
Certain Situations................................................................. 24
ARTICLE IV SERVICING AND ADMINISTRATION OF MORTGAGE LOANS............................................... 25
Section 4.1. Master Servicer and Sub-Servicers..................................................... 25
Section 4.2. Collection of Certain Mortgage Loan Payments.......................................... 27
Section 4.3. Sub-Servicing Agreements Between Master Servicer and Sub-Servicers.................... 27
Section 4.4. Successor Sub-Servicers............................................................... 28
Section 4.5. Liability of Master Servicer.......................................................... 28
Section 4.6. No Contractual Relationship Between Sub-Servicer and Indenture Trustee or the Class C
Noteholders........................................................................ 28
Section 4.7. Assumption or Termination of Sub-Servicing Agreement by Indenture Trustee............. 28
Section 4.8. Trust C Principal and Interest Account................................................ 28
Section 4.9. Delinquency Advances, Compensating Interest and Servicing Advances.................... 30
Section 4.10. Purchase of Mortgage Loans........................................................... 31
Section 4.11. Maintenance of Insurance............................................................. 31
Section 4.12. Due-on-Sale Clauses; Assumption and Substitution Agreements.......................... 32
Section 4.13. Realization Upon Defaulted Mortgage Loans............................................ 33
Section 4.14. Indenture Trustee to Cooperate; Release of Files..................................... 34
Section 4.15. Servicing Compensation............................................................... 35
Section 4.16. Annual Statement as to Compliance.................................................... 36
Section 4.17. Annual Independent Certified Public Accountants' Reports............................. 36
Section 4.18. Access to Certain Documentation and Information Regarding the Mortgage Loans......... 36
Section 4.19. Assignment of Agreement.............................................................. 36
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ARTICLE V SERVICING TERMINATION......................................................................... 37
Section 5.1. Events of Servicer Termination........................................................ 37
Section 5.2. Inspections by the Note Insurer and the Indenture Trustee; Errors and Omissions
Insurance.......................................................................... 41
Section 5.3. Merger, Conversion, Consolidation or Succession to Business of Master Servicer........ 42
Section 5.4. Notices of to Class C Noteholders..................................................... 42
ARTICLE VI ADMINISTRATIVE DUTIES OF THE MASTER SERVICER................................................. 42
Section 6.1. Administrative Duties with Respect to the Indenture................................... 42
Section 6.2. Records............................................................................... 44
Section 6.3. Additional Information to be Furnished to the Issuer.................................. 44
ARTICLE VII MISCELLANEOUS............................................................................... 44
Section 7.1. Compliance Certificates and Opinions.................................................. 44
Section 7.2. Form of Documents Delivered to the Indenture Trustee.................................. 45
Section 7.3. Acts of Class C Noteholders........................................................... 45
Section 7.4. Notices, etc., to Indenture Trustee................................................... 46
Section 7.5. Notices and Reports to Class C Noteholders; Waiver of Notices......................... 46
Section 7.6. Rules by Indenture Trustee and Sponsor................................................ 47
Section 7.7. Successors and Assigns................................................................ 47
Section 7.8. Severability.......................................................................... 47
Section 7.9. Benefits of Agreement................................................................. 47
Section 7.10. Legal Holidays....................................................................... 47
Section 7.11. Governing Law........................................................................ 47
Section 7.12. Counterparts......................................................................... 47
Section 7.13. Usury................................................................................ 47
Section 7.14. Amendment............................................................................ 48
Section 7.15. The Note Insurer..................................................................... 49
Section 7.16. Notices.............................................................................. 49
Section 7.17. Limitation of Liability.............................................................. 50
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SCHEDULE I -- Schedules of Mortgage Loans
EXHIBIT A -- Form of Contents of Mortgage Loan File
EXHIBIT B -- Form of Certificate Re: Mortgage Loans Prepaid in Full
EXHIBIT C -- Form of Indenture Trustee's Acknowledgement of Receipt
EXHIBIT D -- Form of Certification
EXHIBIT E -- Form of Delivery Order
EXHIBIT F -- Form of Power of Attorney
EXHIBIT G -- Form of Monthly Report
EXHIBIT H -- Form of Master Servicer's Trust Receipt
EXHIBIT I -- Reserved
EXHIBIT J -- Form of Addition Notice
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SALE AND SERVICING AGREEMENT, relating to ADVANTA MORTGAGE LOAN TRUST
1998-4C (the "Trust" or "Issuer"), dated as of November 1, 1998, by and among
ADVANTA MORTGAGE CONDUIT SERVICES, INC., a Delaware corporation, in its capacity
as sponsor of the Issuer (the "Sponsor"), ADVANTA MORTGAGE CORP. USA, a Delaware
corporation, in its capacity as master servicer (the "Master Servicer"), and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A., a national banking association, in
its capacity as indenture trustee (the "Indenture Trustee").
WHEREAS, the Issuer desires to purchase a portfolio of the Mortgage Loans
(as defined herein) originated by the Originators (as defined herein);
WHEREAS, the Sponsor has purchased such Mortgage Loans from the
Originators and is willing to sell such Mortgage Loans to the Issuer;
WHEREAS, the Master Servicer has agreed to service the Mortgage Loans,
which constitute the principal assets of the trust estate; and
WHEREAS, Ambac Assurance Corporation (the "Note Insurer") 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 Sponsor, the Master Servicer, the Issuer and the Indenture
Trustee hereby agree as follows:
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ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.1. DEFINITIONS. For all purposes of this Agreement, the
following terms shall have the meanings set forth below, unless the context
clearly indicates otherwise. In addition, capitalized terms used herein and not
defined herein shall have their respective meanings as set forth in the
Indenture:
"Accepted Servicing Practices": The Master Servicer's normal servicing
practices in servicing and administering mortgage loans for its own account,
which in general will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgage Loans in the jurisdictions in which the related
Properties are located and will give due consideration to the Class C
Noteholders' reliance on the Master Servicer.
"Advanta Mortgage Files": For any Mortgage Loan identified on the related
Schedule of Mortgage Loans with an "A" code, the items listed as (a), (b), (c),
(d) and (f) on Exhibit A hereto.
"Advanta Servicing Fee": With respect to any Mortgage Loan that is not an
Unaffiliated Originator Loan, an amount retained by the Master Servicer or by
any successor thereto as compensation for servicing and administration duties
relating to such Mortgage Loan pursuant to Section 4.15 hereof and equal to
0.50% per annum of the then outstanding Loan Balance of such Mortgage Loan as of
the opening of business on the first day of each calendar month payable on a
monthly basis.
"Affiliated Originators": Advanta Mortgage Corp. USA, a Delaware
corporation, Advanta Mortgage Corp. Midatlantic, a Pennsylvania corporation,
Advanta Mortgage Corp. Midatlantic II, a Pennsylvania corporation, Advanta
Mortgage Corp. Midwest, a Pennsylvania corporation, Advanta Mortgage Corp. of
New Jersey, a New Jersey corporation, Advanta Mortgage Corp. Northeast, a New
York corporation, Advanta National Bank, a national banking association, Advanta
Finance Corp., a Nevada corporation.
"Agreement": This Trust C Sale and Servicing Agreement, as it may be
amended from time to time, and including the Exhibits and Schedules attached
hereto.
"AMHC": Advanta Mortgage Holding Company, a Delaware corporation and the
corporate parent of Advanta Mortgage Corp. USA, and the indirect corporate
parent of Advanta Mortgage Conduit Services, Inc.
"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 person who is
authorized to act for such Person in matters relating to this Agreement, and
whose action is binding upon such Person and, with respect to the Indenture
Trustee, the Sponsor, the Issuer and the Master Servicer, initially including
those individuals whose names appear on the lists of Authorized Officers
delivered on the Closing Date.
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"Balloon Loan": Any Mortgage Loan which has an amortization schedule which
extends beyond its maturity date, resulting in a relatively large unamortized
principal balance due in a single payment at maturity.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in the State of New York, the State of
California or in the city in which the principal corporate trust office of the
Indenture Trustee is located, are authorized or obligated by law or executive
order to be closed.
"Class A Note": Any note designated as a "Class A Note" on the face
thereof.
"Class B Note": Any note designated as a "Class B Note" on the face
thereof.
"Class C Deficiency Amount": As defined in the Trust C Indenture.
"Class C Note": Any note designated as a "Class B Note" on the face
thereof.
"Class C Note Principal Balance": As of the Closing Date, $100,000,000. As
of any Payment Date with respect to the Class C Certificates, the Class C Note
Principal Balance as of the Closing Date less any amounts actually distributed
theretofor as principal thereon to the Class C Notes on all prior Payment Dates.
"Class C Noteholders": The holders of the Class C Notes.
"Closing Date": November 24, 1998.
"Code": The Internal Revenue Code of 1986, as amended and any successor
statute.
"Combined Loan-to-Value Ratio": With respect to any First Mortgage Loan,
the percentage equal to the Original Principal Amount of the related Note
divided by the Appraised Value of the related Property and with respect to any
Second Mortgage Loan, the percentage equal to (a) the sum of (i) the remaining
principal balance, as of origination of the Second Mortgage Loan of the Senior
Lien note(s) relating to such Second Mortgage Loan and (ii) the Original
Principal Amount of the Note relating to such Second Mortgage Loan divided by
(b) the Appraised Value.
"Compensating Interest": As defined in Section 4.9(b) hereof.
"Conduit Acquisition Trust": The trust described in the Pooling and
Servicing Agreement dated as of May 1, 1997 among the Sponsor, Bankers Trust
Company of California, N.A., as trustee, Advanta Mortgage Corp. USA, as the
master servicer, and the "Borrowers" named therein.
"Conduit Mortgage Files": For any Mortgage Loan identified on the related
Schedule of Mortgage Loans with a "B" code, the items listed on Exhibit A
hereto.
"Control Party": Until the last sentence of Section 7.15 hereof is
applicable and so long as no Note Insurer Default has occurred and is
continuing, the Note Insurer, and thereafter, the Indenture Trustee.
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"Coupon Rate": The rate of interest borne by each Note.
"Cut-Off Date": The date as of which Mortgage Loans are transferred and
assigned to the Issuer, the opening of business, November 1, 1998.
"Definitive Notes": Class C Notes issued in definitive form without
coupons.
"Delinquency Advance": As defined in Section 4.9(a) hereof.
"Delinquent": A Mortgage Loan is "delinquent" if any payment due thereon
is not made by the close of business on 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 corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit E
hereto and delivered by the Issuer to the Indenture Trustee on the Closing Date
pursuant to Section 2.2 of the Trust C Indenture.
"Depository": The Depository Trust Company, ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named.
"Designated Depository Institution": With respect to the Trust C Principal
and Interest Account, an institution whose deposits are insured by the Bank
Insurance Fund or the Savings Association Insurance Fund of the FDIC, the
long-term deposits of which shall be rated A2 or better by Moody's or A or
better by Standard & Poor's and in the highest short-term rating category for
Moody's, and Standard & Poor's unless otherwise approved in writing by the
Indenture Trustee. The Note Insurer, Moody's and Standard & Poor's, and which is
any of the following: (i) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Indenture Trustee, the Note Insurer, Moody's and Standard &
Poor's and, in each case acting or designated by the Master Servicer as the
depository institution for the Trust C Principal and Interest Account; provided,
however, that any such institution or association shall have combined capital,
surplus and undivided profits of at least $100,000,000. Notwithstanding the
foregoing, a Trust C Principal and Interest Account may be held by an
institution otherwise meeting the preceding requirements except that the only
applicable rating requirement shall be that the unsecured and uncollateralized
debt obligations thereof shall be rated Baa3 or better by Moody's or BBB or
better by Standard & Poor's if such institution has trust powers and the Trust C
Principal and Interest Account is held by such institution in its corporate
trust department.
"Determination Date": As to each Payment Date, the third Business Day
preceding such Payment Date or such earlier day as shall be agreed to by the
Note Insurer and the Indenture Trustee.
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"Direct Participant" or "DTC Participant" means any broker-dealer, bank or
other financial institution for which the Depository holds Class C Notes from
time to time as a securities depository.
"Document Delivery Requirements": The Sponsor's obligations to deliver
certain legal documents, to prepare and record certain Mortgage assignments or
to deliver certain opinions relating to Mortgage assignments, in each case with
respect to the Mortgage Loans and as set forth in Section 2.1(b) hereof.
"Eligible Investments": Those investments so designated pursuant to
Section 8.9 of the Trust C Indenture.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"File": The documents delivered to the Indenture Trustee pursuant to
Section 2.1 hereof pertaining to a particular Mortgage Loan and any additional
documents required to be added to the Advanta Mortgage File or Conduit Mortgage
File, as appropriate, pursuant to this Agreement.
"First Mortgage Loan": A Mortgage Loan which constitutes a first priority
mortgage lien with respect to any Property.
"Indemnification Agreement": The Indemnification Agreement dated as of
November 24, 1998 between Note Insurer and the Underwriter, as may be amended
from time to time.
"Indenture Trustee": Bankers Trust Company of California, N.A., located on
the date of execution of this Agreement at Bankers Trust Company, ▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, a national banking association, not in its individual
capacity but solely as Indenture Trustee under this Agreement, and any successor
hereunder.
"Indenture Trustee's Fees": With respect to any Payment Date, the product
of (x) one-twelfth of 0.007% and (y) the aggregate Loan Balance of the Mortgage
Loans as of the beginning of the related Remittance Period.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in the Class C Notes.
"Insurance Agreement": The Insurance and Indemnity Agreement dated as of
November 24, 1998 among the Sponsor, the Indenture Trustee, the Master Servicer,
Trust A, Trust B, Trust C, and the Note Insurer, as it may be amended from time
to time.
"Insurance Policy": Any hazard, title or primary mortgage insurance policy
relating to a Mortgage Loan.
"Issuer" or "Trust C": Advanta Mortgage Loan Trust 1998-4C, as created by
the Trust C Trust Agreement.
"Late Payment Rate": For any Payment Date, means the lesser of (a) the
greater of (x) the per annum rate of interest publicly announced from time to
time by Citibank, N.A. as its prime or base lending rate (any change in such
rate of interest to be effective on the date such
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change is announced by Citibank, N.A.), plus 2% per annum and (y) the then
applicable highest rate of interest on the Class C Notes and (b) the maximum
rate permissible under applicable usury or similar laws limiting interest rates.
The Late Payment Rate shall be computed on the basis of the actual number of
days elapsed over a year of 360 days.
"Liquidated Mortgage Loan": As defined in Section 4.13(b) hereof. A
Mortgage Loan which is purchased from the Issuer pursuant to Section 3.3, 3.4,
2.2(b) or 4.10 hereof is not a "Liquidated Mortgage Loan".
"Liquidation Expenses": Expenses which are incurred by the Master Servicer
or any Sub-servicer in connection with the liquidation of any defaulted Mortgage
Loan, such expenses, including, without limitation, legal fees and expenses, and
any unreimbursed Servicing Advances expended by the Master Servicer or any
Sub-servicer pursuant to Section 4.9 with respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Mortgage Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by the Master
Servicer in connection with such Liquidated Mortgage Loan, whether through
trustee's sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan, the outstanding
principal balance thereof as of the Cut-Off Date less any related Principal
Remittance Amounts relating to such Mortgage Loan included in previous related
Trust C Monthly Remittance Amounts that were transferred by the Master Servicer
or any Sub-servicer to the Indenture Trustee for deposit in the Trust C Note
Account; provided, however, (x) that the Loan Balance for any Mortgage Loan
which has become a Liquidated Mortgage 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 Mortgage Loan, and at all times thereafter and (y) the
Loan Balance "as of the Cut-Off Date" for any Mortgage Loan originated during
the period from the Cut-Off Date to the Closing Date shall be the original Loan
Balance thereof.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from
the Issuer on a Remittance Date pursuant to Section 3.3, 3.4, 2.2(b) or 4.10
hereof, an amount equal to the Loan Balance of such Mortgage Loan as of the date
of purchase, plus one month's interest on the outstanding Loan Balance thereof
as of the beginning of the preceding Remittance Period computed at the Coupon
Rate less the Servicing Fee (expressed as an annual percentage rate), if any,
together with, without duplication, the aggregate amount of (i) all delinquent
interest, all Delinquency Advances and Servicing Advances, including
Nonrecoverable Advances theretofore made with respect to such Mortgage Loan and
not subsequently recovered from the related Mortgage Loan, (ii) all Delinquency
Advances which the Master Servicer or any Sub-servicer has theretofore failed to
remit with respect to such Mortgage Loan and (iii) any Reimbursement Amount
relating to the Issuer.
"Master Servicer": Advanta Mortgage Corp. USA, a Delaware corporation, and
its permitted successors and assigns.
"Master Servicer's Trust Receipt": The Master Servicer's trust receipt in
the form set forth as Exhibit H hereto.
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"Master Servicing Fee": As to any Payment Date the product of (x)
one-twelfth of 0.50% and (y) the aggregate Loan Balances of the Unaffiliated
Originator Loans as of the opening of business on the first day of the calendar
month preceding such Payment Date.
"Master Transfer Agreement": Any one of the Master Loan Transfer
Agreements among the Sponsor and/or the Conduit Acquisition Trust, the Indenture
Trustee and one or more Originators. For purposes of this Agreement the Master
Loan Transfer Agreements are (x) the Master Loan Transfer Agreement dated as of
June 15, 1997 among the Sponsor, the Indenture Trustee and the Affiliated
Originators named therein and (y) any similar agreement with an Unaffiliated
Originator designated as a "Master Transfer Agreement" together, in either case,
with any related Conveyance Agreements (as defined therein).
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second or third lien on an estate in fee simple interest in real
property securing a Note.
"Mortgage Loans": Such of the mortgage loans transferred and assigned to
the Issuer pursuant to Section 2.1(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 Schedule of Mortgage Loans. The term
"Mortgage Loan" includes the terms "First Mortgage Loan", "Second Mortgage Loan"
and "Third Mortgage Loan". 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
Issuer. Any mortgage loan which, although intended by the parties hereto to have
been, and which purportedly was, transferred and assigned to the Issuer by the
Sponsor, in fact was not transferred and assigned to the Issuer for any reason
whatsoever shall nevertheless be considered a "Mortgage Loan" for all purposes
of this Agreement.
"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of, without duplication, Liquidation Expenses and
unreimbursed Servicing Advances, unreimbursed Delinquency Advances and accrued
and unpaid Servicing Fees through the date of liquidation relating to such
Liquidated Mortgage Loan. In no event shall Net Liquidation Proceeds with
respect to any Liquidated Mortgage Loan be less than zero.
"Nonrecoverable Advances": With respect to any Mortgage Loan, (a) any
Delinquency Advance or Servicing Advance previously made and not reimbursed
pursuant to Section 8.7 (b)(xvii) of the Indenture or Section 4.9, (b) a
Delinquency Advance or Servicing Advance proposed to be made in respect of a
Mortgage Loan or REO Property either of which, in the good faith business
judgment of the Master Servicer, as evidenced by an Officer's Certificate
delivered promptly to the Note Insurer and the Indenture Trustee following such
determination would not be ultimately recoverable pursuant to Section
8.7(b)(xvii) of the Indenture or Section 4.9 or (c) any other advance identified
as a Nonrecoverable Advance in subsection 4.8(d).
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
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"Note Account": The Note Account established in accordance with Section
8.3 of the Trust C Indenture and maintained by the Indenture Trustee.
"Note Insurer": As defined in the recitals.
"Note Insurer Default": Any one of the following events shall have
occurred and be continuing:
(a) The Note Insurer shall have failed to make a payment required under
the Note Policy;
(b) The Note Insurer shall have (i) filed a petition or commenced any case
or proceeding under any provision or chapter of the United States Bankruptcy
Code or any other similar Federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, (ii) made a general
assignment for the benefit of its creditors, or (iii) had an order for relief
entered against it under the United States Bankruptcy Code or any other similar
Federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and nonappealable; or
(c) A court of competent jurisdiction, the New York Department of
Insurance, the Wisconsin Department of Insurance, or other competent regulatory
authority shall have entered a final and nonappealable order, judgment or decree
(i) appointing a custodian, trustee, agent or receiver for the Note Insurer or
for all or any material portion of its property or (ii) authorizing the taking
of possession by a custodian, trustee, agent or receiver of the Note Insurer (or
the taking of possession of all or any material portion of the property of the
Note Insurer).
"Note Policy": The note guaranty insurance policy dated November 24, 1998
issued by the Note Insurer to the Indenture Trustee for the benefit of the Class
C Noteholders.
"Noteholders": The holders of the Class A Notes, the Class B Notes and the
Class C Notes.
"Officer's Certificate": A certificate signed by any Authorized Officer of
any Person delivering such certificate and delivered to the Indenture Trustee.
"Operative Documents": Collectively, the Master Transfer Agreements, the
Insurance Agreement, the Indemnification Agreement, and, with respect to each of
Trust A, Trust B and Trust C, the related Sale and Servicing Agreement,
Subsequent Transfer Agreements, Trust Agreement, Note Policy, Indenture and
Notes.
"Original Pool Principal Balance": The Pool Principal Balance as of the
Closing Date.
"Original Principal Amount": With respect to each Note, the principal
amount of such Note or the mortgage note relating to a Senior Lien, as the case
may be, on the date of origination thereof.
"Originator": Any entity from which the Sponsor has purchased Mortgage
Loans, or Advanta Mortgage Corp. USA, Advanta Mortgage Corp. Midatlantic,
Advanta Mortgage Corp. Midatlantic II, Advanta Mortgage Corp. Midwest, Advanta
Mortgage Corp. of
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New Jersey, Advanta Mortgage Corp. Northeast, Advanta National Bank and Advanta
Finance Corp.
"Outstanding": With respect to the Class C Notes, as of any date of
determination, all such Class C Notes theretofore executed and delivered
hereunder except:
(i) Class C Notes theretofore cancelled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation;
(ii) Class C Notes or portions thereof for which full and final
payment money in the necessary amount has been theretofore deposited with
the Indenture Trustee in trust for the Class C Noteholders;
(iii) Class C Notes in exchange for or in lieu of which other Class
C Notes have been executed and delivered pursuant to this Agreement,
unless proof satisfactory to the Indenture Trustee is presented that any
such Class C Notes are held by a bona fide purchaser; and
(iv) Class C Notes alleged to have been destroyed, lost or stolen
for which replacement Class C Notes have been issued as provided for in
Section 2.4 of the Indenture.
"Overall Event of Servicer Termination": Any event described in clause (b)
of Section 5.1 hereof.
"Owner Trustee": Wilmington Trust Company, not in its individual capacity
but solely as Owner Trustee under the Trust C Trust Agreement, its successors in
interest or any successor Owner Trustee under the Trust Agreement.
"Payment Date": Any date on which the Indenture Trustee is required to
make distributions to the Class C Noteholders, which shall be the 25th day of
each month, commencing in the month following the Closing Date or if the 25th
day is not a Business Day, then the next succeeding Business Day.
"Percentage Interest": As to any Class C Note, that percentage, expressed
as a fraction, the numerator of which is the Class C Note Principal Balance of
such Class C Note as of the related Cut-Off Date and the denominator of which is
the Aggregate Class C Note Principal Balance; and as to any Certificate, that
Percentage Interest set forth on such Certificate.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Cumulative Realized Losses": With respect to any period, the sum of
all Realized Losses with respect to the Mortgage Loans in Trust C experienced
during such period.
"Pool Delinquency Rate": With respect to any Remittance Period, the
fraction, expressed as a percentage, equal to (x) the aggregate principal
balances of all Mortgage Loans 90 or more days Delinquent (including all
foreclosures and REO Properties) as of the close of business on the last day of
such Remittance Period over (y) the Pool Principal Balance as of the close of
business on the last day of such Remittance Period.
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"Pool Principal Balance": The aggregate principal balances of all Mortgage
Loans.
"Pool Rolling Six Month Delinquency Rate": As of any Payment Date
commencing with the seventh Payment Date, the fraction, expressed as a
percentage, equal to the average of the Pool Delinquency Rates for each of the
six immediately preceding Remittance Periods with respect to the Mortgage Loans.
"Prepaid Installment": With respect to any Mortgage Loan, any installment
of principal thereof and interest thereon received 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 in full which is
received by the Master Servicer in advance of the scheduled due date for the
payment of such principal (other than the principal portion of any Prepaid
Installment), 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.
"Preservation Expenses": Expenditures made by the Master Servicer or any
Sub-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.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": That certain Prospectus dated September 15, 1998 naming
Advanta Mortgage Conduit Services, Inc. as registrant and describing certain
mortgage loan asset-backed securities to be issued from time to time as
described in the related Prospectus Supplement.
"Prospectus Supplement": That certain Prospectus Supplement dated November
2, 1998, discussing the Class C Notes issued by Trust C.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for another
pursuant to Section 3.3, 3.4 or 2.2(b) hereof, which (i) bears a fixed rate of
interest, (ii) has a Coupon Rate at least equal to the Coupon Rate of the
Mortgage Loan being replaced, (iii) is of the same or better property type and
the same or better occupancy status as the replaced Mortgage Loan, (iv) shall be
of the same or better credit quality classification (determined in accordance
with the Originators' credit underwriting guidelines) as the Mortgage Loan being
replaced, (v) shall mature no later than the Payment Date in November, 2028,
(vi) has a Combined Loan-to-Value Ratio as of the Cut-Off Date no higher than
the Combined Loan-to-Value Ratio of the replaced Mortgage Loan at such time,
(vii) has a Loan Balance as of the related Replacement Cut-Off Date equal to or
less than the Loan Balance of the replaced Mortgage Loan as of such Replacement
Cut-Off Date, (viii) satisfies all of the representations and warranties set
forth in Section 3.3, all as evidenced by an Officer's Certificate of the
Sponsor delivered to the Note Insurer and the Indenture Trustee prior to any
such substitution and (ix) is a valid First Mortgage Loan if the Mortgage Loan
to be substituted for is a valid First Mortgage Loan or, Second Mortgage Loan if
the Mortgage Loan to be substituted for is a Second Mortgage Loan. In the event
that one or more mortgage loans are proposed to be substituted for one or more
mortgage loans, the Note Insurer may allow the foregoing tests to be met on a
weighted average basis or
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other aggregate basis acceptable to the Note Insurer, as evidenced by a written
consent delivered to the Indenture Trustee by the Note Insurer, except that the
requirement of clauses (vi) and (viii) hereof must be satisfied as to each
Qualified Replacement Mortgage.
"Realized Loss": As to any Liquidated Mortgage Loan, the amount, if any,
by which the Loan Balance thereof as of the date of liquidation is in excess of
Net Liquidation Proceeds realized thereon.
"Record Date": With respect to each Payment Date, the business day
immediately preceding the Payment Date; provided, that, if the Class C Notes
revert to Definitive Notes, the Record Date with respect to each Payment Date
thereafter shall be the last Business Day of the calendar month immediately
preceding the calendar month in which such Payment Date occurs.
"Register": The register maintained by the Indenture Trustee in accordance
with Section 2.3 of the Indenture, in which the names of the Class C Noteholders
are set forth.
"Registrar": The Indenture Trustee, acting in its capacity as Indenture
Trustee appointed pursuant to Section 6.13 of the Indenture, or any duly
appointed and eligible successor thereto.
"Registration Statement": The Registration Statement filed by the Sponsor
with the Securities and Exchange Commission, including all amendments thereto
and including the Prospectus and Prospectus Supplement relating to the Class C
Notes constituting a part thereof.
"Remittance Date": Any date on which the Master Servicer is required to
remit monies on deposit in the Trust C Principal and Interest Account to the
Indenture Trustee, which shall be no later than the 18th day of each month, or,
if such day is not a Business Day, the immediately preceding Business Day,
commencing in the month following the month in which the Closing Date occurs.
"Remittance Period": The period (inclusive) beginning on the first day of
the calendar month immediately preceding the month in which a Remittance Date
occurs and ending on the last day of such immediately preceding calendar month.
"REO Property": A Property acquired by the Master Servicer or any
Sub-servicer on behalf of the Issuer through foreclosure or deed-in-lieu of
foreclosure in connection with a defaulted Mortgage Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Issuer.
"Schedules of Mortgage Loans": The Schedules of Mortgage Loans, attached
hereto as Schedule I. Such Schedules shall also contain one of the following
codes for each Mortgage Loan: "C" if such Mortgage Loan is an Unaffiliated
Originator Loan or "A" for all other Mortgage Loans. The information contained
on each Mortgage Loan Schedule shall be delivered to the Indenture Trustee on a
computer readable magnetic tape or disk.
"Second Mortgage Loan": A Mortgage Loan which constitutes a second
priority mortgage lien with respect to the related Property.
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"Securities Act": The Securities Act of 1933, as amended.
"Senior Lien": With respect to any Second Mortgage Loan, the mortgage loan
relating to the corresponding Property having a first priority lien.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Master Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicer Termination Delinquency Rate Trigger": As defined in the
Insurance Agreement.
"Servicer Termination Loss Trigger": As defined in the Insurance
Agreement.
"Servicing Advance": As defined in Section 4.9(c) and Section 4.13(a)
hereof.
"Servicing Fee": With respect to any Mortgage Loan which is an
Unaffiliated Originator Loan, the sum of any servicing fee relating to such
Unaffiliated Originator Loan and the Master Servicing Fee. With respect to any
Mortgage Loan other than an Unaffiliated Originator Loan, the Advanta Servicing
Fee. The Sponsor shall inform the Indenture Trustee as to the level of any
servicing fee relating to an Unaffiliated Originator Loan, which shall not be in
excess of 0.50% per month, unless otherwise approved by the Control Party in
writing.
"Sponsor": Advanta Mortgage Conduit Services, Inc., a Delaware
corporation.
"Standard & Poor's": Standard & Poor's Ratings Group, a division of The
McGraw Hill Companies.
"Substitution Amount": In connection with the delivery of any Qualified
Replacement Mortgage, if the outstanding principal amount of such Qualified
Replacement Mortgage as of the applicable Replacement Cut-Off Date is less than
the Loan Balance of the Mortgage Loan being replaced as of such Replacement
Cut-Off Date, an amount equal to such difference together with accrued and
unpaid interest on such amount calculated at the Coupon Rate net of the
Servicing Fee of the Mortgage Loan being replaced.
"Sub-Servicer": Any Person with whom the Master Servicer has entered into
a Sub-Servicing Agreement and who satisfies any requirements set forth in
Section 4.3 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Master
Servicer and any Sub-Servicer relating to servicing.
"Trust A": Advanta Mortgage Loan Trust 1998-4A, the trust created under
the Trust A Trust Agreement.
"Trust A Sale and Servicing Agreement": The Trust A Sale and Servicing
Agreement, dated as of November 1, 1998 among Trust A, the Sponsor, the Master
Servicer and the Indenture Trustee, as it may be amended from time to time, and
including the Exhibit and Schedules attached thereto.
"Trust A Trust Agreement": The Trust Agreement between the Owner Trustee
and the Sponsor.
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"Trust B": Advanta Mortgage Loan Trust 1998-4B, the trust created under
the Trust B Trust Agreement.
"Trust B Sale and Servicing Agreement": The Trust B Sale and Servicing
Agreement, dated as of November 1, 1998, among Trust B, the Sponsor, the Master
Servicer and the Indenture Trustee, as it may be amended from time to time, and
including the Exhibits and Schedules attached thereto.
"Trust B Trust Agreement": The Trust Agreement between the Owner Trustee
and the Sponsor.
"Trust C": Advanta Mortgage Loan Trust 1998-4C, the trust created under
the Trust C Trust Agreement.
"Trust C Certificate": As defined in the Trust C Trust Agreement.
"Trust C Event of Servicer Termination": Any event described in clause (a)
of Section 5.1 hereof.
"Trust C Indenture": The Indenture dated as of November 1, 1998 relating
to Trust C between the Issuer and the Indenture Trustee, as the same may be
amended and supplemented from time to time.
"Trust C Monthly Remittance Amounts": As defined in the Indenture.
"Trust C Principal and Interest Account": Collectively, each Trust C
Principal and Interest Account created by the Master Servicer or any
Sub-servicer pursuant to Section 4.8(a) hereof, or pursuant to any Sub-Servicing
Agreement.
"Trust C Trust Agreement": The Trust Agreement dated as of November 1,
1998 between the Owner Trustee and the Sponsor.
"Trust Estate": Collectively, all money, instruments and other property,
to the extent such money, instruments and other property are subject or intended
to be held in trust for the benefit of the Class C Noteholders, including all
proceeds thereof, including, without limitation, (i) the Mortgage Loans, (ii)
such amounts including collections in respect of the related Mortgage Loans
received on or after the Cut-Off Date, but excluding any premium recapture, as
applicable, including Eligible Investments, as from time to time may be held in
the Trust C Note Account and by the Master Servicer in the Trust C Principal and
Interest Account (except as otherwise provided herein), each to be created
pursuant to this Agreement, (iii) any Property, the ownership of which has been
effected on behalf of the Issuer as a result of foreclosure or acceptance by the
Master Servicer of a deed in lieu of foreclosure and that has not been withdrawn
from the Issuer, (iv) any Insurance Policies relating to the Mortgage Loans and
any rights of the Sponsor or the Affiliated Originators under any Insurance
Policies, (v) Net Liquidation Proceeds with respect to any Liquidated Mortgage
Loan.
"Trust Notes": The Class A Note issued by Trust A or the Class B Note
issued by Trust B or the Class C Note issued by Trust C.
"Unaffiliated Originator Loan": Any Mortgage Loan purchased by the Sponsor
from an Unaffiliated Originator and sold to the Issuer by the Sponsor.
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"Unaffiliated Originators": Any Originator who is not affiliated with the
Sponsor.
"Underwriter": ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.
SECTION 1.2. 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 1.1 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 1.3. 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 1.4. 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.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS
SECTION 2.1. CONVEYANCE OF THE MORTGAGE LOANS. (a) The Sponsor,
concurrently with the execution and delivery hereof, hereby transfers, assigns,
sets over and otherwise conveys without recourse, to Trust C, for pledge to the
Indenture Trustee on behalf of the Class C Noteholders all right, title and
interest of the Sponsor in and to (i) each Mortgage Loan listed on the Schedule
of Mortgage Loans, including its Loan Balance and all collections in respect
thereof received on or after the Cut-Off Date (excluding payments in respect of
accrued interest due prior to the Cut-Off Date); (ii) property that secured a
Mortgage Loan that is acquired by foreclosure or deed in lieu of foreclosure;
(iii) the Sponsor's rights under the hazard insurance policies; and (iv) all
other assets included or to be included in the Trust Estate for pledge to the
Indenture Trustee on behalf of the Class C Noteholders and the Note Insurer. In
addition, on or prior to the Closing Date, the Sponsor shall cause the Note
Insurer to deliver the Trust C Note Policy to Trust C for pledge to the
Indenture Trustee on behalf of the Class C Noteholders. The foregoing transfer,
assignment, set-over and conveyance shall be made by the Sponsor to Trust C for
pledge to the Indenture Trustee on behalf of the Class C Noteholders, and each
reference in this Agreement to such transfer, assignment, set-over and
conveyance shall be construed accordingly.
The Sponsor agrees to take or cause to be taken such actions and execute
such documents (including, without limitation, the filing of all necessary
continuation statements for the UCC-1 financing statements filed in the State of
New York (which shall have been filed
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within 90 days of the Closing Date) describing the Mortgage Loans and naming the
Sponsor as debtor and the Indenture Trustee as secured party and any amendments
to UCC-1 financing statements required to reflect a change in the name or
corporate structure of the Sponsor or the filing of any additional UCC-1
financing statements due to the change in the principal office of the Sponsor
(within 90 days of any event necessitating such filing)) as are necessary to
perfect and protect the Class C Noteholders' and the Note Insurer's interests in
each Mortgage Loan and the proceeds thereof.
(b) In connection with the transfer and assignment of the Mortgage Loans,
the Sponsor agrees to:
(i) cause to be delivered on the Closing Date, without recourse, to the
Indenture Trustee, with respect to the Mortgage Loans or, on the Transfer
Date with respect to the Qualified Replacement Mortgage listed on the
Schedule of Mortgage Loans, the items listed in the definitions of "Advanta
Mortgage Files" and "Conduit Mortgage Files," as appropriate, in Exhibit A
hereto; and
(ii) cause, within 75 Business Days following the Closing Date, the
assignments of Mortgage to be submitted for recording in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien
thereof as against creditors of or purchasers from the related Originator to
the Indenture Trustee; provided, however, that for administrative convenience
and facilitation of servicing and to reduce closing costs, assignments of
mortgage shall not be required to be submitted for recording with respect to
any Mortgage Loan which relates to an Advanta Mortgage File only if the
Indenture Trustee has received an Opinion of Counsel to the effect that the
recordation of such assignments in any specific jurisdiction is not necessary
to protect the Indenture Trustee's interest in the related Mortgagee.
All recording, if required pursuant to this Section 2.1, shall be
accomplished at the expense of the Sponsor. Notwithstanding anything to the
contrary contained in this Section 2.1, 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
Sponsor shall be deemed to have satisfied its obligations hereunder upon
delivery to the Indenture 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 and any assignment of Mortgage in
recordable form received by the Indenture Trustee shall be kept in the related
Mortgage File.
(c) In the case of Mortgage Loans which have been prepaid in full on or
after the Initial Cut-Off Date and prior to the Closing Date, the Sponsor, in
lieu of the foregoing, will deliver within 15 Business Days after the Closing
Date to the Indenture Trustee a certification of an Authorized Officer in the
form set forth in Exhibit B.
(d) The Sponsor shall transfer, assign, set over and otherwise convey
without recourse, to Trust C for pledge to the Indenture Trustee on behalf of
the Class C Noteholders all right, title and interest of the Sponsor in and to
any Qualified Replacement Mortgage delivered to Trust C by the Sponsor pursuant
to Section, 2.2, Section 3.3, Section 3.4 hereof and all its right, title and
interest to principal collected and interest accruing on such Qualified
Replacement Mortgage on and after the applicable Replacement Cut-Off Date;
provided, however, that the Sponsor shall reserve and retain all right, title
and interest in and to payments of principal and
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interest due on such Qualified Replacement Mortgage prior to the applicable
Replacement Cut-Off Date.
(e) As to each Mortgage Loan released from Trust C in connection with the
conveyance of a Qualified Replacement Mortgage therefor, the Indenture Trustee
will transfer, assign, set over and otherwise convey without recourse, on the
Sponsor's order, all of its right, title and interest in and to such released
Mortgage Loan and all of the Issuer's right, title and interest to principal
collected and interest accruing on such released Mortgage Loan on and after the
applicable Replacement Cut-Off Date; provided, however, that the Issuer shall
reserve and retain all right, title and interest in and to payments of principal
collected and interest accruing on such released Mortgage Loan prior to the
applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Issuer, the Sponsor agrees to cause to be delivered
to the Indenture Trustee the items described in Section 2.1(b) on the date of
such transfer and assignment or, if a later delivery time is permitted by
Section 2.1(b), then no later than such later delivery time.
(g) As to each Mortgage Loan released from the Issuer in connection with
the conveyance of a Qualified Replacement Mortgage the Indenture Trustee shall
deliver on the date of conveyance of such Qualified Replacement Mortgage and on
the order of the Sponsor (i) the original Note, or the certified copy, relating
thereto, endorsed without recourse, to the Sponsor and (ii) 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
Sponsor shall prepare a substitute assignment or cure such defect, as the case
may be, and thereafter cause each such assignment to be duly recorded.
(i) The Sponsor shall reflect on its records that the Mortgage Loans have
been sold to the Issuer.
(j) To the extent that the ratings, if any, then assigned to the unsecured
debt of the Sponsor or of its ultimate corporate parent are satisfactory to the
Control Party, Moody's and Standard & Poor's, then any of the Document Delivery
Requirements described above may be waived by an instrument signed by the
Control Party, Standard & Poor's and Moody's (or any documents theretofore
delivered to the Indenture Trustee returned to the Sponsor) on such terms and
subject to such conditions as the Control Party, Moody's and Standard & Poor's
may permit.
SECTION 2.2. ACCEPTANCE BY THE ISSUER; CERTAIN SUBSTITUTIONS OF MORTGAGE
LOANS; CERTIFICATION BY INDENTURE TRUSTEE. The Indenture Trustee, on behalf of
the Issuer,hereby acknowledges receipt of the Trust Estate and agrees to execute
and deliver on the Closing Date and each Transfer Date an acknowledgment of
receipt of the Files delivered to it on behalf of the Issuer by the Sponsor in
the form attached as Exhibit C 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 pledged to it on
behalf of the Class C Noteholders and the Note Insurer.
The Indenture Trustee agrees to review any documents delivered by the
Sponsor within 90 days after the Closing Date (or within 90 days with respect to
any Qualified Replacement Mortgage after the assignment thereof) and to deliver
to the Sponsor, the Master Servicer and the Note Insurer a Certification in the
form attached hereto as Exhibit D hereto. The
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Indenture Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the represented
purpose or that they are other than what they purport to be on their face, nor
shall the Indenture Trustee be under any duty to determine independently whether
there are any intervening assignments or assumption or modification agreements
with respect to any Mortgage Loan.
(b) If the Indenture Trustee during such 90-day period finds any document
constituting a part of a File which is not properly executed, has not been
received within the specified period, or is unrelated to the Mortgage Loans
identified in the Schedules of Mortgage Loans, or that any Mortgage Loan does
not conform in a material respect to the description thereof as set forth in the
Schedules of Mortgage Loans, the Indenture Trustee shall promptly so notify the
Sponsor, the Issuer and the Note Insurer. In performing any such review, the
Indenture Trustee may conclusively rely on the Sponsor as to the purported
genuineness of any such document and any signature thereon. The Sponsor agrees
to use reasonable efforts to remedy a material defect in a document constituting
part of a File of which it is so notified by the Indenture Trustee. If, however,
within 60 days after the Indenture Trustee's notice to it respecting such defect
the Sponsor has not remedied or caused to be remedied the defect and the defect
materially and adversely affects the interest in the related Mortgage Loan of
the Class C Noteholders or of the Note Insurer, the Sponsor will then on the
next succeeding Remittance Date (i) substitute in lieu of such Mortgage Loan a
Qualified Replacement Mortgage and, deliver the Substitution Amount applicable
thereto to the Master Servicer for deposit in the Trust C 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
Master Servicer for deposit in the Trust C Principal and Interest Account. Upon
receipt of any Qualified Replacement Mortgage or of written notification signed
by a Servicing Officer to the effect that the Loan Purchase Price in respect of
a Defective Mortgage Loan has been deposited into the Trust C Principal and
Interest Account, then as promptly as practicable, the Indenture Trustee shall
execute such documents and instruments of transfer presented by the Sponsor, in
each case without recourse, representation or warranty, and take such other
actions as shall reasonably be requested by the Sponsor to effect such transfer
by the Issuer of such Defective Mortgage Loan pursuant to this Section. It is
understood and agreed that the obligation of the Sponsor to accept a transfer of
a Defective Mortgage Loan and to either convey a Qualified Replacement Mortgage
or to make a deposit of any related Loan Purchase Price into the Trust C
Principal and Interest Account shall constitute the sole remedy respecting such
defect available to Class C Noteholders, the Indenture Trustee, the Issuer and
the Note Insurer against the Sponsor.
The Sponsor, promptly following the transfer of a Defective Mortgage Loan
from or to the Issuer pursuant to this Section, shall deliver an amended
Mortgage Loan Schedule to the Indenture Trustee and the Note Insurer and shall
make appropriate entries in its general account records to reflect such
transfer. The Master Servicer shall, following such retransfer, appropriately
▇▇▇▇ its records to indicate that it is no longer servicing such Mortgage Loan
on behalf of the Issuer. The Sponsor, promptly following such transfer, shall
appropriately ▇▇▇▇ its electronic ledger and make appropriate entries in its
general account records to reflect such transfer.
(c) As to any Qualified Replacement Mortgage, the Sponsor shall, if
required to deliver any such Qualified Replacement Mortgage, deliver to the
Indenture Trustee with respect to such Qualified Replacement Mortgage such
documents and agreements as are required to be held by the Indenture Trustee in
accordance with Section 2.2. For any Remittance Period during which the Sponsor
substitutes one or more Qualified Replacement Mortgages, the Master
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Servicer shall determine the Substitution Amount which amount shall be deposited
by the Sponsor in the Trust C Principal and Interest Account at the time of
substitution. All amounts received in respect of the Qualified Replacement
Mortgage during the Remittance Period in which the circumstances giving rise to
such substitution occur shall not be a part of the Trust Estate and shall not be
deposited by the Master Servicer in the Trust C Principal and Interest Account.
All amounts received by the Master Servicer during the Remittance Period in
which the circumstances giving rise to such substitution occur in respect of any
Defective Mortgage Loan so removed by the Trust Estate shall be deposited by the
Master Servicer in the Trust C Principal and Interest Account. Upon such
substitution, the Qualified Replacement Mortgage shall be subject to the terms
of this Agreement in all respects, and the Sponsor shall be deemed (i) to have
made with respect to such Qualified Replacement Mortgage or Loans, as of the
date of substitution, the covenants, representations and warranties set forth in
Section 3.3 and (ii) to have certified that such Mortgage Loan(s) is/are
Qualified Replacement Loan(s). The procedures applied by the Sponsor in
selecting each Qualified Replacement Mortgage shall not be materially adverse to
the interests of the Indenture Trustee, the Issuer, the Class C Noteholders or
the Note Insurer.
SECTION 2.3. COOPERATION PROCEDURES. (a) The Sponsor shall, in connection
with the delivery of each Qualified Replacement Mortgage to the Indenture
Trustee, provide the Indenture Trustee with the information set forth in the
Schedules of Mortgage Loans with respect to such Qualified Replacement Mortgage.
(b) The Sponsor, the Master Servicer and the Indenture Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in providing any additional information required by
any of them in connection with their respective duties hereunder.
SECTION 2.4. [RESERVED].
SECTION 2.5. RETRANSFERS OF MORTGAGE LOANS AT ELECTION OF SPONSOR. Subject
to the conditions set forth below, the Sponsor may, but shall not be obligated
to (except the Sponsor shall be obligated upon a breach of a representation or
warranty), accept the reassignment of Mortgage Loans from the Issuer as of the
close of business on a Payment Date (the "Transfer Date"). On the fifth Business
Day (the "Transfer Notice Date") prior to the Transfer Date designated in such
notice, the Sponsor shall give the Indenture Trustee, the Note Insurer and the
Master Servicer a notice of the proposed reassignment that contains a list of
the Mortgage Loans to be reassigned. Such reassignment of Mortgage Loans shall
be permitted upon satisfaction of the following conditions:
(i) No Event of Default has occurred or will occur as a result of
such removal;
(ii) the Overcollateralization Amount as of such Payment Date equals
or exceeds the then Specified Overcollateralization Amount;
(iii) On or before the Transfer Date, the Sponsor shall have
delivered to the Indenture Trustee and the Note Insurer a revised Schedule
of Mortgage Loans, reflecting the proposed transfer and the Transfer Date,
and the Master Servicer shall have marked its servicing records to show
that the Mortgage Loans reassigned to the holder of the Sponsor are no
longer owned by the Issuer;
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(iv) The Sponsor shall represent and warrant that random selection
procedures were used in selecting the Mortgage Loans and no other
selection procedures were used which are adverse to the interests of the
Sponsor or the Class C Noteholders or the Note Insurer were utilized in
selecting the Mortgage Loans to be removed from the Issuer;
(v) The Sponsor shall have delivered to the Indenture Trustee and
the Insurer an Officer's Certificate certifying that the items set forth
in subparagraphs (i) through (iv), inclusive, have been performed or are
true and correct, as the case may be. The Indenture Trustee may
conclusively rely on such Officer's Certificate, shall have no duty to
make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.
Upon receiving the requisite information from the Sponsor, the Master Servicer
shall perform in a timely manner those acts required of it, as specified above.
Upon satisfaction of the above conditions, on the Transfer Date the Indenture
Trustee shall deliver, or cause to be delivered, to the Sponsor the File for
each Mortgage Loan being so reassigned, and the Indenture Trustee shall execute
and deliver to the Sponsor such other documents prepared by the Sponsor as shall
be reasonably necessary to reassign such Mortgage Loans to the Sponsor. Any such
transfer of the Issuer's right, title and interest in and to Mortgage Loans
shall be without recourse, representation or warranty by or of the Indenture
Trustee or the Issuer to the Sponsor.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE SPONSOR AND THE MASTER SERVICER
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR. The Sponsor
hereby represents, warrants and covenants to the Indenture Trustee, the Note
Insurer and to the Class C Noteholders as of the Closing Date that:
(a) The Sponsor is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware 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
Sponsor 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 this
Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other Operative
Documents to which the Sponsor is a party by the Sponsor and its performance and
compliance with the terms of this Agreement and of the other Operative Documents
to which it is a party have been duly authorized by all necessary corporate
action on the part of the Sponsor and will not violate the Sponsor's Articles 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 the
Sponsor is a party or by which the Sponsor 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 Sponsor or any of its properties.
(c) This Agreement and the other Operative Documents to which the Sponsor
is a party, assuming due authorization, execution and delivery by the other
parties hereto and
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thereto, each constitutes a valid, legal and binding obligation of the Sponsor,
enforceable against it in accordance with the terms hereof and thereof, except
as the enforcement hereof and 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 Sponsor 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 might have consequences that would materially and
adversely affect the condition (financial or other) or operations of the Sponsor
or its properties or might have consequences that would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which it is a party.
(e) No litigation is pending or, to the best of the Sponsor's knowledge,
threatened against the Sponsor which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Document
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Sponsor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which it is
a party.
(f) No certificate of an officer, statement furnished in writing or report
delivered pursuant to the terms hereof by the Sponsor 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) The statements contained in the Registration Statement which describe
the Sponsor or matters or activities for which the Sponsor is responsible in
accordance with the Operative Documents or which are attributed to the Sponsor
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 Sponsor or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein with respect to the
Sponsor not misleading. To the best of the Sponsor's knowledge and belief, 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 required to be
stated therein or necessary to make the statements contained therein not
misleading.
(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 Sponsor makes no such representation or warranty),
that are necessary or advisable in connection with the purchase and sale of the
Class C Notes and the execution and delivery by the Sponsor 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 this Agreement and the other Operative Documents on
the part of the Sponsor and the performance by the Sponsor of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
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(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Sponsor.
(j) The Sponsor received fair consideration and reasonably equivalent
value in exchange for the sale of the interests in the Mortgage Loans to the
Issuer.
(k) The Sponsor did not sell any interest in any Mortgage Loan with any
intent to hinder, delay or defraud any of its respective creditors.
(l) The Sponsor is solvent and the Sponsor will not be rendered insolvent
as a result of the sale of the Mortgage Loans to the Issuer.
It is understood and agreed that the representations and warranties set
forth in this Section 3.1 shall survive delivery of the Mortgage Loans to the
Indenture Trustee.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF THE MASTER SERVICER. The
Master Servicer hereby represents, warrants and covenants to the Indenture
Trustee, the Note Insurer and to the Class C Noteholders as of the Closing Date
that:
(a) The Master Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, is, and each
Sub-Servicer 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. The Master Servicer and each Sub-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 this Agreement and the
other Operative Documents to which it is a party. The Master Servicer has, on a
consolidated basis with its parent, AMHC, equity of at least $5,000,000, as
determined in accordance with generally accepted accounting principles.
(b) The execution and delivery of this Agreement by the Master Servicer
and its performance and compliance with the terms of this Agreement and the
other Operative Documents to which it is a party have been duly authorized by
all necessary corporate action on the part of the Master Servicer and will not
violate the Master Servicer's Articles 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 the Master Servicer is a party or by
which the Master 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 the Master Servicer or any of its properties.
(c) This Agreement and the other Operative Documents to which the Master
Servicer is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Master Servicer, enforceable against it in accordance with the
terms hereof, except as the enforcement hereof 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 Master 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
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agency, which might have consequences that would materially and adversely affect
the condition (financial or other) or operations of the Master Servicer 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
Master Servicer is a party.
(e) No litigation is pending or, to the best of the Master Servicer's
knowledge, threatened against the Master Servicer which litigation might have
consequences that would prohibit its entering into this Agreement or any other
Operative Document to which it is a party or that would materially and adversely
affect the condition (financial or otherwise) or operations of the Master
Servicer 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 Master Servicer is a party.
(f) The statements contained in the Registration Statement which describe
the Master Servicer or matters or activities for which the Master Servicer is
responsible in accordance with the Operative Documents or which are attributed
to the Master Servicer 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 Master Servicer or omit to state a material
fact required to be stated therein or necessary to make the statements contained
therein with respect to the Master Servicer 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, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Master Servicer makes no such representation or
warranty), that are necessary or advisable in connection with the execution and
delivery by the Master 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 this
Agreement and the other Operative Documents on the part of the Master Servicer
and the performance by the Master Servicer of its obligations under this
Agreement and such of the other Operative Documents to which it is a party.
(h) The collection practices used by the Master Servicer with respect to
the Mortgage Loans directly serviced by it have been, in all material respects,
legal, proper, prudent and customary in the mortgage loan servicing business.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Master Servicer.
(j) The terms of each existing Sub-Servicing Agreement and each designated
Sub-servicer are acceptable to the Master Servicer and any new Sub-Servicing
Agreements or Sub-servicers will comply with the provisions of Section 4.3.
It is understood and agreed that the representations and warranties set
forth in this Section 3.2 shall survive delivery of the Mortgage Loans to the
Indenture Trustee.
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Upon discovery by any of the Master Servicer, the Sponsor, any
Sub-Servicer, the Note Insurer or the Indenture Trustee of a breach of any of
the representations and warranties set forth in this Section 3.2 which
materially and adversely affects the interests of the Class C Noteholders or of
the Note 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 breach, the Master Servicer shall cure such breach in all material
respects; provided, however, that, if the Master Servicer can demonstrate to the
reasonable satisfaction of the Note Insurer and the Indenture Trustee that it is
diligently pursuing remedial action, then the cure period may be extended with
the written approval of the Note Insurer.
SECTION 3.3. REPRESENTATIONS AND WARRANTIES OF THE SPONSOR WITH RESPECT TO
THE MORTGAGE LOANS. The Sponsor makes the following representations and
warranties as to the Mortgage Loans on which the Note Insurer relies and the
Indenture Trustee relies in accepting the Mortgage Loans in trust and executing
and authenticating the Class C Noteholders. Such representations and warranties
speak as of the Closing Date with respect to the Mortgage Loans or as of the
Transfer Date upon which any Qualified Replacement Mortgage is added to the
Issuer, but shall in each case survive the sale, transfer, and assignment of the
Mortgage Loans to the Indenture Trustee:
(i) The information with respect to each Mortgage Loan set forth in
the Schedules of Mortgage Loans is true and correct as of the Cut-Off;
(ii) All of the original or certified documentation set forth in
Section 2.1 (including all material documents related thereto) with
respect to each Mortgage Loan has been or will be delivered to the
Indenture Trustee on the Closing Date or as otherwise provided in Section
2.1;
(iii) Except for any Unaffiliated Originator Loans being serviced by
a servicer other than the Master Servicer, each Mortgage Loan is being
serviced by the Master Servicer or a Person controlling, controlled by or
under common control with the Master Servicer and qualified to service
mortgage loans;
(iv) The Note related to each Mortgage Loan in Trust C bears a
Coupon Rate of at least 5.99% per annum;
(v) As of the Cut-Off Date, none of the Mortgage Loans are more than
59 days Delinquent;
(vi) As of the Closing Date, no more than 1.0% of the aggregate Loan
Balances of the Mortgage Loans is secured by Properties located within any
single zip code area;
(vii) Each Mortgage Loan conforms, and all such Mortgage Loans in
the aggregate conform, in all material respects to the description thereof
set forth in the Registration Statement; and
(viii) The credit underwriting guidelines applicable to each
Mortgage Loan conform in all material respects to the description thereof
set forth in the Prospectus.
(b) The Sponsor hereby assigns to the Indenture Trustee for the benefit of
the Class C Noteholders and the Note Insurer (so long as a Note Insurer Default
has not occurred and is continuing) all of its right, title and interest in
respect of each Master Transfer Agreement
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applicable to the related Mortgage Loan. Insofar as such Master Transfer
Agreement provides for representations and warranties made by the related
Originator 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 by the Master Servicer or by the Indenture Trustee on
behalf of the Class C Noteholders and the Note Insurer. Upon the discovery by
the Sponsor, the Master Servicer, the Note Insurer or the Indenture Trustee of a
breach of any of the representations and warranties made in a Master Transfer
Agreement in respect of any Mortgage Loan which materially and adversely affects
the interests of the Class C Noteholders or of the Note Insurer in such Mortgage
Loan, the party discovering such breach shall give prompt written notice to the
other parties. The Master Servicer shall promptly notify the related Originator
of such breach and request that such Originator cure such breach or take the
actions described in Section 3.4(b) hereof within the time periods required
thereby, and if such Originator does not cure such breach in all material
respects, the Sponsor shall cure such breach or take such actions. The
obligations of the Sponsor or Master Servicer, as the case may be, set forth
herein with respect to any Mortgage Loan as to which such a breach has occurred
and is continuing shall constitute the sole obligations of the Master Servicer
and of the Sponsor in respect of such breach.
SECTION 3.4. COVENANTS OF SPONSOR TO TAKE CERTAIN ACTIONS WITH RESPECT TO
THE MORTGAGE LOANS IN CERTAIN SITUATIONS. (a) With the provisos and limitations
as to remedies set forth in this Section 3.4, upon the discovery by the Sponsor,
the Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture Trustee
that the representations and warranties set forth in Section 3.3 of this
Agreement or in the Master Transfer Agreement were untrue in any material
respect as of the Closing Date and such breaches of the representations and
warranties materially and adversely affect the interests of the Class C
Noteholders or of the Note Insurer, the party discovering such breach shall give
prompt written notice to the other parties.
The Sponsor acknowledges that a breach of any representation or warranty
(x) relating to marketability of title sufficient to transfer unencumbered title
to a Mortgage Loan, (y) relating to enforceability of the Mortgage Loan against
the related Mortgagor or Property or (z) set forth in clause (viii) of Section
3.3 above constitutes breach of a representation or warranty which materially
and adversely affects the interests of the Class C Noteholders or of the Note
Insurer in such Mortgage Loan.
(b) Upon the earliest to occur of the Sponsor's discovery, its receipt of
notice of breach from any one of the other parties hereto or from the Note
Insurer or such time as a breach of any representation and warranty materially
and adversely affects the interests of the Class C Noteholders or of the Note
Insurer as set forth above, the Sponsor hereby covenants and warrants that it
shall promptly cure such breach in all material respects or it shall (or shall
cause an affiliate of the Sponsor to), subject to the further requirements of
this paragraph, on the second Remittance Date next succeeding such discovery,
receipt of notice or such other time (i) substitute in lieu of each Mortgage
Loan which has given rise to the requirement for action by the Sponsor a
Qualified Replacement Mortgage and deliver the Substitution Amount applicable
thereto, together with the aggregate amount of all Delinquency Advances and
Servicing Advances, including Nonrecoverable Advances, theretofore made with
respect to such Mortgage Loan, to the Master Servicer for deposit in the Trust C
Principal and Interest Account or (ii) purchase such Mortgage Loan from the
Issuer at a purchase price equal to the Loan Purchase Price thereof, which
purchase price shall be delivered to the Master Servicer for deposit in the
Trust C Principal and Interest Account. It is understood and agreed that the
obligation of the Sponsor 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
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constitute the sole remedy available to the Class C Noteholders, the Indenture
Trustee or the Note Insurer.
(c) In the event that any Qualified Replacement Mortgage is delivered by
an Originator or by the Sponsor (or by an affiliate of the Sponsor, as the case
may be) to the Issuer pursuant to Section 3.3, Section 3.4 or Section 2.2
hereof, the related Originator and the Sponsor shall be obligated to take the
actions described in Section 3.4(b) with respect to such Qualified Replacement
Mortgage upon the discovery by any of the Class C Noteholders, the Sponsor, the
Master Servicer, the Note Insurer, any Sub-Servicer or the Indenture Trustee
that the representations and warranties set forth in the related Master Transfer
Agreement or in Section 3.3 above are untrue in any material respect on the date
such Qualified Replacement Mortgage is conveyed to the Issuer such that the
interests of the Class C Noteholders or the Note 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 Master Transfer Agreement or as set forth in Section
3.3 above referring to items "as of the Cut-Off Date" or "as of the Closing
Date" shall be deemed to refer to such items as of the date such Qualified
Replacement Mortgage is conveyed to the Issuer.
(d) It is understood and agreed that the covenants set forth in this
Section 3.4 shall survive delivery of the respective Mortgage Loans (including
Qualified Replacement Mortgage Loans) to the Indenture Trustee on behalf of the
Issuer.
ARTICLE IV
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
SECTION 4.1. MASTER SERVICER AND SUB-SERVICERS. (a) Acting directly or
through one or more Sub-Servicers as provided in Section 4.3, the Master
Servicer, as master servicer, shall service and administer the Mortgage Loans in
accordance with this Agreement and on behalf of the Indenture Trustee and the
Note Insurer and with reasonable care, and using that degree of skill and
attention that the Master 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.
(b) The duties of the Master Servicer shall include 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 and furnishing monthly and
annual statements to the Indenture Trustee and the Note Insurer, as applicable,
with respect to distributions, paying Compensating Interest and making
Delinquency Advances and Servicing Advances pursuant hereto. The Master Servicer
shall follow its customary standards, policies and procedures in performing its
duties as Master Servicer. The Master Servicer shall cooperate with the
Indenture Trustee and furnish to the Indenture Trustee with reasonable
promptness information in its possession as may be necessary or appropriate to
enable the Indenture Trustee to perform its tax reporting duties hereunder. The
Indenture Trustee shall furnish the Master Servicer or any Sub-servicer with any
powers of attorney and other documents necessary or appropriate to enable the
Master Servicer or any Sub-servicer to carry out its servicing and
administrative duties hereunder.
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(c) The Master Servicer shall have the right using that degree of skill
and attention that the Master Servicer exercises with respect to comparable
mortgage loans that it services for itself or others, to approve applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations to
Properties and (iii) removal, demolition or division of Properties. No
application for such approval shall be considered by the Master Servicer unless:
(x) the provisions of the related Note and Mortgage have been complied with; (y)
the Combined Loan-to-Value Ratio and the Mortgagor's debt-to-income ratio after
any release does not exceed the Combined Loan-to-Value Ratio and debt-to-income
ratio applicable to such Mortgage Loan at origination and (z) the lien priority
of the related Mortgage is not adversely affected; provided, however, that the
foregoing requirements (x), (y) and (z) shall not apply to any such situation
described in this paragraph if such situation results from any condemnation or
easement activity by a governmental entity.
(d) The Master 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 Sub-Servicer as it may from time to time designate, but no such
designation of a Sub-Servicer shall serve to release the Master Servicer from
any of its obligations under this Agreement. Such Sub-Servicer shall have all
the rights and powers of the Master Servicer with respect to such Mortgage Loans
under this Agreement.
(e) Without limiting the generality of the foregoing, but subject to
Sections 4.13 and 4.14, the Master Servicer in its own name or in the name of a
Sub-Servicer may be authorized and empowered pursuant to a power of attorney
executed and delivered by the Indenture Trustee to execute and deliver, and may
be authorized and empowered by the Indenture Trustee, to execute and deliver, on
behalf of itself, the Class C Noteholders, the Note Insurer and the Indenture
Trustee or any of them, (i) any and all instruments of satisfaction or
cancellation or of partial or full release or discharge and all other comparable
instruments with respect to the Mortgage Loans and with respect to the
Properties, (ii) to institute foreclosure proceedings or obtain a deed in lieu
of foreclosure so as to effect ownership of any Property on behalf of the
Indenture Trustee, (iii) to hold title to any Property upon such foreclosure or
deed in lieu of foreclosure on behalf of the Indenture Trustee, and (iv) to
consent to any modification of the terms of any Note not expressly prohibited
hereby if the effect of any such modification will not be to affect materially
and adversely the security afforded by the related Property and the timing of
the receipt of payments required hereby or the interests of the Note Insurer;
provided, however, that Section 4.14(a) shall constitute a power of attorney
from the Indenture Trustee to the Master Servicer or any Sub-servicer to execute
an instrument of satisfaction (or assignment of mortgage without recourse) with
respect to any Mortgage Loan paid in full (or with respect to which payment in
full has been escrowed).
(f) The Master Servicer shall give prompt notice to the Indenture Trustee
of any action, of which the Master Servicer has actual knowledge, to (i) assert
a claim against the Issuer or (ii) assert jurisdiction over the Issuer.
(g) Servicing Advances incurred by the Master Servicer or any Sub-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 the Master Servicer or such Sub-Servicer to
the extent described in Section 4.9(c) and in Section 8.7(b)(xvii) of the
Indenture.
SECTION 4.2. COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS. (a) The Master
Servicer shall, to the extent such procedures shall be consistent with this
Agreement and
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the terms and provisions of any applicable Insurance Policies, follow Accepted
Servicing Practices. Consistent with the foregoing, the Master Servicer may in
its discretion (i) waive any assumption fees, late payment charges, charges for
checks returned for insufficient funds, prepayment fees, if any, 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; provided,
however, the Master Servicer shall not reschedule the payment of delinquent
payments more than one time in any twelve consecutive months with respect to any
Mortgagor.
(b) The Master Servicer shall hold in escrow on behalf of the related
Mortgagor 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 4.3. SUB-SERVICING AGREEMENTS BETWEEN MASTER SERVICER AND
SUB-SERVICERS. The Master Servicer may enter into Sub-Servicing Agreements for
any servicing and administration of Mortgage Loans with any institution which
may be an Affiliate, and which is in compliance with the laws of each state
necessary to enable it to perform its obligations under such Sub-Servicing
Agreement. The Master Servicer shall give notice to the Note Insurer and the
Indenture Trustee of the appointment of any Sub-Servicer and shall furnish to
the Note Insurer and the Indenture Trustee a copy of the Subservicing Agreement.
For purposes of this Agreement, the Master shall be deemed to have received
payments on Mortgage Loans when any Sub-Servicer has received such payments. Any
such Sub-Servicing Agreement shall be consistent with and not violate the
provisions of this Agreement.
SECTION 4.4. SUCCESSOR SUB-SERVICERS. The Master Servicer may terminate
any Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement and to either itself directly service the related
Mortgage Loans itself or enter into a Sub-Servicing Agreement with a successor
Sub-Servicers that qualifies under Section 4.3.
SECTION 4.5. LIABILITY OF MASTER SERVICER. The Master Servicer shall not
be relieved of its obligations under this Agreement notwithstanding any
Sub-Servicing Agreement or any of the provisions of this Agreement relating to
agreements or arrangements between the Master Servicer and a Sub-Servicer or
otherwise, and the Master 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. The Master Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Master by such
Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement. The Issuer shall not indemnify the
Master Servicer for any losses due to the Master Servicer's negligence.
SECTION 4.6. NO CONTRACTUAL RELATIONSHIP BETWEEN SUB-SERVICER AND
INDENTURE TRUSTEE OR THE CLASS C NOTEHOLDERS. Any Sub-Servicing Agreement and
any other transactions or services relating to the Mortgage Loans involving a
Sub-Servicer shall be deemed to be between the Sub-Servicer and the Master
Servicer alone and the Note Insurer, the Indenture Trustee and the Class C
Noteholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to any Sub-Servicer
except as set forth in Section 4.7.
SECTION 4.7. ASSUMPTION OR TERMINATION OF SUB-SERVICING AGREEMENT BY
INDENTURE TRUSTEE. In connection with the assumption of the responsibilities,
duties and
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liabilities and of the authority, power and rights of the Master Servicer
hereunder by the Indenture Trustee pursuant to Section 5.1, it is understood and
agreed that the Master Servicer's rights and obligations under any Sub-Servicing
Agreement then in force between the Master Servicer and a Sub-Servicer may be
assumed or terminated by the Indenture Trustee at its option. Any termination
fee due under any such Sub-servicing agreement shall be paid by the preceding
Master Servicer but in no event shall the Indenture Trustee be liable for any
such fee.
The Master Servicer shall, upon request of the Indenture Trustee, but at
the expense of the Master Servicer, deliver to the assuming party documents and
records relating to each Sub-Servicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts to effect
the orderly and efficient transfer of the Sub-Servicing Agreements to the
assuming party, without the payment of any fee by the Indenture Trustee,
notwithstanding any contrary provision in any Sub-Servicing Agreement.
SECTION 4.8. TRUST C PRINCIPAL AND INTEREST ACCOUNT. (a) The Master
Servicer and/or each Sub-servicer, as applicable, shall establish in the name of
the Issuer for the benefit of the Class C Noteholders and the Note Insurer, as
their interests may appear, and maintain at one or more Designated Depository
Institutions the Trust C Principal and Interest Account.
Subject to Subsections (c) and (e) below, the Master Servicer and any
Sub-servicer shall deposit all receipts related to the Mortgage Loans to the
Trust C Principal and Interest Account on a daily basis (but no later than the
second Business Day after receipt).
Within one Business Day of the Closing Date and each Transfer Date, the
Sponsor and/or the Master Servicer shall deposit to the Trust C Principal and
Interest Account all receipts related to the Mortgage Loans which relate to or
are received on or after the Cut-Off Date.
(b) All funds in the Trust C Principal and Interest Account may only be
held (i) uninvested, up to the limits insured by the FDIC or (ii) invested in
Eligible Investments. The Trust C Principal and Interest Account shall be held
in Trust C in the name of the Issuer and for the benefit of the Class C
Noteholders and the Note Insurer. Any investment earnings on funds held in the
Trust C Principal and Interest Account shall be for the account of the Master
Servicer and may only be withdrawn from the Trust C Principal and Interest
Account by the Master Servicer immediately following the remittance of the Trust
C Monthly Remittance Amounts by the Master Servicer. Any references herein to
amounts on deposit in the Trust C Principal and Interest Account shall refer to
amounts net of such investment earnings. Any investment losses are at the
expense of the Master Servicer and shall be replaced on or prior to the
Remittance Date.
(c) Subject to Subsection (e) below, the Master Servicer shall deposit to
the Trust C Principal and Interest Account all principal and interest
collections on the Mortgage Loans received on or after the Cut-Off Date
including any Prepaid Installments, Prepayments and Net Liquidation Proceeds,
all Loan Purchase Prices and Substitution Amounts received or paid by the Master
Servicer with respect to the Mortgage Loans, other recoveries or amounts related
to the Mortgage Loans received by the Master Servicer, Compensating Interest and
Delinquency Advances together with any amounts which are reimbursable from the
Trust C Principal and Interest Account, but net of (i) the Servicing Fee with
respect to each Mortgage Loan and other servicing compensation to the Master
Servicer as permitted by Section 4.15 hereof, (ii) principal (including
Prepayments) collected on the related Mortgage Loans prior to the Cut-Off Date,
(iii) interest accruing on the related Mortgage Loans prior to the Cut-Off Date
and (iv) Net
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Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed the Loan
Balance of the related Mortgage Loan.
(d) (i) The Master Servicer may make withdrawals from the Trust C
Principal and Interest Account only for the following purposes:
(1) to effect the timely remittance to the Indenture Trustee
of the Trust C Monthly Remittance Amounts due on the Remittance
Date;
(2) to reimburse itself for unreimbursed Delinquency Advances
and Servicing Advances and Nonrecoverable Advances;
(3) to withdraw investment earnings on amounts on deposit in
the Trust C Principal and Interest Account;
(4) to withdraw amounts that have been deposited to the Trust
C Principal and Interest Account in error; and
(5) to clear and terminate the Trust C Principal and Interest
Account following the termination of the Trust Estate pursuant to
Article X of the Indenture.
(ii) On the tenth day of each month, the Master Servicer shall send
to the Indenture Trustee a report, in the form of a computer tape,
detailing the payments on the Mortgage Loans during the prior Remittance
Period. Such tape shall be in the form and have the specifications as may
be agreed to between the Master Servicer and the Indenture Trustee from
time to time. The Note Insurer shall have the right to request this
computer tape upon providing 3 Business Days written notice to the Master
Servicer.
(iii) On each Remittance Date the Master Servicer shall remit to the
Indenture Trustee by wire transfer, or otherwise make funds available in
immediately available funds for deposit in the Trust C Note Account
pursuant to Section 8.7(a) of the Indenture, the Trust C Interest
Remittance Amount and the Trust C Principal Remittance Amount.
(e) To the extent that the ratings, if any, then assigned to the unsecured
debt of the Master Servicer or of the Master Servicer's ultimate corporate
parent are satisfactory to the Note Insurer, the Indenture Trustee, Moody's and
Standard & Poor's, then the requirement to maintain the Trust C Principal and
Interest Account may be waived by an instrument signed by the Note Insurer,
Standard & Poor's, Indenture Trustee, and Moody's, and the Master Servicer may
be allowed to co-mingle with its general funds the amounts otherwise required to
be deposited to the Trust C Principal and Interest Account, on such terms and
subject to such conditions as the Note Insurer, the Indenture Trustee, Moody's
and Standard & Poor's may permit.
SECTION 4.9. DELINQUENCY ADVANCES, COMPENSATING INTEREST AND SERVICING
ADVANCES. (a) The Master Servicer is required, not later than each Remittance
Date, to deposit into the Trust C Principal and Interest Account an amount equal
to the sum of the interest portions (net of the Servicing Fees) due, but not
collected, with respect to Delinquent Mortgage Loans during the prior Remittance
Period, but only if, in its good faith business judgment, the Master Servicer
reasonably believes that such amount will ultimately be recovered from the
related Mortgage Loan. Such amounts are "Delinquency Advances".
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The Master Servicer shall be permitted to fund its payment of Delinquency
Advances on any Remittance Date and to reimburse itself for any Delinquency
Advances paid from the Master Servicer's own funds, from collections on the
related Mortgage Loan. The Master Servicer may use funds deposited to the Trust
C Principal and Interest Account subsequent to the related Remittance Period to
fund its payment of Delinquency Advances related to a Payment Date. The Master
Servicer shall also fund Delinquency Advances from the deposits into the Trust C
Principal and Interest Account with respect thereto (i) late collections from
the Mortgagor whose Delinquency gave rise to the shortfall which resulted in
such Delinquency Advance and (ii) Net Liquidation Proceeds recovered on account
of the related Mortgage Loan to the extent of the amount of aggregate
Delinquency Advances related thereto or (iii) from its own funds. If not
therefore recovered from the related Mortgagor or the related Net Liquidation
Proceeds, Delinquency Advances constituting Nonrecoverable Advances shall be
recoverable pursuant to Section 8.7(b)(xvii) of the Indenture and Section 4.8(a)
hereof.
(b) On or prior to each Remittance Date, the Master Servicer shall deposit
in the Trust C Principal and Interest Account with respect to any full
Prepayment received on a Mortgage Loan during the related Remittance Period out
of its own funds without any right of reimbursement therefor, an amount equal to
the difference between (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 Remittance Period and (y) to the extent not previously
advanced, the interest (less the Servicing Fee) paid by the Mortgagor with
respect to the Mortgage Loan during such Remittance Period (any such amount paid
by the Master Servicer, "Compensating Interest"). The Master Servicer shall in
no event be required to pay Compensating Interest with respect to any Remittance
Period in an amount in excess of the aggregate Servicing Fee received by the
Master Servicer with respect to all Mortgage Loans for such Remittance Period
nor shall it be required to pay Compensating Interest due to partial prepayments
or Relief Act Shortfalls.
(c) The Master Servicer will pay all "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 (a) foreclosures and (b) other legal actions and
costs associated therewith that potentially affect the existence, validity,
priority, enforceability, or collectibility of the Mortgage Loans, including
collection agency fees and costs of pursuing or obtaining personal judgments,
garnishments, levies, attachment and similar actions, and (iii) the costs of the
conservation, management, liquidation, sale or other disposition of any REO
Property, including reasonable fees paid to any independent contractor in
connection therewith, and (iv) advances to keep liens current, unless with
respect to any of the foregoing the Master Servicer has determined that such
advance would not be recoverable. Each such amount so paid will constitute a
"Servicing Advance". The Master Servicer may recover Servicing Advances (x) from
the Mortgagors to the extent permitted by the Mortgage Loans, from Liquidation
Proceeds realized upon the liquidation of the related Mortgage Loan and (y) as
provided in Section 4.8(d) hereof.
(d) On the Remittance Date in December 1998, the Master Servicer shall
make a special non-recoverable advance equal to one-month's interest, calculated
at the Class C Note Interest Rate (applicable to the December 1998 Payment Date)
for the Class C Notes with respect to all Mortgage Loans in Trust C not having a
payment due during November 1998 and the amounts of such advance shall be
included in the Interest Remittance Amount related to Trust C.
SECTION 4.10. PURCHASE OF MORTGAGE LOANS. The Master Servicer may, but is
not obligated to, purchase for its own account any Mortgage Loan which becomes
Delinquent, in
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whole or in part, as to four consecutive monthly installments or any Mortgage
Loan as to which enforcement proceedings have been brought by the Master
Servicer or by any Sub-Servicer pursuant to Section 4.13. Any such Mortgage Loan
so purchased shall be purchased by the Master Servicer on a Remittance Date at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be deposited in the Trust C Principal and Interest Account provided, that
the Master Servicer may not purchase any Mortgage Loans pursuant to this Section
4.10 if such purchase will cause the aggregate purchase price to exceed 10% of
the Original Pool Principal Balance.
SECTION 4.11. MAINTENANCE OF INSURANCE.
(a) The Master Servicer shall cause to be maintained with respect to each
Mortgage Loan a hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage, and which provides for a recovery by
the Master Servicer on behalf of the Issuer 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 at the time of origination relates to a Property
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Master 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 the Master Servicer on behalf of
the Issuer 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. The Master Servicer shall indemnify the
Issuer and the Note Insurer out of the Master Servicer's own funds for any loss
to the Issuer and the Note Insurer resulting from the Master Servicer's failure
to maintain the insurance required by this Section.
(c) It is understood and agreed that such insurance shall be with insurers
approved by the Master Servicer and that no earthquake or other additional
insurance is to be required of any Mortgagor or to be maintained on property
acquired in respect of a defaulted loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. Any cost incurred by the Master Servicer in maintaining
any such insurance shall be added to the amount owing under the Mortgage Loan
where the terms of the Mortgage Loan so permit. Such costs shall be recoverable
by the Master Servicer pursuant to Section 4.9.
(d) In the event that the Master 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 the Master
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 4.11, the Master
Servicer shall be deemed conclusively to have satisfied its obligations with
respect to fire and hazard insurance coverage under this Section 4.11, it being
understood and agreed that such blanket policy may contain a deductible clause,
in which case the Master Servicer shall, in the event that there shall not have
been maintained on the related Property a policy complying with
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the preceding paragraphs of this Section 4.11, and there shall have been a loss
which would have been covered by such policy, deposit in the Trust C Principal
and Interest Account from the Master 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 4.11 and the amount paid under
such blanket policy. Upon the request of the Indenture Trustee or the Note
Insurer, the Master Servicer shall cause to be delivered to the Indenture
Trustee and the Note Insurer, a certified true copy of such policy.
SECTION 4.12. DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION AGREEMENTS.
When a Property has been or is about to be conveyed by the Mortgagor, the Master
Servicer shall, to the extent it has knowledge of such conveyance or prospective
conveyance, exercise its rights 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 the Master Servicer shall not exercise any such
right if (i) the "due-on-sale" clause, in the reasonable belief of the Master
Servicer, is not enforceable under applicable law or (ii) the Master Servicer
reasonably believes that to permit an assumption of the Mortgage Loan would not
materially and adversely affect the interest of the Class C Noteholders or of
the Note Insurer. In such event, the Master Servicer shall 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, the Master 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 be delivered by the
Master Servicer outside of its usual procedures for mortgage loans held in its
own portfolio the Master Servicer shall, prior to executing and delivering such
agreement, obtain the prior written consent of the Control Party. The Mortgage
Loan, as assumed, shall conform in all respects to the requirements,
representations and warranties of this Agreement. The Master Servicer shall
notify the Indenture Trustee that any such assumption or substitution agreement
has been completed by forwarding to the Indenture Trustee the original copy of
such assumption or substitution agreement, which copy shall be added by the
Indenture 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. The Master Servicer shall be
responsible for recording or causing the recordation any such assumption or
substitution agreements. In connection with any such assumption or substitution
agreement, the required monthly payment on the related Mortgage Loan shall not
be changed but shall remain as in effect 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 the Master
Servicer or the Sub-Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by or paid to the
Master Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or any assumption which the Master Servicer
may be restricted by law from preventing, for any reason whatsoever.
SECTION 4.13. REALIZATION UPON DEFAULTED MORTGAGE LOANS. (a) The Master
Servicer shall foreclose upon or otherwise comparably effect the ownership on
behalf of the
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Issuer of Properties relating to defaulted Mortgage Loans as to which no
satisfactory arrangements can be made for collection of Delinquent payments and
which the Master Servicer has not purchased pursuant to Section 4.10. In
connection with such foreclosure or other conversion, the Master Servicer shall
exercise such of the rights and powers vested in it hereunder, and use the same
degree of care and skill in their 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 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 4.9(c) hereof.
Notwithstanding the generality of the foregoing provisions, the Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Class C Noteholders solely for the purpose of its prompt disposition and sale.
Pursuant to its efforts to sell such REO Property, the Master Servicer shall
either itself or through an agent selected by the Master 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 Class C Noteholders, rent
the same, or any part thereof, as the Master Servicer deems to be in the best
interest of the Class C Noteholders for the period prior to the sale of such REO
Property. The Master Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Property in determining whether to
foreclose upon or otherwise comparably convert the ownership of such Property.
(b) The Master Servicer shall determine, with respect to each defaulted
Mortgage Loan, 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, whereupon such Mortgage Loan shall
become a "Liquidated Mortgage Loan" and shall promptly deliver to the Note
Insurer, with a copy to the Indenture Trustee, a related liquidation report with
respect to such Liquidated Mortgage Loan.
SECTION 4.14. INDENTURE 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 Master Servicer or any
Sub-servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Master Servicer or any Sub-servicer shall
deliver to the Indenture Trustee a Master Servicer's Trust Receipt attached
hereto as Exhibit H. Upon receipt of such Master Servicer's Trust Receipt, the
Indenture Trustee shall promptly release the related File, in trust to the
applicable party as directed in writing by the Master Servicer on the Master
Servicer's Trust Receipt, in each case pending its release by the such party.
Upon any such payment in full, or the receipt of such notification that such
funds have been placed in escrow, the Master Servicer or any Sub-servicer is
authorized to give, as attorney-in-fact for the Indenture 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 Trust C Principal and
Interest Account. In lieu of executing any such satisfaction or assignment, as
the
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case may be, the Master Servicer or any Sub-servicer may prepare and submit to
the Indenture Trustee, a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Indenture Trustee with all requisite information completed by the Master
Servicer or any Sub-servicer; in such event, the Indenture 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
Indenture 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 Indenture Trustee), upon request of the
Master Servicer or any Sub-servicer and delivery to the Indenture Trustee of a
Master Servicer's Trust Receipt, release the related File to the Master 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 the Master Servicer. The Indenture Trustee shall
complete in the name of the Indenture Trustee any endorsement in blank on any
Note prior to releasing such Note to the Master Servicer or any Sub-servicer.
Such receipt shall obligate the Master Servicer or any Sub-servicer to return
the File to the Indenture Trustee when the need therefor by the Master Servicer
or any Sub-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, the Master Servicer's Trust Receipt shall be
released by the Indenture Trustee to the Master Servicer or any Sub-servicer.
(c) No costs associated with the procedures described in this Section 4.14
shall be an expense of the Issuer.
(d) The provisions set forth in Subsections (a) and (b) may be superseded
by any waiver of the Document Delivery Requirement as may be given by the Note
Insurer, Moody's and Standard & Poor's pursuant to Section 2.1(b) hereof.
(e) Each Master Servicer's Trust Receipt may be delivered to the Indenture
Trustee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium, as
the Master Servicer and the Indenture Trustee shall mutually agree. The
Indenture Trustee shall promptly release the related File(s) within five (5) to
seven (7) business days of receipt of a properly completed Master Servicer's
Trust Receipt pursuant to clauses (i), (ii) or (iii) above or such shorter
period as may be agreed upon by the Master Servicer and the Indenture Trustee.
Receipt of a Master Servicer's Trust Receipt pursuant to clauses (i), (ii) or
(iii) above shall be authorization to the Indenture Trustee to release such
Files, provided the Indenture Trustee has determined that such Master Servicer's
Trust Receipt has been executed, with respect to clauses (i) or (ii) above, or
approved, with respect to clause (iii) above, by an Authorized Officer of the
Master Servicer or any Sub-servicer, and so long as the Indenture Trustee
complies with its duties and obligations under this Agreement. If the Indenture
Trustee is unable to release the Files within the time frames previously
specified, the Indenture Trustee shall immediately notify the Master Servicer or
any Sub-servicer indicating the reason for such delay, but in no event shall
such notification be later than five business days after receipt of a Master
Servicer's Trust Receipt. If the Master Servicer is required to pay penalties or
damages due solely to the Indenture Trustee's negligent failure to release the
related File or the Indenture Trustee's negligent failure to execute and release
documents in a timely manner, the Indenture Trustee shall be liable for such
penalties or damages.
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On each day that the Master Servicer remits to the Indenture Trustee
Master Servicer's Trust Receipts pursuant to clauses (ii) or (iii) above, the
Master Servicer or any Sub-servicer shall also submit to the Indenture Trustee a
summary of the total amount of such Master Servicer's Trust Receipts requested
on such day by the same method as described in such clauses (ii) or (iii) above.
SECTION 4.15. SERVICING COMPENSATION. As compensation for its activities
hereunder, the Master Servicer shall be entitled to retain the amount of the
Servicing Fee with respect to each Mortgage Loan. Additional servicing
compensation in the form of prepayment charges, release fees, bad check charges,
assumption fees, late payment charges, or any other servicing-related fees, Net
Liquidation Proceeds not required to be deposited in the Trust C Principal and
Interest Account pursuant to Section 4.8(c)(v) and similar items may, to the
extent collected from Mortgagors, be retained by the Master Servicer.
SECTION 4.16. ANNUAL STATEMENT AS TO COMPLIANCE. The Master Servicer, at
its own expense, will deliver to the Indenture Trustee, the Note Insurer,
Standard & Poor's, and Moody's, on or before the last day of November of each
year, commencing in 1999, an Officer's Certificate stating, as to each signer
thereof, that (i) a review of the activities of the Master Servicer during such
preceding calendar year and of performance under this Agreement has been made
under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Master Servicer 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 officers and the nature and status thereof including the steps being
taken by the Master Servicer to remedy such defaults.
SECTION 4.17. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORTS. On
or before the last day of November of each year, commencing in 1999, the Master
Servicer, at its own expense, shall cause to be delivered to the Indenture
Trustee, the Note Insurer, Standard & Poor's and Moody's a letter or letters of
a firm of independent, nationally recognized certified public accountants
reasonably acceptable to the Control Party stating that such firm has, with
respect to the Master Servicer's overall servicing operations (i) performed
applicable tests in accordance with the compliance testing procedures as set
forth in Appendix 3 of the Audit Guide for Audits of HUD Approved Nonsupervised
Mortgagees or (ii) examined such operations in accordance with the requirements
of the Uniform Single Audit Program for Mortgage Bankers, and in either case
stating such firm's conclusions relating thereto.
SECTION 4.18. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
THE MORTGAGE LOANS. The Master Servicer shall provide to the Indenture Trustee,
the Note Insurer, the FDIC and the supervisory agents and examiners of each of
the foregoing access to the documentation regarding the Mortgage Loans required
by applicable state and federal regulations, such access being afforded without
charge but only upon reasonable request and during normal business hours at the
offices of the Master Servicer designated by it.
Upon any change in the format of the computer tape maintained by the
Master Servicer in respect of the Mortgage Loans, the Master Servicer shall
deliver a copy of such computer tape to the Indenture Trustee and in addition
shall provide a copy of such computer tape to the Indenture Trustee at such
other times as the Indenture Trustee may reasonably request. The Note Insurer
may request a copy of this computer tape upon three Business Days prior written
notice to the Master Servicer.
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SECTION 4.19. ASSIGNMENT OF AGREEMENT. The Master Servicer may not assign
its obligations under this Agreement, in whole or in part, unless it shall have
first obtained the written consent of the Indenture Trustee and the Note
Insurer, which such consent shall not be unreasonably withheld; provided,
however, that any assignee must meet the eligibility requirements set forth in
Section 5.1(g) hereof for a successor servicer. Notice of any such assignment
shall be given by the Master Servicer to the Indenture Trustee, the Note Insurer
and Moody's.
ARTICLE V
SERVICING TERMINATION
SECTION 5.1. EVENTS OF SERVICER TERMINATION. (a) The Master Servicer may
be removed with respect to Trust C if any one of the following events ("Trust C
Events of Servicer Termination") shall occur and be continuing:
(i) The Master Servicer shall fail to deliver to the Indenture
Trustee any proceeds or required payment, which failure continues
unremedied for five Business Days following written notice to an
Authorized Officer of the Master Servicer from the Indenture Trustee or
from Class C Noteholders evidencing Percentage Interest aggregating not
less than 25%.
(ii) The Master Servicer shall fail to perform any one or more of
its obligations hereunder other than the obligations contemplated by
Subsection 5.1(i) above, and shall continue in default thereof for a
period of sixty (60) days after notice by the Indenture Trustee or the
Note Insurer of said failure; provided, however, that if the Master
Servicer can demonstrate to the reasonable satisfaction of the Control
Party that it is diligently pursuing remedial action, then the cure period
may be extended with the written approval of the Control Party; or
(iii) The Master Servicer shall fail to cure any breach of any of
its representations and warranties set forth in Section 3.2 which
materially and adversely affects the interests of the Class C Noteholders
or the Note Insurer for a period of thirty (30) days after the Master
Servicer's discovery or receipt of notice thereof; provided, however, that
if the Master Servicer can demonstrate to the reasonable satisfaction of
the Control Party that it is diligently pursuing remedial action, then the
cure period may be extended with the written approval of the Control
Party; or
(iv) The failure by the Master Servicer to make any required
Servicing Advance and such failure continues for fifteen days; provided,
however; that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Control Party that any such event was due to
circumstances beyond the control of the Master Servicer, such event shall
not be considered an event of termination of the Master Servicer; or
(v) The failure by the Master Servicer to make any required
Delinquency Advance or to pay any Compensating Interest; provided,
however, that if the Master Servicer can demonstrate to the reasonable
satisfaction of the Control Party that any such event was due to
circumstances beyond the control of the Master Servicer, such event shall
not be considered an event of termination of the Master Servicer;
Then, and in each and every such case, so long as a Trust C Event of
Servicer
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Termination shall not have been remedied by the Master Servicer, either
the Indenture Trustee, the Note Insurer or the Class C Noteholders
evidencing Percentage Interests aggregating not less than 51% in each case
with the consent of the Note Insurer, or the Note Insurer, by notice then
given in writing to the Master Servicer (and to the Indenture Trustee if
given by the Note Insurer of the Class C Noteholders) may terminate all of
the rights and obligations of the Master Servicer as servicer of Trust C
under this Agreement. Any such notice to the Master Servicer shall also be
given to each Rating Agency and the Note Insurer. On and after the receipt
by the Master Servicer of such written notice, all authority and power of
the Master Servicer under this Agreement, whether with respect to the
Class C Notes or the Mortgage Loans or otherwise, shall pass to and be
vested in the Indenture Trustee pursuant to and under this Section 5.1(a)
and, without limitation, the Indenture Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether
to complete the transfer and endorsement of each Mortgage Loan and related
documents, or otherwise. The Master Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the responsibilities and
rights of the Master Servicer hereunder, including, without limitation,
the transfer to the Indenture Trustee for the administration by it of all
cash amounts that shall at the time be held by the Master Servicer and to
be deposited by it in the Trust C Note Account, or that have been
deposited by the Master Servicer in the Note Account or thereafter
received by the Master Servicer with respect to the Mortgage Loans. All
reasonable costs and expenses (including attorneys' fees) incurred in
connection with amending this Agreement to reflect such succession as
Master Servicer pursuant to this Section 5.1 shall be paid by the
predecessor Master Servicer (or if the predecessor Master Servicer is the
Indenture Trustee, the initial Master Servicer) upon presentation of
reasonable documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 5.1(a)(i) for a period of two Business Days or under Section
5.1(ii), (iii), (iv), or (v) for a period of 60 days, shall not constitute
a Trust C Event of Servicer Termination if such delay or failure could not
be prevented by the exercise of reasonable diligence by the Master
Servicer and such delay or failure was caused by an act of God or the
public enemy, acts of declared or undeclared war, public disorder,
rebellion or sabotage, epidemics, landslides, lightning, fire, hurricanes,
earthquakes, floods or similar causes. The preceding sentence shall not
relieve the Master Servicer from using its best efforts to perform its
respective obligations in a timely manner in accordance with the terms of
this Agreement and the Master Servicer shall provide the Indenture
Trustee, the Sponsor, the Note Insurer and the Class C Noteholders with an
Officer's Certificate giving prompt notice of such failure or delay by it,
together with a description of its efforts to so perform its obligations.
The Master Servicer shall immediately notify the Indenture Trustee and the
Note Insurer in writing of any Trust C Event of Servicer Termination.
(b) The Master Servicer may be removed with respect to Trust A,
Trust B and Trust C if any one of the following events ("Overall Events of
Servicer Termination") shall occur and be continuing:
(i) The occurrence of a Servicer Termination Loss Trigger or
Servicer Termination Delinquency Rate Trigger, as such terms are defined
in the Insurance Agreement; or
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(ii) The Master 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; or
(iii) If, without the application, approval or consent of the Master
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 the Master
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 or custodian or similar entity with respect
to the Master 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 the Master 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 seventy-five (75) consecutive days.
Then, and in each and every such case, so long as an Overall Event of Servicer
Termination shall not have been remedied by the Master Servicer, either the
Indenture Trustee, the Note Insurer or the Noteholders evidencing Percentage
Interests aggregating not less than 51% with the consent of the Note Insurer, or
the Note Insurer, by notice then given in writing to the Master Servicer (and to
the Indenture Trustee if given by the Note Insurer of the Noteholders) may
terminate all of the rights and obligations of the Master Servicer as servicer
under this Agreement, the Trust B Sale and Servicing Agreement and the Trust C
Sale and Servicing Agreement. Any such notice to the Master Servicer shall also
be given to each Rating Agency and the Note Insurer. On and after the receipt by
the Master Servicer of such written notice, all authority and power of the
Master Servicer under this Agreement, whether with respect to the Trust Notes or
the Mortgage Loans or otherwise, shall pass to and be vested in the Indenture
Trustee pursuant to and under this Section 5.1(b) and, without limitation, the
Indenture Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of each Mortgage
Loan in Trust C and related documents, or otherwise. The Master Servicer agrees
to cooperate with the Indenture Trustee in effecting the termination of the
responsibilities and rights of the Master Servicer hereunder, including, without
limitation, the transfer to the Indenture Trustee for the administration by it
of all cash amounts that shall at the time be held by the Master Servicer and to
be deposited by it in the Note Account, or that have been deposited by the
Master Servicer in the Note Account or thereafter received by the Master
Servicer with respect to the Mortgage Loans. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with amending this Agreement
to reflect such succession as Master Servicer pursuant to this Section 5.1(b)
shall be paid by the predecessor Master Servicer (or if the predecessor Master
Servicer is the Indenture Trustee, the initial Master Servicer) upon
presentation of reasonable documentation of such costs and expenses.
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The Master Servicer shall not resign from the obligations and duties
hereby imposed on it, except 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 the Master Servicer so causing such a conflict being of a type and nature
carried on by the Master Servicer at the date of this Agreement. Any such
determination permitting the resignation of the Master Servicer shall be
evidenced by an opinion of counsel to such effect which shall be delivered to
the Indenture Trustee and the Note Insurer.
(c) No removal or resignation of the Master Servicer shall become
effective until the Indenture Trustee or a successor servicer shall have assumed
the Master Servicer's responsibilities and obligations in accordance with this
Section. If no successor servicer is available, the Indenture Trustee shall act
as successor servicer and perform all of the obligations of this Section,
including, without limitation, making Delinquency Advances and paying
Compensating Interest; provided, however, that the Indenture Trustee will not be
obligated to act as successor servicer if it is legally unable to perform its
duties hereunder.
(d) Upon removal or resignation of the Master Servicer, the Master
Servicer also shall promptly deliver or cause to be delivered to a successor
servicer or the Indenture Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Master 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 the Master Servicer's possession.
(e) Any collections received by the Master Servicer after removal or
resignation shall be endorsed by it to the Indenture Trustee and remitted
directly and immediately to the Indenture Trustee or the successor Master
Servicer.
(f) Upon removal or resignation of the Master Servicer, the Indenture
Trustee (x) may solicit bids for a successor servicer as described below, and
(y) pending the appointment of a successor Master Servicer as a result of
soliciting such bids, shall serve as Master Servicer. The Indenture Trustee
shall, if it is unable to obtain a qualifying bid and is prevented by law from
acting as Master Servicer, appoint, or petition a court of competent
jurisdiction to appoint, any housing and home finance institution, bank or
mortgage servicing institution which has shareholders' equity of not less than
$10,000,000, as determined in accordance with generally accepted accounting
principles, and acceptable to the Note Insurer as the successor to the Master
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Master Servicer hereunder. The compensation of any
successor servicer (including, without limitation, the Indenture Trustee) so
appointed shall be the aggregate Servicing Fees, together with the other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in Sections 4.8 and 4.15; provided, however, that, if the
Indenture Trustee acts as successor Master Servicer then the Sponsor agrees to
pay to the Indenture Trustee at such time that the Indenture Trustee becomes
such successor Master Servicer a fee of twenty-five dollars ($25.00) for each
Mortgage Loan then included in the Trust Estate. The Indenture Trustee shall be
obligated to serve as successor Master Servicer whether or not the $25.00 fee
described in the preceding sentence is paid by the Sponsor, but shall in any
event be entitled to receive, and to enforce payment of, such fee from the
Sponsor.
(g) In the event the Indenture Trustee solicits bids as provided above,
the Indenture Trustee shall solicit, by public announcement, bids from housing
and home finance institutions, banks and mortgage servicing institutions meeting
the qualifications set forth above.
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Such public announcement shall specify that the successor Master Servicer shall
be entitled to the full amount of the aggregate Servicing Fees as servicing
compensation, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise as provided in Sections 4.8
and 4.15. Within thirty days after any such public announcement, the Indenture
Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid. The Indenture Trustee shall deduct from
any sum received by the Indenture Trustee from the successor to the Master
Servicer in respect of such sale, transfer and assignment all costs and expenses
of any public announcement and of any sale, transfer and assignment of the
servicing rights and responsibilities hereunder. After such deductions, the
remainder of such sum shall be paid by the Indenture Trustee to the Master
Servicer at the time of such sale, transfer and assignment to the Master
Servicer's successor.
(h) The Indenture Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Master Servicer agrees to cooperate with the Indenture Trustee
and any successor Master Servicer in effecting the termination of the Master
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Indenture Trustee or such successor Master Servicer, as applicable,
all documents and records reasonably requested by it to enable it to assume the
Master Servicer's functions hereunder and shall promptly also transfer to the
Indenture Trustee or such successor Master Servicer, as applicable, all amounts
which then have been or should have been deposited in the Trust C Principal and
Interest Account by the Master Servicer or which are thereafter received with
respect to the Mortgage Loans. Neither the Indenture Trustee nor any other
successor Master 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 Master Servicer to deliver, or any delay in
delivering, cash, documents or records to it, or (ii) restrictions imposed by
any regulatory authority having jurisdiction over the Master Servicer or (iii)
any breaches of a predecessor Master Servicer.
(i) The Indenture Trustee or any other successor Master Servicer, upon
assuming the duties of Master Servicer hereunder, shall immediately make all
Delinquency Advances and pay all Compensating Interest which the Master Servicer
has theretofore failed to remit with respect to the Mortgage Loans; provided,
however, that if the Indenture Trustee is acting as successor Master Servicer,
the Indenture Trustee shall be required to make Delinquency Advances (including
the Delinquency Advances described in this clause (i)) only if, in the Indenture
Trustee's reasonable good faith judgment, such Delinquency Advances will
ultimately be recoverable from the related Mortgage Loans.
(j) The Master Servicer which is being removed or is resigning shall give
notice to the Mortgagors and to Moody's and Standard and & Poor's of the
transfer of the servicing to the successor.
(k) The Indenture Trustee shall give notice to the Note Insurer, Moody's,
Standard & Poor's and to the Noteholders of the occurrence of any event
specified in Section 5.1(a), 5.1(b) or any other event in which the Master
Servicer is no longer acting as Master Servicer hereunder of which the Indenture
Trustee has actual knowledge.
SECTION 5.2. INSPECTIONS BY THE NOTE INSURER AND THE INDENTURE TRUSTEE;
ERRORS AND OMISSIONS INSURANCE. (a) At any reasonable time and from time to time
upon reasonable notice, the Note Insurer, the Indenture Trustee, or any agents
or representatives thereof may inspect the Master Servicer's servicing
operations and discuss the servicing operations of the
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Master Servicer with any of its officers or directors. The costs and expenses
incurred by the Master Servicer or its agents or representatives in connection
with any such examinations or discussions shall be paid by the Master Servicer.
(b) The Master Servicer agrees to maintain errors and omissions coverage
and a fidelity bond, each at least to the extent generally maintained by prudent
mortgage loan servicers having servicing portfolios of a similar size.
SECTION 5.3. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS
OF MASTER SERVICER. Any corporation into which the Master Servicer may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Master Servicer shall
be a party, or any corporation succeeding to all or substantially all of the
business of the Master Servicer, shall be the successor of the Master 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 5.1(g).
SECTION 5.4. NOTICES OF TO CLASS C NOTEHOLDERS. Upon any termination or
appointment of a successor to the Master Servicer pursuant to this Article V,
the Indenture Trustee shall give prompt written notice thereof to the Class C
Noteholders at their respective addresses appearing in the Note Register, the
Note Insurer and each Rating Agency.
ARTICLE VI
ADMINISTRATIVE DUTIES OF THE MASTER SERVICER
SECTION 6.1. ADMINISTRATIVE DUTIES WITH RESPECT TO THE INDENTURE. The
Master Servicer shall perform all its duties and the duties of the Issuer under
the Indenture. In addition, the Master Servicer shall consult with the Owner
Trustee as the Master Servicer deems appropriate regarding the duties of the
Issuer under the Indenture. The Master Servicer shall monitor the performance of
the Issuer and shall advise the Owner Trustee when action is necessary to comply
with the Issuer's duties under the Indenture. The Master Servicer shall prepare
for execution by the Issuer or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer to prepare, file or deliver
pursuant to the Indenture. In furtherance of the foregoing, the Master Servicer
shall take all necessary action that is the duty of the Issuer to take pursuant
to the Indenture.
(a) Duties with Respect to the Issuer.
(i) In addition to the duties of the Master Servicer set forth in
this Agreement or any of the Documents, the Master Servicer shall perform
such calculations and shall prepare for execution by the Issuer or the
Owner Trustee or shall cause the preparation by other appropriate Persons
of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer or the Owner Trustee to
prepare, file or deliver pursuant to this Agreement or any of the
Operative Documents or under state and federal tax and securities laws,
and at the request of the Owner Trustee shall take all appropriate action
that it is the duty of the Issuer to take pursuant to this Agreement or
any of the Operative Documents. In accordance with the directions of the
Issuer or the Owner Trustee, the Master Servicer shall administer, perform
or supervise the performance of such other activities in connection with
the Mortgage Loans (including
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the Operative Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Issuer or the Owner
Trustee and are reasonably within the capability of the Master Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Operative Documents to the contrary, the Master Servicer shall be
responsible for promptly notifying the Owner Trustee and the Indenture
Trustee in the event that any withholding tax is imposed on the Issuer's
payments (or allocations of income) with respect to the Trust C
Certificates as contemplated by this Agreement. Any such notice shall be
in writing and specify the amount of any withholding tax required to be
withheld by the Owner Trustee or the Indenture Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agreement or the Operative
Documents to the contrary, the Master Servicer shall be responsible for
performance of the duties of the Issuer or the Sponsor set forth in
[Section 5.1(a), (b), (c) and (d) of the Trust C Trust agreement] with
respect to, among other things, accounting and reports with respect to the
Trust C Certificates.
(iv) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Master Servicer may enter into
transactions with or otherwise deal with any of its Servicer Affiliates;
provided, however, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer and
shall be, in the Master Servicer's opinion, no less favorable to the
Issuer in any material respect.
(b) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Master Servicer are non-ministerial, the Master
Servicer shall not take any action pursuant to this Article VI unless within a
reasonable time before the taking of such action, the Master Servicer shall have
notified the Owner Trustee and the Note Insurer of the proposed action and the
Owner Trustee and the Note Insurer shall not have withheld consent or provided
an alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Mortgage Loans);
(C) the amendment, change or modification of this Agreement or
any of the Operative Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of Successor Servicers or the consent
to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
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(c) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Operative
Documents, the Master Servicer, in its capacity hereunder, shall not be
obligated to, and shall not, (1) make any payments to the Noteholders under the
Operative Documents, (2) sell the Trust Property pursuant to Section 5.1 of the
Indenture, (3) take any other action that the Issuer directs the Master Servicer
not to take on its behalf or (4) in connection with its duties hereunder assume
any indemnification obligation of any other Person.
(d) The Indenture Trustee or any successor Servicer shall not be
responsible for any obligations or duties of the Master Servicer under Section
6.1.
SECTION 6.2. RECORDS. The Master Servicer shall maintain appropriate books
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer and the Indenture Trustee at any time during normal business hours.
SECTION 6.3. ADDITIONAL INFORMATION TO BE FURNISHED TO THE ISSUER. The
Master Servicer shall furnish to the Issuer and the Indenture Trustee from time
to time such additional information regarding the Mortgage Loans as the Issuer
and the Indenture Trustee shall reasonably request.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. COMPLIANCE CERTIFICATES AND OPINIONS. Upon any application or
request by the Sponsor, the Note Insurer or the Class C Noteholders to the
Indenture Trustee to take any action under any provision of this Agreement, the
Sponsor, the Note Insurer or the Class C Noteholders, as the case may be, shall
furnish to the Indenture 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 any 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 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 7.2. FORM OF DOCUMENTS DELIVERED TO THE INDENTURE 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
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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 of an Authorized Officer of the Indenture 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 is erroneous. Any such certificate of an
Authorized Officer of the Indenture Trustee or any opinion of counsel may be
based, insofar as it relates to factual matter upon a certificate or opinion of,
or representations by, one or more Authorized Officers of the Sponsor or of the
Master Servicer, stating that the information with respect to such factual
matters is in the possession of the Sponsor or of the Master 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 Indenture Trustee, stating that
the information with respect to such matters is in the possession of the
Indenture Trustee, unless such 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 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
Indenture 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 7.3. ACTS OF CLASS C NOTEHOLDERS. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by the Class C Noteholders may be embodied
in and evidenced by one or more instruments of substantially similar tenor
signed by such Class C Noteholders in person or by an 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
Indenture Trustee, and, where it is hereby expressly required, to the Sponsor
and/or the Note Insurer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "act" of
the Class C Noteholders 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
Indenture Trustee and the Issuer, 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 Class C Notes shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Class C Noteholders shall bind the Class C Noteholders
issued upon the
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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 Indenture
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Class C Notes.
SECTION 7.4. NOTICES, ETC., TO INDENTURE TRUSTEE. Any request, demand,
authorization, direction, notice, consent, waiver or act of the Class C Notes or
other documents provided or permitted by this Agreement to be made upon, given
or furnished to, or filed with the Indenture Trustee by any Class C Notes, the
Note Insurer or by the Sponsor shall be sufficient for every purpose hereunder
if made, given, furnished or filed in writing to or with and received by the
Indenture Trustee at its corporate trust office as set forth in the Indenture.
SECTION 7.5. NOTICES AND REPORTS TO CLASS C NOTEHOLDERS; WAIVER OF
NOTICES. Where this Agreement provides for notice to Class C Noteholders of any
event or the mailing of any report to Class C Noteholders, such notice or report
shall be sufficiently given (unless otherwise herein expressly provided) if
mailed, first-class postage prepaid, to each Class C Noteholder affected by such
event or to whom such report is required to be mailed, at the address of such
Class C-1 Noteholder 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
Class C Noteholders 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 Class C Noteholder shall affect the sufficiency of such notice
or report with respect to other Class C Noteholders, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided.
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 Class C Noteholders shall be filed with the Indenture
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 Class C Noteholders 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 Indenture 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 Class C-1 Notes, failure to give such notice shall not affect any other
rights or obligations created hereunder.
SECTION 7.6. RULES BY INDENTURE TRUSTEE AND SPONSOR. The Indenture Trustee
may make reasonable rules for any meeting of Class C Noteholders.
SECTION 7.7. 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 7.8. SEVERABILITY. In case any provision in this Agreement or in
the Class C Notes 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.
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SECTION 7.9. BENEFITS OF AGREEMENT. Nothing in this Agreement or in the
Class C Notes, expressed or implied, shall give to any Person, other than the
Class C Noteholders, the Note Insurer and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
SECTION 7.10. LEGAL HOLIDAYS. In any case where the date of any Payment
Date, any other date on which any distribution to any Class C Noteholder 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 Class C Notes 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 Payment Date, or such other date for the payment of
any distribution to any Class C Noteholder 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 7.11. GOVERNING LAW. In view of the fact that Class C Noteholders
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 Class C Note 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.
SECTION 7.12. 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.
SECTION 7.13. USURY. The amount of interest payable or paid on any Class C
Note 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 Class C Note
exceeds the Highest Lawful Rate, the Issuer stipulates that such excess amount
will be deemed to have been paid to the Class C Noteholder as a result of an
error on the part of the Indenture Trustee acting on behalf of the Issuer and
the Class C Noteholder receiving such excess payment shall promptly, upon
discovery of such error or upon notice thereof from the Indenture Trustee on
behalf of the Issuer, refund the amount of such excess or, at the option of such
Class C Noteholder, apply the excess to the payment of principal of such Class C
Note, if any, remaining unpaid. In addition, all sums paid or agreed to be paid
to the Indenture Trustee for the benefit of Class C Noteholders 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 Class C Notes.
SECTION 7.14. AMENDMENT. (a) The Indenture Trustee, the Sponsor and the
Master Servicer, may at any time and from time to time, with the prior written
consent of the Note Insurer but without the giving of notice to or the receipt
of the consent of the Class C Noteholders, amend this Agreement, and the
Indenture Trustee shall consent to such amendment, for the purpose of (i) curing
any ambiguity, or correcting or supplementing any provision hereof which may be
inconsistent with any other provision hereof, or to add provisions hereto which
are
46
51
not inconsistent with the provisions hereof, (ii) complying with the
requirements of the Code and the regulations proposed or promulgated thereunder;
provided, however, that any such action shall not, as evidenced by an opinion of
counsel delivered to the Indenture Trustee, materially and adversely affect the
interests of any Class C Noteholder (without its written consent).
(b) The Indenture Trustee, the Sponsor and the Master Servicer may, at any
time and from time to time, with the prior written consent of the Note Insurer
but without the giving of notice to or the receipt of the consent of the Class C
Noteholders, amend this Agreement, and the Indenture Trustee shall consent to
such amendment, for the purpose of changing the definitions of Trust C Specified
Overcollateralization Amount provided, however, that no such change shall affect
the weighted average life of the Class C Notes (assuming an appropriate
prepayment speed as determined by the Underwriter by more than five percent, as
determined by the Underwriter.
(c) This Agreement may also be amended by the Indenture Trustee, the
Sponsor, and the Master Servicer at any time and from time to time, with the
prior written approval of the Note Insurer and not less than a majority of the
Percentage Interest represented by each the Class C Notes 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 Class C Noteholders hereunder; provided, however, that 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 Class C Noteholder without the
consent of the Class C Noteholder, (b) reduce the aforesaid percentages of
Percentage Interests which are required to consent to any such amendments or (c)
result in a down-rating or withdrawal of any ratings then assigned to the Class
C Notes, without the consent of the Class C Noteholders of the then Outstanding
Class C Notes.
(d) The Note Insurer, the Class C Noteholders, Moody's and Standard &
Poor's 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 7.15. THE NOTE INSURER. The Note Insurer is a third-party
beneficiary of this Agreement. Any right conferred to the Note Insurer shall be
suspended during any period in which the Note Insurer is in default in its
payment obligations under the Note Policy, except with respect to amendments to
this Agreement pursuant to Section 11.14. During the continuance of a Note
Insurer Default, the Note Insurer's rights hereunder shall vest in the Indenture
Trustee on behalf of the Class C Noteholders and shall be exercisable by the
Class C Noteholders of at least a majority in Percentage Interest of the Class C
Notes then Outstanding or, if there are no Class C Notes then Outstanding and
the Note Policy has expired or a Note Insurer Default has occurred and is
continuing, or if there are no Class C Notes outstanding and any and all amounts
due and owing the Note Insurer under the Insurance Agreement have been paid in
full, and the Note Policy has expired or is unavailable due to a Note Insurer
Default, by at least a majority of the Trust C Certificates then Outstanding. At
such time as the Class C Notes are no longer Outstanding hereunder and the Note
Insurer has been reimbursed for all Reimbursement Amounts to which it is
entitled hereunder and the Note Policy has expired, the Note Insurer's rights
hereunder shall terminate.
SECTION 7.16. NOTICES. All notices hereunder shall be given as follows,
until any superseding instructions are given to all other Persons listed below:
47
52
The Indenture Trustee: Bankers Trust Company
of California, N.A.
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Advanta 1998-4C
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Sponsor: Advanta Mortgage Conduit Services
Inc.
Welsh & ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Structured Finance
The Master Servicer: Advanta Mortgage Corp. USA
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Note Insurer: Ambac Assurance Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
(Advanta Mortgage Loan Trust
1998-4C Mortgage Loan Backed
Notes Series 1998-4)
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: ( ___ ) ___-____
Moody's: ▇▇▇▇▇'▇ Investors Service
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: The Mortgage Monitoring
Department
Standard & Poor's: Standard & Poor's Ratings Group
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Manager, Structured
Finance Operations Group
Underwriter: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
The Issuer: Advanta Mortgage Loan Trust 1998-4C
c/o Wilmington Trust Company, as
Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
48
53
SECTION 7.17. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as Owner
Trustee of the Issuer under the Trust Agreement, in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Issuer is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties to this Agreement and by any person
claiming by, through or under them and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaking by the
Issuer under this Agreement or any related documents.
49
54
IN WITNESS WHEREOF, the Sponsor, the Issuer, the Master Servicer and the
Indenture 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.
ADVANTA MORTGAGE CONDUIT SERVICES,
INC., as Sponsor
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
ADVANTA MORTGAGE CORP. USA
as Master Servicer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
ADVANTA MORTGAGE LOAN
TRUST 1998-4C, as Issuer
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as
Owner Trustee,
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Indenture Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Secretary
[SIGNATURE PAGE TO THE TRUST C SALE AND SERVICING AGREEMENT]
50
55
STATE OF CALIFORNIA )
: ss.:
COUNTY OF )
On the ____ day of _________, 1998, before me personally came ___________
to me known, who, being by me duly sworn did depose and say that his/her office
is located at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; that s/he is
________________ of Bankers Trust Company of California, N.A., the national
banking corporation described in and that executed the above instrument as
Indenture Trustee; and that s/he signed his/her name thereto under authority
granted by 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
56
EXHIBIT A
FORM OF CONTENTS OF MORTGAGE LOAN FILE
(a) the original Note, or a certified copy thereof, bearing all
intervening endorsements, endorsed either (i) "Pay to the order of Bankers Trust
Company of California, N.A., as custodian or trustee under the applicable
custody or trust agreement, without recourse" or (ii) "Pay to the order of
Bankers Trust Company of California, N.A., as custodian or trustee under the
applicable custody or trust agreement, without recourse, Advanta as Master
Servicer," or (iii) "Pay to the order of Bankers Trust Company of California,
N.A., as custodian or trustee" by [Seller, signature, name, title] and signed in
the name of the previous owner by an authorized offer (in the event that the
Mortgage Loan was acquired by the previous owner in a merger the signature must
be in the following form: "[the previous owner], successor by merger to [name of
predecessor]", in the event that the Mortgage Loan was acquired or originated
while doing business under another name, the signature must be in the following
form: "[the previous owner], formerly known as [previous name]". The original
Note should be accompanied by any rider made in connection with the origination
of the related Mortgage Loan;
(b) the original of any guarantee executed in connection with the Note (if
any);
(c) the original Mortgage with evidence of recording thereon or copies
certified by the related recording office or if the original Mortgage has not
yet been returned from the recording office, a certified copy of the Mortgage;
(d) the originals of all assumption, modification, consolidation or
extension agreements;
(e) the original assignment of Mortgage of each Mortgage Loan to "Bankers
Trust Company of California, N.A., as custodian or trustee". In the event that
the Mortgage Loan was acquired by the previous owner in a merger, the assignment
of Mortgage must be the "(previous owner), successor by merger to (names of
predecessor)"; and in the event that the Mortgage Loan was acquired or
originated by the previous owner while doing business under another name, the
Assignment of Mortgage must be by the "(previous owner), formerly known as
(previous name)"; and
(f) the originals of all intervening assignments of Mortgage, showing a
complete chain of assignment from origination to the related Seller, including
warehousing assignments, with evidence of recording thereon (or, if an original
intervening assignment has not been returned from the recording office, a
certified copy thereof.
A-1
57
EXHIBIT B
FORM OF CERTIFICATE RE: MORTGAGE LOANS PREPAID IN FULL
I, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President of Advanta Mortgage Conduit Services,
Inc., a Delaware corporation, as sponsor (the "Sponsor"), hereby certify that
between the "Cut-Off Date" (as defined in the Trust C Sale and Servicing
Agreement dated as of November 1, 1998 among the Sponsor, Advanta Mortgage Corp.
USA, as master servicer, Advanta Mortgage Loan Trust 1998-4C, as Issuer, and
Bankers Trust Company of California, N.A., as Indenture Trustee) and the date
hereof the following schedule of "Mortgage Loans" (as defined in the Trust C
Sale and Servicing Agreement) has been prepaid in full.
Dated: November 24, 1998
By: __________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
B-1
58
EXHIBIT C
FORM OF INDENTURE TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
Bankers Trust Company of California, N.A., in its capacity as Indenture
Trustee (the "Indenture Trustee") under that certain Trust C Sale and Servicing
Agreement dated as of November 1, 1998 (the "Trust C Sale and Servicing
Agreement") by and among Advanta Mortgage Conduit Services, Inc., a Delaware
corporation, as sponsor (the "Sponsor"), Advanta Mortgage Corp. USA, a Delaware
corporation, as master servicer, Advanta Mortgage Loan Trust 1998-4C (the
"Issuer") and Bankers Trust Company of California, N.A., as Indenture Trustee,
hereby acknowledges receipt of the items delivered to it on behalf of the Issuer
by the Sponsor with respect to the Mortgage Loans listed on Schedule I of the
Trust C Sale and Servicing Agreement and hereby declares that it will hold such
items on behalf of the Class C Noteholders and the Note Insurer.
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
not in its individual capacity but solely
in its capacity as Indenture Trustee
By:___________________________________________
Name:
Title:
Dated: November 24, 1998
C-1
59
EXHIBIT D
FORM OF 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
Indenture Trustee (the "Indenture Trustee") of a certain pool of mortgage loans
(the "Pool") heretofore conveyed in trust to the Indenture Trustee, pursuant to
that certain Trust C Indenture dated as of November 1, 1998 (the "Trust C
Indenture") by and among Advanta Mortgage Loan Trust 1998-4C, as Issuer (the
"Issuer") and the Indenture Trustee; and
WHEREAS, the Trustee is required, pursuant to Section 2.2(a) of the Trust
C Sale and Servicing Agreement dated as of November 1, 1998 (the "Trust C Sale
and Servicing Agreement") among the Sponsor, the Issuer, the Indenture Trustee
and Advanta Mortgage Corp. USA, as Master Servicer, to review the Files relating
to the Pool within a specified period following the Closing Date and to notify
the Sponsor promptly of any defects with respect to the Pool, and the Sponsor is
required to remedy such defects or take certain other action, all as set forth
in Section 2.2(b) of the Trust C Sale and Servicing Agreement; and
WHEREAS, Section 2.2(a) of the Trust C Sale and Servicing Agreement
requires the Indenture Trustee to deliver this Certification upon the
satisfaction of certain conditions set forth therein.
NOW, THEREFORE, it has determined that all required documents (or
certified copies of documents listed in Section 2.1 of the Trust C Sale and
Servicing Agreement) have been executed or received, and that such documents
relate to the Initial Mortgage Loans identified in the Schedules of Mortgage
Loans pursuant to Section 2.1(a) of the Trust C Sale and Servicing 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 Sponsor pursuant to
Section 2.2(b) of the Trust C Sale and Servicing Agreement has been completed.
The Indenture Trustee makes no certification hereby, however, with respect to
any intervening assignments or assumption and modification agreements.
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By:__________________________________________
Name:
Title:
D-1
60
EXHIBIT E
DELIVERY ORDER
November 24, 1998
Bankers Trust Company
of California, N.A.
Three ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Ladies and Gentlemen:
Pursuant to Section 2.2 of the Trust C Indenture, dated as of November 1,
1998 (the "Trust C Indenture") by and between Advanta Mortgage Loan Trust
1998-4C, as Issuer and Bankers Trust Company of California, N.A., as Indenture
Trustee, the Issuer HEREBY CERTIFIES that all conditions precedent to the
issuance of Advanta Mortgage Loan Trust 1998-4C, Mortgage Loan Asset-Backed
Notes (the "Class C Notes"), HAVE BEEN SATISFIED and HEREBY REQUESTS YOU TO
AUTHENTICATE AND DELIVER said Class C Notes, and to RELEASE said Class C Notes
to the holders thereof, or otherwise upon their order.
Very truly yours,
ADVANTA MORTGAGE LOAN TRUST 1998-4C
by: WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:_____________________________________
Name:
Title:
▇-▇
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Conduit Services, Inc.
Mortgage Loan Certificates
Series 1998-4C
Statement to Class C Noteholders
AS TO THE POOL
DISTRIBUTION DATE:
DELINQUENCY ADVANCES MADE:
ACCRUED SERVICING FEE FOR THE CURRENT PERIOD:
PLUS ADDITIONAL SERVICING FEES:
LESS PERMITTED REDUCTIONS TO SERVICING FEES:
TOTAL SERVICING FEES DUE MASTER SERVICER (INCLUDING MASTER SERVICING FEE):
COLLECTED SERVICING FEES FOR CURRENT PERIOD:
Total Delinquency (Excluding Foreclosure & REO, Including
delinquent bankruptcies)
--------------------------------------------------------- Loans in
Foreclosure
30-59 60-89 90+ (Including
Days Days Days Total Delinquency bankruptcies in F/C)
---- ---- ---- ----------------- --------------------
UPS-$
%-$
Loans-$
%-#
BOOK VALUE AND LOAN NUMBER OF REO PROPERTY:
NUMBER OF LOANS AS OF THE CURRENT DISTRIBUTION DATE:
NUMBER OF LOANS AS OF THE NEXT DISTRIBUTION DATE:
WEIGHTED AVERAGE COUPON AS OF THE CURRENT DISTRIBUTION DATE:
E-2
62
WEIGHTED AVERAGE COUPON AS OF THE NEXT DISTRIBUTION DATE:
▇-▇
▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇:
LOAN PURCHASE PRICES
Bankruptcy
Proceedings
-----------
Loans -# UPB-$
Status
Current
Delinquent*
Foreclosure*
Total
Modified Loans
--------------
Loans-# UPS-$
Status
Current
Delinquent*
Foreclosure*
Total
* included in delinquency and foreclosure statistics above
CURTAILMENTS INCLUDED IN CURRENT DISTRIBUTION:
PREPAYMENTS IN FULL INCLUDED IN CURRENT DISTRIBUTION:
RECOVERIES OF PRINCIPAL INCLUDED IN CURRENT DISTRIBUTION:
CARRY-FORWARD AMOUNT:
AMOUNT OF SUBORDINATION INCREASE OR DECREASE:
INFORMATION PURSUANT TO
SECTION 6049(d)(7)(C):
PROJECTED EXCESS SPREAD:
BALANCE OF LARGEST LOAN:
▇-▇
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
TRUST C NOTE ACCOUNT DEPOSIT
AS TO THE POOL:
PROCEEDS OF LIQUIDATION OF TRUST ESTATE:
AMOUNT OF DEPOSIT IN THE TRUST C NOTE ACCOUNT:
LOAN PURCHASE PRICE AMOUNTS:
SUBSTITUTION AMOUNT:
INVESTMENT EARNINGS: ON CERT. ACCT.
MONTHLY REMITTANCE FOR EACH CLASS:
AMOUNT OF EXCESS SPREAD ALLOCABLE USED TO COVER SHORTFALLS WITH RESPECT TO TRUST
A AND TRUST B:
AMOUNT WITHDRAWN FROM TRUST C NOTE ACCOUNT AND DEPOSITED IN THE EXPENSE ACCOUNT:
AMOUNT WITHDRAWN FROM TRUST C NOTE ACCOUNT AND DISTRIBUTED TO TRUST C
CERTIFICATES:
AMOUNT REMAINING IN TRUST C ACCOUNT:
PREMIUM AMOUNT:
E-5
65
EXHIBIT F
FORM OF MONTHLY REPORT
Advanta Mortgage Conduit Services, Inc.
Mortgage Loan Notes
Series 1998-4C
Statement to Class C Noteholders
CURRENT
ORIGINAL FACE PRIOR PRINCIPAL PRINCIPAL
CLASS VALUE BALANCE INTEREST PRINCIPAL TOTAL BALANCE
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
TOTALS
-----------------------------------------------------------------------------------------------------------------------------
FACTOR INFORMATION PER $1000 OF ORIGINAL FACE PASS-THROUGH RATES
PRIOR CURRENT
PRINCIPAL PRINCIPAL
CLASS CUSIP BALANCE INTEREST PRINCIPAL TOTAL BALANCE CURRENT NEXT
-----------------------------------------------------------------------------------------------------------------------------
SPONSOR: Advanta Mortgage Conduit Services, Inc. ACCOUNT
SERVICER: Advanta Mortgage Corp. USA MANAGER:
-----------------
LEAD UNDERWRITER: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
RECORD DATE:
DISTRIBUTION DATE:
FACTOR INFORMATION:
F-1
66
EXHIBIT G
FORM OF MASTER SERVICER'S TRUST RECEIPT
To: Bankers Trust Company
of California, N.A.
Three ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust
Date:
In connection with the administration of the mortgage loans held by you as
Indenture Trustee under a certain Trust C Indenture dated as of November 1, 1998
and by and between Advanta Mortgage Loan Trust 1998-4C, as Issuer, and you, as
Indenture Trustee (the "Agreement"), the Master Servicer hereby requests a
release of the File held by you as Indenture Trustee with respect to the
following described Mortgage Loan for the reason indicated below:
Mortgagor's Name:
Loan No.:
Reason for requesting file:
_______ 1. Mortgage Loan paid in full.
(The Master Servicer hereby certifies that
all amounts received in connection with the
loan have been or will be credited to the
Trust C Note Account (whichever is
applicable) pursuant to the Agreement.)
_______ 2. Mortgage Loan repurchased pursuant to Section 4.14 of the Agreement.
(The Master Servicer hereby certifies that
the Loan Purchase Price has been or will be
paid to the Trust C Note Account pursuant to
the Agreement.)
_______ 3. Mortgage Loan substituted.
(The Master Servicer hereby certifies that a
Qualified Replacement Mortgage has been or
will be assigned and delivered to you along
with the related File pursuant to the
Agreement.)
67
_______ 4. The Mortgage Loan is being foreclosed.
_______ 5. Other. (Describe)
The undersigned acknowledges that the above File will be held by the
undersigned in accordance with the provisions of the Agreement and will be
returned to you, except if the Mortgage Loan has been paid in full, or
repurchased or substituted for by a Qualified Replacement Mortgage (in which
case the File will be retained by us permanently) and except if the Mortgage
Loan is being foreclosed (in which case the File will be returned when no longer
required by us for such purpose).
Capitalized terms used herein shall have the meanings ascribed to them in
the Agreement.
ADVANTA MORTGAGE CORP. USA
By______________________________________
Name:_________________________________
Title:________________________________