Exhibit 4.2
POOLING AND SERVICING AGREEMENT
Relating to
AMRESCO RESIDENTIAL SECURITIES CORPORATION
MORTGAGE LOAN TRUST 199_-_
Among
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor,
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller and Master Servicer,
------------------------------
---------------------------------------------
------------------------------------------------------------
as Servicers
and
--------------------------------------------
as Trustee
Dated as of _______________ __, 199_
CONTENTS
Page
CONVEYANCE........................................................................................................1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION.......................................................................2
Section 1.01 Definitions............................................................................2
Section 1.02 Use of Words and Phrases..............................................................43
Section 1.03 Captions; Table of Contents...........................................................44
Section 1.04 Opinions..............................................................................44
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST.............................................................45
Section 2.01 Establishment of the Trust............................................................45
Section 2.02 Office................................................................................45
Section 2.03 Purposes and Powers...................................................................45
Section 2.04 Appointment of the Trustee; Declaration of Trust......................................45
Section 2.05 Expenses of the Trust.................................................................45
Section 2.06 Ownership of the Trust................................................................45
Section 2.07 Reserved..............................................................................45
Section 2.08 Miscellaneous REMIC Provisions........................................................46
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS, THE MASTER SERVICER
AND THE SELLER; COVENANT OF SELLER TO CONVEY MORTGAGE LOANS.............................................48
Section 3.01 Representations and Warranties of the Depositor.......................................48
Section 3.02 Representations and Warranties of the Servicers and the Master Servicer...............49
Section 3.03 Representations and Warranties of the Seller..........................................52
Section 3.04 Representations and Warranties Relating to the Mortgage Loans; Covenants of
Seller to Take Certain Actions with Respect to the Mortgage Loans In Certain
Situations............................................................................54
Section 3.05 Conveyance of the Mortgage Loans, Subsequent Mortgage Loans and Qualified
Replacement Mortgages.................................................................62
Section 3.06 Acceptance by Trustee; Certain Substitutions of Mortgage Loans; Certification
by Trustee............................................................................65
Section 3.07 Conveyance of the Subsequent Mortgage Loans...........................................66
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES.......................................................................69
Section 4.01 Issuance of Certificates..............................................................69
Section 4.02 Sale of Certificates..................................................................69
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS..................................................................70
Section 5.01 Terms.................................................................................70
Section 5.02 Forms.................................................................................70
Page
Section 5.03 Execution, Authentication and Delivery................................................70
Section 5.04 Registration and Transfer of Certificates.............................................71
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.....................................72
Section 5.06 Persons Deemed Owners.................................................................73
Section 5.07 Cancellation..........................................................................73
Section 5.08 Limitation on Transfer of Ownership Rights............................................73
Section 5.09 Assignment of Rights..................................................................74
ARTICLE VI
COVENANTS...............................................................................................75
Section 6.01 Distributions.........................................................................75
Section 6.02 Money for Distributions to be Held in Trust; Withholding..............................75
Section 6.03 Protection of Trust Estate............................................................76
Section 6.04 Performance of Obligations............................................................76
Section 6.05 Negative Covenants....................................................................77
Section 6.06 No Other Powers.......................................................................77
Section 6.07 Limitation of Suits...................................................................77
Section 6.08 Unconditional Rights of Owners to Receive Distributions...............................78
Section 6.09 Rights and Remedies Cumulative........................................................78
Section 6.10 Delay or Omission Not Waiver..........................................................78
Section 6.11 Control by Owners.....................................................................78
Section 6.12 Access to Owners of Certificates' Names and Addresses.................................79
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES....................................................................80
Section 7.01 Collection of Money...................................................................80
Section 7.02 Establishment of Accounts.............................................................80
Section 7.03 Flow of Funds.........................................................................80
Section 7.04 Pre-Funding Account and Capitalized Interest Account..................................88
Section 7.05 Investment of Accounts................................................................89
Section 7.06 Reserved..............................................................................90
Section 7.07 Eligible Investments..................................................................90
Section 7.08 Accounting and Directions by Trustee..................................................92
Section 7.09 Reports by Trustee....................................................................92
Section 7.10 Additional Reports by Trustee.........................................................95
ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS.......................................................................................96
Section 8.01 Servicers and Subservicers............................................................96
Section 8.02 Collection of Certain Mortgage Loan Payments..........................................97
Section 8.03 Subservicing Agreements Between Servicer and Subservicer..............................97
Section 8.04 Successor Subservicer.................................................................98
Section 8.05 Liability of Servicer.................................................................98
Section 8.06 No Contractual Relationship Between Subservicer and the Trustee or the Owners.........98
Section 8.07 Assumption or Termination of Subservicing Agreement by Trustee........................98
Section 8.08 Principal and Interest Accounts; Escrow Accounts......................................98
Section 8.09 Delinquency Advances and Servicing Advances..........................................100
Section 8.10 Compensating Interest; Purchase of Mortgage Loans....................................101
Section 8.11 Maintenance of Insurance.............................................................102
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Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements..........................102
Section 8.13 Realization Upon Defaulted Mortgage Loans............................................103
Section 8.14 Trustee and Custodian to Cooperate; Release of Files.................................105
Section 8.15 Servicing Compensation...............................................................106
Section 8.16 Annual Statement as to Compliance....................................................106
Section 8.17 Annual Independent Certified Public Accountants' Reports.............................107
Section 8.18 Access to Certain Documentation and Information Regarding the
Mortgage Loans.......................................................................107
Section 8.19 Assignment of Agreement..............................................................107
Section 8.20 Events of Servicing Termination......................................................107
Section 8.21 Resignation of a Servicer and Appointment of Successor...............................109
Section 8.22 Waiver of Past Events of Servicing Termination.......................................111
Section 8.23 Assumption or Termination of Subservicing Agreement By the Trustee...................112
Section 8.24 Powers and Duties of the Trustee as Successor Servicer...............................112
Section 8.25 Liability of the Servicers...........................................................112
Section 8.26 Inspections by Trustee and Seller; Errors and Omissions Insurance....................113
Section 8.27 Merger, Conversion, Consolidation or Succession to Business of Servicer..............113
Section 8.28 Notices of Material Events...........................................................114
Section 8.29 Servicer's Monthly Servicing Report; Aggregate Monthly Servicing Report;
Reconciliation; Cooperation Procedures...............................................114
Section 8.30 Indemnification by the Servicer......................................................116
Section 8.31 Servicing Standard...................................................................117
Section 8.32 No Solicitation......................................................................117
Section 8.33 Powers and Duties of the Master Servicer.............................................117
Section 8.34 Liability of the Master Servicer.....................................................118
Section 8.35 Master Servicer Not to Resign........................................................118
ARTICLE IX
TERMINATION OF TRUST...................................................................................120
Section 9.01 Termination of Trust.................................................................120
Section 9.02 Auction Termination; Servicer Termination............................................120
Section 9.03 Termination Upon Loss of REMIC Status................................................122
Section 9.04 Disposition of Proceeds..............................................................123
ARTICLE X
THE TRUSTEE............................................................................................124
Section 10.01 Certain Duties and Responsibilities..................................................124
Section 10.02 Removal of Trustee for Cause.........................................................125
Section 10.03 Certain Rights of the Trustee........................................................126
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.............................127
Section 10.05 May Hold Certificates................................................................128
Section 10.06 Money Held in Trust..................................................................128
Section 10.07 Compensation and Reimbursement; No Lien for Fees.....................................128
Section 10.08 Corporate Trustee Required; Eligibility..............................................128
Section 10.09 Resignation and Removal; Appointment of Successor....................................128
Section 10.10 Acceptance of Appointment by Successor Trustee.......................................129
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the Trustee...........130
Section 10.12 Reporting; Withholding...............................................................130
Section 10.13 Liability of the Trustee.............................................................131
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Section 10.14 Appointment of Co-Trustee or Separate Trustee........................................131
Section 10.15 Appointment of Custodians............................................................132
Section 10.16 No Solicitation......................................................................132
ARTICLE XI
MISCELLANEOUS..........................................................................................133
Section 11.01 Compliance Certificates and Opinions.................................................133
Section 11.02 Form of Documents Delivered to the Trustee...........................................133
Section 11.03 Acts of Owners.......................................................................134
Section 11.04 Notices, etc. to Trustee.............................................................134
Section 11.05 Notices and Reports to Owners; Waiver of Notices.....................................134
Section 11.06 Rules by Trustee.....................................................................135
Section 11.07 Successors and Assigns...............................................................135
Section 11.08 Severability.........................................................................135
Section 11.09 Benefits of Agreement................................................................135
Section 11.10 Legal Holidays.......................................................................135
Section 11.11 Governing Law; Submission to Jurisdiction............................................136
Section 11.12 Counterparts.........................................................................136
Section 11.13 Usury................................................................................136
Section 11.14 Amendment............................................................................137
Section 11.15 Paying Agent; Appointment and Acceptance of Duties...................................137
Section 11.16 REMIC Status.........................................................................138
Section 11.17 Additional Limitation on Action and Imposition of Tax................................139
Section 11.18 Appointment of Tax Matters Person....................................................140
Section 11.19 Attorneys' Fees......................................................................140
Section 11.20 Notices..............................................................................140
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SCHEDULE I-A SCHEDULE OF GROUP I MORTGAGE LOANS
SCHEDULE I-B SCHEDULE OF GROUP II MORTGAGE LOANS
SCHEDULE II SCHEDULE OF ADVANTA LOANS AND WENDOVER LOANS
EXHIBIT A-1 FORM OF CLASS ▇-▇, ▇-▇, ▇-▇ and B CERTIFICATES
EXHIBIT B-1 FORM OF CLASS C-IO CERTIFICATE
EXHIBIT B-2 FORM OF CLASS D CERTIFICATE
EXHIBIT B-3 FORM OF CLASS R CERTIFICATE
EXHIBIT B-4 FORM OF CLASS S CERTIFICATE
EXHIBIT C FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT D FORM OF CERTIFICATE RE: MORTGAGE LOANS PREPAID
IN FULL AFTER CUT-OFF DATE
EXHIBIT E FORM OF CUSTODIAN'S RECEIPT
EXHIBIT F FORM OF POOL CERTIFICATION
EXHIBIT G FORM OF DELIVERY ORDER
EXHIBIT H FORM OF SERVICER'S TRUST RECEIPT
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J FORM OF NOTICE
EXHIBIT K FORM OF LIQUIDATION REPORT
EXHIBIT L FORM OF CUSTODIAL AGREEMENT
EXHIBIT M AUCTION SALE BID PROCEDURES
v
POOLING AND SERVICING AGREEMENT, relating to AMRESCO RESIDENTIAL
SECURITIES CORPORATION MORTGAGE LOAN TRUST 199_-_, dated as of __________ __,
199_, by and among AMRESCO RESIDENTIAL SECURITIES CORPORATION, a Delaware
corporation, in its capacity as Depositor (the "Depositor"), AMRESCO RESIDENTIAL
CAPITAL MARKETS, INC., a Delaware corporation, in its capacities as the Seller
(in such capacity, the "Seller") and the Master Servicer (in such capacity, the
"Master Servicer"), _______________ _______________ and, _______________
_______________ as Servicer (the "Servicers"), and _______________
_______________, in its capacity as the Trustee (the "Trustee").
WHEREAS, the Depositor wishes to establish a trust and two subtrusts
and provide for the allocation and sale of the beneficial interests therein and
the maintenance and distribution of the Trust Estate;
WHEREAS, each of the Servicers have agreed to service a portion of the
Mortgage Loans, respectively, which constitute the principal assets of the Trust
Estate and the Master Servicer has agreed to supervise the activities of the
Servicers;
WHEREAS, all things necessary to make the Certificates, when executed
by the Depositor and authenticated by the Trustee valid instruments, and to make
this Agreement a valid agreement, in accordance with their and its terms, have
been done;
WHEREAS, _______________ _______________ is willing to serve in the
capacity of the Trustee hereunder;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Seller, each Servicer, the
Master Servicer and the Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on
the Certificates in accordance with their terms, all of the sums distributable
under this Agreement with respect to the Certificates and the performance of the
covenants contained in this Agreement, the Seller hereby bargains, sells,
conveys, assigns, and transfers to the Depositor and the Depositor hereby
bargains, sells, conveys, assigns and transfers to the Trustee, in trust,
without recourse and for the exclusive benefit of the Owners of the
Certificates, all of their respective right, title and interest in and to any
and all benefits accruing to them from (a) the Mortgage Loans (other than any
principal and interest payments due thereon on or prior to the Cut-Off Date or
Subsequent Cut-Off Date in the case of Subsequent Mortgage Loans) listed in
Schedules I-A and I-B to this Agreement (or Schedules I-A and I-B to any
Subsequent Transfer Agreement) which the Seller is causing to be delivered to
the Depositor and the Depositor is causing to be delivered to the Custodian, on
behalf of the Trustee (and all substitutions therefor as provided by Section
3.03, 3.04, 3.05 and 3.06), together with the related Mortgage Loan documents
and the Seller's and the Depositor's interest in any Property which secured a
Mortgage Loan but which has been acquired by foreclosure or deed in lieu of
foreclosure, and all payments thereon and proceeds of the conversion, voluntary
or involuntary, of the foregoing; (b) such amounts as may be held by the Trustee
in the Certificate Account, the Pre-Funding Account, the Capitalized Interest
Account, the Upper-Tier Group I Distribution Account and the Upper-Tier Group II
Distribution Account together with investment earnings on such amounts and such
amounts as may be held in the name of the Trustee in the Principal and Interest
Account, if any, exclusive of investment earnings thereon (except as otherwise
provided herein), whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicers); (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Mortgage Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to
payment of any and every kind, and other forms of obligations and receivables
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing) to pay the Certificates as specified herein; ((a)-(c)
above shall be collectively referred to herein as the "Trust Estate").
The Trustee acknowledges such sale, accepts the Trust hereunder in
accordance with the provisions hereof and agrees to perform the duties herein to
the best of its ability.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to the Group I Certificates and any
Payment Date, the calendar month immediately preceding the month in which the
Payment Date occurs; a "calendar month" shall be deemed to be 30 days. With
respect to the Group II Certificates and any Payment Date, the period commencing
on the preceding Payment Date (or on the Closing Date in the case of the first
Payment Date) and ending on the day immediately preceding the current Payment
Date. All calculations of interest on the Group I Certificates will be made on
the basis of a 360-day year assumed to consist of twelve 30 day months and
calculations of interest on the Group II Certificates will be made on the basis
of the actual number of days elapsed in the related Accrual Period and a year of
360 days.
"Addition Notice": With respect to the transfer of Subsequent Mortgage
Loans to the Trust for inclusion in Group I or Group II pursuant to Section 3.07
hereof, notice given in accordance with Section 3.07(b)(i) regarding the
Depositor's designation of Subsequent Mortgage Loans to be sold to the Trust for
inclusion in Group I or Group II and the aggregate Loan Balance of such
Subsequent Mortgage Loans with respect to each such Group.
"Advisor": As defined in Section 9.02(a) hereof.
"Aggregate Certificate Principal Balance": As of any date of
determination thereof, the sum of the then outstanding Certificate Principal
Balance of the Class A Certificates, the Mezzanine Certificates and the Class B
Certificates.
"Aggregate Monthly Servicing Report": The monthly servicing report
prepared by the Master Servicer pursuant to Section 8.29(g), which report is
based on the information provided in the Servicer's Monthly Servicing Reports.
"Aggregate Servicing Fee Rate": 0.50% per annum.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
"Applied Realized Loss Amount": The Group I Applied Realized Loss
Amount or the Group II Applied Realized Loss Amount, as applicable.
"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.
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"ARMC": AMRESCO Residential Mortgage Corporation, a Delaware
corporation.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor, the Seller, the Servicers and the Master Servicer initially including
those individuals whose names appear on the lists of Authorized Officers
delivered at the Closing; with respect to the Trustee, any Vice President,
Assistant Vice President, Trust Officer or any Officer of the Trustee located at
the Corporate Trust Office.
"Balloon Loan": A Mortgage Loan with respect to which the principal
balance by its original terms does not fully amortize at final maturity.
"Balloon Payment": The final payment of principal due with respect to a
Balloon Loan.
"Business Day": Any day that is not a Saturday, Sunday or other day on
which commercial banking institutions in the States of California or in the city
in which the Corporate Trust Office is located, are authorized or obligated by
law or executive order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 7.02(b) hereof and maintained by the
Trustee. Funds on deposit in the Capitalized Interest Account shall be invested
in a trust deposit with the Trustee from the day following the Startup Day until
the end of each Funding Period.
"Certificate": Any one of the Class A Certificates, the Mezzanine
Certificates, the Class B-1 Certificates, the Class C-IO Certificates, the Class
D Certificates, the Class S Certificates or the Class R Certificates, each
representing the interests and the rights described in this Agreement.
"Certificate Account": The certificate account established in
accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office; provided that the funds in such account shall not be commingled with
other funds held by the Trustee.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Certificates, the Certificate Principal Balances
thereof, as follows:
Class A-1 Certificates - $
Class A-2 Certificates - $
Class A-3 Certificates - $
Class A-4 Certificates - $
Class A-5 Certificates - $
Class A-6 Certificates - $
Class A-7 Certificates - $
Class A-8 Certificates - $
Class M-1F Certificates - $
Class M-1A Certificates - $
Class M-2F Certificates - $
Class M-2A Certificates - $
Class B-1F Certificates - $
Class B-1A Certificates - $
The Class S Certificates, the Class C-IO Certificates, the Class D
Certificates and the Class R Certificates do not have a Certificate Principal
Balance.
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"Class": Any Class of the Class A Certificates, any Class of the
Mezzanine Certificates, any class of the Class B-1 Certificates, the Class S
Certificates, either class of the Class C-IO Certificates, the Class D
Certificates, or the Class R Certificates.
"Class A Certificate": Any one of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates, Class A-5
Certificates, Class A-6 Certificates, Class A-7 Certificates and Class A-8
Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates less any amounts actually distributed on such Class A
Certificates with respect to the Class A Principal Distribution Amount pursuant
to Section 7.03(f) and 7.03(g) hereof with respect to principal thereon on all
prior Payment Dates plus any Preference Amount previously distributed with
respect to principal.
"Class A Distribution Amount": The sum of the Class A-1 Distribution
Amount, the Class A-2 Distribution Amount, the Class A-3 Distribution Amount,
the Class A-4 Distribution Amount, the Class A-5 Distribution Amount, the Class
A-6 Distribution Amount, the Class A-7 Distribution Amount and the Class A-8
Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-1 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-1 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-1 Certificates less any amounts actually distributed to the Owners of
the Class A-1 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-1 Certificates with respect to principal.
"Class A-1 Certificate Termination Date": The Payment Date on which the
Class A-1 Certificate Principal Balance is reduced to zero.
"Class A-1 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-1 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-1 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-1 Certificates as it relates to interest previously paid on the Class
A-1 Certificates.
"Class A-1 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-1 Current Interest, (y) the Class A-1 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount payable
to the Owners of the Class A-1 Certificates pursuant to Section 7.03(f) hereof.
"Class A-1 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-1 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-1 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-1 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-1
Pass-Through Rate.
"Class A-1 Pass-Through Rate": ____% per annum.
4
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less any amounts actually distributed to the Owners of
the Class A-2 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-2 Certificates with respect to principal.
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-2 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-2 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-2 Certificates as it relates to interest previously paid on the Class
A-2 Certificates.
"Class A-2 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-2 Current Interest, (y) the Class A-2 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount payable
to the Owners of Class A-2 Certificates pursuant to Section 7.03(f) hereof.
"Class A-2 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-2 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-2 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-2 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-2
Pass-Through Rate.
"Class A-2 Pass-Through Rate": _______% per annum.
"Class A-3 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less any amounts actually distributed to the Owners of
the Class A-3 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-3 Certificates with respect to principal.
"Class A-3 Certificate Termination Date": The Payment Date on which the
Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-3 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-3 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-3 Certificates as it relates to interest previously paid on the Class
A-3 Certificates.
5
"Class A-3 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-3 Current Interest, (y) the Class A-3 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount payable
to the Owners of the Class A-3 Certificates pursuant to Section 7.03(f) hereof.
"Class A-3 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-3 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-3 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-3 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-3
Pass-Through Rate.
"Class A-3 Pass-Through Rate": _______% per annum.
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less any amounts actually distributed to the Owners of
the Class A-4 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-4 Certificates with respect to principal.
"Class A-4 Certificate Termination Date": The Payment Date on which the
Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-4 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-4 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-4 Certificates as it relates to interest previously paid on the Class
A-4 Certificates.
"Class A-4 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-4 Current Interest, (y) the Class A-4 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount payable
to the Owners of the Class A-4 Certificates pursuant to Section 7.03(f) hereof.
"Class A-4 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-4 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-4 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-4 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-4
Pass-Through Rate.
"Class A-4 Pass-Through Rate": _______% per annum.
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less any amounts actually distributed to the
6
Owners of the Class A-5 Certificates pursuant to Section 7.03(f) hereof thereon
on all prior Payment Dates plus any Preference Amount previously distributed to
the Owners of Class A-5 Certificates with respect to principal.
"Class A-5 Certificate Termination Date": The Payment Date on which the
Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-5 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-5 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-5 Certificates as it relates to interest previously paid on the Class
A-5 Certificates.
"Class A-5 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-5 Current Interest, (y) the Class A-5 Interest Carry
Forward Amount and (z) the Group I Class A Principal Distribution Amount payable
to the Owners of the Class A-5 Certificates pursuant to Section 7.03(f) hereof.
"Class A-5 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-5 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-5 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-5 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-5
Pass-Through Rate.
"Class A-5 Pass-Through Rate": On any Payment Date (i) on or prior to
the Group I Step Up Date, the lesser of (x) _______% per annum and (y) the Group
I Net Weighted Average Coupon Rate and (ii) after the Group I Step Up Date, the
lesser of (x) _______% and (y) the Group I Net Weighted Average Coupon Rate.
"Class A-6 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-6 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class A-6 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-6 Certificates less any amounts actually distributed to the Owners of
the Class A-6 Certificates pursuant to Section 7.03(f) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-6 Certificates with respect to principal.
"Class A-6 Certificate Termination Date": The Payment Date on which the
Class A-6 Certificate Principal Balance is reduced to zero.
"Class A-6 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-6 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-6 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-6 Certificates as it relates to interest previously paid on the Class
A-6 Certificates.
"Class A-6 Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class A-6 Current Interest, (x) the Class A-6 Interest Carry
Forward Amount, (y) the Class A-6 Lockout Distribution Amount payable to the
Owners of the Class A-6 Certificates pursuant to Section 7.03(f) and (z) the
Group I Class A Principal Distribution Amount payable to the Owners of the Class
A-6 Certificates pursuant to Section 7.03(f) hereof.
7
"Class A-6 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-6 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-6 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-6 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-6
Pass-Through Rate.
"Class A-6 Lockout Distribution Amount": For any Payment Date, the
product of (i) the applicable Class A-6 Lockout Percentage for such Payment Date
and (ii) the Class A-6 Lockout Pro Rata Distribution Amount for such Payment
Date.
"Class A-6 Lockout Percentage": For each Payment Date, the percentage
set forth below:
Class A-6
Payment Dates Lockout Percentage
------------- ------------------
"Class A-6 Lockout Pro Rata Distribution Amount": For any Payment Date,
an amount equal to the product of (x) a fraction, the numerator of which is the
Class A-6 Certificate Principal Balance immediately prior to such Payment Date
and the denominator of which is the aggregate Certificate Principal Balance of
the Class A Certificates relating to Group I immediately prior to such Payment
Date and (y) the Group I Class A Principal Distribution Amount for such Payment
Date.
"Class A-6 Pass-Through Rate": _______% per annum.
"Class A-7 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-7 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposed of the REMIC provisions.
"Class A-7 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-7 Certificates less any amounts actually distributed to the Owners of
the Class A-7 Certificate pursuant to Section 7.03(g) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-7 Certificates with respect to principal.
"Class A-7 Certificate Termination Date": The Payment Date on which the
Class A-7 Certificate Principal Balance is reduced to zero.
"Class A-7 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-7 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-7 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-7 Certificates as it relates to interest previously paid on the Class
A-7 Certificates.
"Class A-7 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-7 Current Interest, (y) the Class A-7 Interest Carry
Forward Amount and (z) the portion of the Group II Class
8
A Principal Distribution Amount payable to the Owners of the Class A-7
Certificates pursuant to Section 7.03(g) hereof.
"Class A-7 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-7 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-7 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-7 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-7
Pass-Through Rate.
"Class A-7 Pass-Through Rate": With respect to the Payment Date in
__________ 199_, _______% per annum. Thereafter, on any Payment Date, the lesser
of (x) One-Month LIBOR plus _______% per annum and (y) the Group II Available
Funds Cap Rate for such Payment Date.
"Class A-8 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-8 Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposed of the REMIC provisions.
"Class A-8 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-8 Certificates less any amounts actually distributed to the Owners of
the Class A-8 Certificate pursuant to Section 7.03(g) hereof on all prior
Payment Dates plus any Preference Amount previously distributed to the Owners of
the Class A-8 Certificates with respect to principal.
"Class A-8 Certificate Termination Date": The Payment Date on which the
Class A-8 Certificate Principal Balance is reduced to zero.
"Class A-8 Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class A-8 Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class A-8 Pass-Through Rate plus the Preference Amount owed to the Owners of the
Class A-8 Certificates as it relates to interest previously paid on the Class
A-8 Certificates.
"Class A-8 Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-8 Current Interest, (y) the Class A-8 Interest Carry
Forward Amount and (z) the portion of the Group II Class A Principal
Distribution Amount payable to the Owners of the Class A-8 Certificates pursuant
to Section 7.03(g) hereof.
"Class A-8 Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
A-8 Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class A-8 Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class A-8 Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class A-8
Pass-Through Rate.
"Class A-8 Pass-Through Rate": With respect to the Payment Date in
October 1998, _______% per annum. Thereafter, on any Payment Date on or prior to
the Group II Step Up Date, the lesser of (x) One- Month LIBOR plus _______% per
annum and (y) the Group II Available Funds Cap Rate for such Payment Date and on
any Payment Date after the Group II Step Up Date, the lesser of (x) One-Month
LIBOR plus _______% per annum and (y) the Group II Available Funds Cap Rate.
"Class B-1 Certificate": Any one of the Class B-1F Certificates or the
Class B-1A Certificates.
9
"Class B-1A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class B-1A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class B-1A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the Group II Applied Realized
Loss Amount as of such Payment Date.
"Class B-1A Certificate": Any one of the Certificates designated on the
face thereof as a Class B-1A Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class B-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1A Certificates pursuant to Section 7.03(g) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of the Class B-1A
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class B-1A Certificates with
respect to principal.
"Class B-1A Certificate Termination Date": The Payment Date on which
the Class B-1A Certificate Principal Balance is reduced to zero.
"Class B-1A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B-1A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B-1A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class B-1A Certificates as it relates to interest previously paid on the
Class B-1A Certificates.
"Class B-1A Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class B-1A Current Interest, (x) the Class B-1A Principal
Distribution Amount, if any, (y) the Class B-1A Interest Carry Forward Amount,
if any, and (z) the Class B-1A Realized Loss Amortization Amount, if any.
"Class B-1A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
B-1A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class B-1A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class B-1A Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class B-1A
Pass-Through Rate.
"Class B-1A Pass-Through Rate": With respect to the Payment Date in
__________ 199_, _______% per annum. Thereafter, on any Payment Date on or prior
to the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus _______%
per annum and (y) the Group II Available Funds Cap Rate for such Payment Date
and on any Payment Date after the Group II Step Up Date, the lesser of (x)
One-Month LIBOR plus _______% per annum and (y) the Group II Available Funds Cap
Rate.
"Class B-1A Principal Distribution Amount": As of any Payment Date on
or after the Group II Stepdown Date and as long as a Group II Trigger Event is
not in effect, the excess of (x) the aggregate Certificate Principal Balance of
the Group II Certificates (after taking into account the payment of the Group II
Class A Principal Distribution Amount, the Class M-1A Principal Distribution
Amount and the Class M- 2A Principal Distribution Amount on such Payment Date)
over (y) the lesser of (A) the product of (i) _______% and (ii) the outstanding
aggregate Loan Balance of the Mortgage Loans in Group II as of the last day of
the related Remittance Period and (B) the aggregate outstanding Loan Balance of
the Mortgage Loans in Group II as of the last day of the related Remittance
Period minus $_______________.
10
"Class B-1A Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class B-1A
Certificates as of such Payment Date and (y) the excess of (i) the Group II
Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra Principal
Distribution Amount, the Class M-1A Realized Loss Amortization Amount, the Class
M-2A Realized Loss Amortization Amount, the Class M-1A Interest Carry Forward
Amount, the Class M-2A Interest Carry Forward Amount and the Class B-1A Interest
Carry Forward Amount, in each case for such Payment Date.
"Class B-1F Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class B-1F Certificate Principal Balance (after taking into
account the distribution of the Group I Principal Distribution Amount on such
Payment Date, but prior to the application of the Class B-1F Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the Group I Applied Realized
Loss Amount as of such Payment Date.
"Class B-1F Certificate": Any one of the Certificates designated on the
face thereof as a Class B-1F Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class B-1F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class B-1F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class B-1F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of the Class B-1F
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class B-1F Certificates with
respect to principal.
"Class B-1F Certificate Termination Date": The Payment Date on which
the Class B-1F Certificate Principal Balance is reduced to zero.
"Class B-1F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class B-1F Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class B-1F Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class B-1F Certificates as it relates to interest previously paid on the
Class B-1F Certificates.
"Class B-1F Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class B- 1F Current Interest, (x) the Class B-1F Principal
Distribution Amount, if any, (y) the Class B-1F Interest Carry Forward Amount,
if any, and (z) the Class B-1F Realized Loss Amortization Amount, if any.
"Class B-1F Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
B-1F Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class B-1F Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class B-1F Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class B-1F
Pass-Through Rate.
"Class B-1F Pass-Through Rate": On any Payment Date, the lesser of (x)
_______% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class B-1F Principal Distribution Amount": As of any Payment Date on
or after the Group I Stepdown Date and as long as a Group I Trigger Event is not
in effect, the excess of (x) the aggregate Certificate Principal Balance of the
Group I Certificates (after taking into account the payment of the Group I Class
A Principal Distribution Amount, the Class M-1F Principal Distribution Amount
and the Class M-2F Principal Distribution Amount on such Payment Date) over (y)
the lesser of (A) the product of (i) _______%
11
and (ii) the outstanding aggregate Loan Balance of the Mortgage Loans in Group I
as of the last day of the related Remittance Period and (B) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group I as of the last day of
the related Remittance Period minus $_______________.
"Class B-1F Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class B-1F
Certificates as of such Payment Date and (y) the excess of (i) the Group I
Monthly Excess Cashflow Amount over (ii) the sum of the Group I Extra Principal
Distribution Amount, the Class M-1F Realized Loss Amortization Amount, the Class
M-2F Realized Loss Amortization Amount, the Class M-1F Interest Carry Forward
Amount, the Class M-2F Interest Carry Forward Amount and the Class B-1F Interest
Carry Forward Amount, in each case for such Payment Date.
"Class C-AIO Certificate": Any one of the Certificates designated on
the face thereof as a Class C-AIO Certificate, substantially in the form
annexed hereto as Exhibit B-1, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein and each evidencing
an interest designated as a "regular interest" in the Upper-Tier REMIC created
hereunder for purposes of the REMIC Provisions.
"Class C-AIO Certificate Termination Date": _______________ __, 200_.
"Class C-AIO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class C-AIO Notional Principal Amount
immediately prior to such Payment Date during the related Accrual Period at the
Class C-AIO Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class C-AIO Certificates as it relates to interest previously paid on the
Class C-AIO Certificates.
"Class C-AIO Distribution Amount": With respect to any payment date,
the sum of (x) the Class C-AIO Current Interest and (y) the Class C-AIO
Interest Carry Forward Amount, if any.
"Class C-AIO Interest Carry Forward Amount": With respect to any
Payment Date the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class C-AIO Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class C-AIO Interest Carry Forward Amount from all previous
payment dates exceeds (ii) the amount of the actual distribution made to Owners
of the Class C-AIO Certificates on such immediately preceding Payment Date and
(y) 30 days' interest on such amount at the Class C-AIO Pass-Through Rate.
"Class C-AIO Notional Principal Amount": Until the Payment Date
occurring in June 2000, the sum of (x) the Lower-Tier Balance of the Lower-Tier
Interest M-2A and (y) the Lower-Tier Balance of the Lower-Tier Interest B-1A;
thereafter, zero.
"Class C-AIO Pass-Through Rate": On any Payment Date, _______% per
annum.
"Class C-FIO Certificate": Any one of the Certificates designated on
the face thereof as a Class C-FIO Certificate, substantially in the form
annexed hereto as Exhibit B-1, authenticated and delivered by the Trustee,
representing the right to distributions as set forth herein and each evidencing
an interest designated as a "regular interest" in the Upper-Tier REMIC created
hereunder for purposes of the REMIC Provisions.
"Class C-FIO Certificate Termination Date": __________ __, 200_.
"Class C-FIO Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class C-FIO Notional Principal Amount
immediately prior to such Payment Date during the related Accrual Period at the
Class C-FIO Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class C-FIO Certificates as it relates to interest previously paid on the
Class C-FIO Certificates.
12
"Class C-FIO Distribution Amount": With respect to any Payment Date,
the sum of (x) the Class C-FIO Current Interest and (y) the Class C-FIO Carry
Forward Amount, if any.
"Class C-FIO Interest Carry Forward Amount": With respect to any
Payment Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the
Class C-FIO Current Interest as of the immediately preceding Payment Date and
(B) any unpaid Class C-FIO Interest Carry Forward Amount from all previous
Payment Dates exceeds (ii) the amount of the actual distribution with respect to
interest made to the Owners of the Class C-FIO Certificates on such immediately
preceding Payment Date and (y) 30 days' interest on such amount at the Class
C-FIO Pass-Through Rate.
"Class C-FIO Notional Principal Amount": Until the Payment Date
occurring in __________ 200_, the sum of (x) the Lower-Tier Balance of the
Lower-Tier Interest M-1F and (y) the Lower-Tier Balance of the Lower-Tier
Interest M-2F; thereafter, zero.
"Class C-FIO Pass-Through Rate": On any Payment Date, _______% per
annum.
"Class C-IO Certificate": Any one of the Class C-AIO Certificates or
Class C-FIO Certificates.
"Class D Carry Forward Amount": With respect to any Payment Date the
amount, if any, by which (x) the Class D Distribution Amount as of the
immediately preceding Payment Date exceeds (y) the amount of the actual
distribution made to Owners of the Class D Certificates on such immediately
preceding Payment Date.
"Class D Certificate": Any one of the Certificates designated on the
face thereof as a Class D Certificate, substantially in the form annexed hereto
as Exhibit B-2, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class D Distribution Amount": With respect to any Payment Date
beginning in __________ 200_, the sum of:
(1) with respect to Mortgage Loans in Group I, one-twelfth of
the product of (x) the sum of the aggregate Loan Balances of such
Mortgage Loans on the immediately preceding Payment Date and (y) the
excess, if greater than zero, of (I) the weighted average of the Coupon
Rates of such Mortgage Loans over (II) the sum of the following
payments allocable to Group I on or in respect of the related Payment
Date (in each case expressed as an annual rate based on such aggregate
outstanding Loan Balance): (A) the Aggregate Servicing Fee Rate, (B)
the Trustee Fee Rate, (C) the Master Servicer Fee Rate and (D) the
Class B-1F Pass-Through Rate;
(2) with respect to Mortgage Loans in Group II, one-twelfth of
the product of (x) the sum of the aggregate Loan Balances of such
Mortgage Loans on the immediately preceding Payment Date and (y) the
excess, if greater than zero, of (I) the weighted average of the Coupon
Rates of such Mortgage Loans on such immediately preceding Payment Date
(weighted on the basis of the Loan Balances as of such Payment Date)
over (II) the sum of the following payments allocable to Group II on or
in respect of the related Payment Date (in each case expressed as an
annual rate based on such aggregate outstanding Loan Balance): (A) the
Aggregate Servicing Fee Rate, (B) the Trustee Fee Rate, (C) the Master
Servicer Fee Rate and (D) the Class B-1A Pass-Through Rate; and
(3) the Class D Carry Forward Amount, if any.
"Class M-1 Certificate": Any one of the Class M-1F Certificates or the
Class M-1A Certificates.
13
"Class M-1A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-1A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-1A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group
II Applied Realized Loss Amount as of such Payment Date over (ii) the sum of the
Class M-2A Applied Realized Loss Amount and the Class B-1A Applied Realized Loss
Amount, in each case as of such Payment Date.
"Class M-1A Certificate": Any one of the Certificates designated on the
face thereof as a Class M- 1A Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-1A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1A Certificates less the sum of (x) any amounts distributed to the
Owners of the Class M-1A Certificates pursuant to Section 7.03(g) hereof on all
prior Payment Dates, (y) the aggregate, cumulative amount of Class M-1A Applied
Realized Loss Amounts on all prior Payment Dates and (z) any Preference Amount
previously distributed to the Owners of the Class M-1A Certificates with respect
to principal.
"Class M-1A Certificate Termination Date": The Payment Date on which
the Class M-1A Certificate Principal Balance is reduced to zero.
"Class M-1A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-1A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-1A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-1A Certificates as it relates to interest previously paid on the
Class M-1A Certificates.
"Class M-1A Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-1A Current Interest, (x) the Class M-1A Principal
Distribution Amount, if any, (y) the Class M-1A Interest Carry Forward Amount,
if any, and (z) the Class M-1A Realized Loss Amortization Amount, if any.
"Class M-1A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-1A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-1A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-1A Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-1A
Pass-Through Rate.
"Class M-1A Pass-Through Rate": With respect to the Payment Date in
__________ 199_, _______% per annum. Thereafter, on any Payment Date on or prior
to the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus _______%
per annum and (y) the Group II Available Funds Cap Rate for such Payment Date
and on any Payment Date after the Group II Step Up Date, the lesser of (x)
One-Month LIBOR plus _______% per annum and (y) the Group II Available Funds Cap
Rate.
"Class M-1A Principal Distribution Amount": As of any Payment Date on
or after the Group II Stepdown Date and as long as a Group II Trigger Event is
not in effect, the excess of (x) the sum of (i) the Class A-7 Certificate
Principal Balance (after taking into account the payment of the Group II Class A
Principal Distribution Amount on such Payment Date) and (ii) the Class M-1A
Certificate Principal Balance immediately prior to such Payment Date over (y)
the lesser of (A) the product of (i) _______% and (ii) the outstanding Loan
Balance of the Mortgage Loans in Group II as of the last day of the related
Remittance Period and (B) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group II as of the last day of the related Remittance Period minus
$_______________.
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"Class M-1A Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class M-1A
Certificates as of such Payment Date and (y) the excess of (i) the Group II
Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra Principal
Distribution Amount and the Class M-1A Interest Carry Forward Amount, in each
case for such Payment Date.
"Class M-1F Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-1F Certificate Principal Balance (after taking into
account the distribution of the Group I Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-1F Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group I
Applied Realized Loss Amount as of such Payment Date over (ii) the sum of the
Class M-2F Applied Realized Loss Amount and the Class B-1F Applied Realized Loss
Amount, in each case as of such Payment Date.
"Class M-1F Certificate": Any one of the Certificates designated on the
face thereof as a Class M-1F Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-1F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-1F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-1F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates, and (y) the aggregate, cumulative amount of Class M-1F
Applied Realized Loss Amounts on all prior Payment Dates and (z) any Preference
Amount previously distributed to the Owners of the Class M-1F Certificates with
respect to principal.
"Class M-1F Certificate Termination Date": The Payment Date on which
the Class M-1F Certificate Principal Balance is reduced to zero.
"Class M-1F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-1F Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-1F Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-1F Certificates as it relates to interest previously paid on the
Class M-1F Certificates.
"Class M-1F Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-1F Current Interest, (x) the Class M-1F Principal
Distribution Amount, if any, (y) the Class M-1F Interest Carry Forward Amount,
if any, and (z) the Class M-1F Realized Loss Amortization Amount, if any.
"Class M-1F Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-1F Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-1F Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-1F Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-1F
Pass-Through Rate.
"Class M-1F Pass-Through Rate": On any Payment Date, the lesser of (x)
_______% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class M-1F Principal Distribution Amount": As of any Payment Date on
or after the Group I Stepdown Date and as long as a Group I Trigger Event is not
in effect, the excess of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates related to Group I (after taking into
account the payment of the Group I Class A Principal Distribution Amount on such
Payment Date) and (ii) the Class M-1F Certificate Principal Balance immediately
prior to such Payment Date over (y) the lesser of
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(A) the product of (i) _______% and (ii) the outstanding Loan Balance of the
Mortgage Loans in Group I as of the last day of the related Remittance Period
and (B) the aggregate outstanding Loan Balance of the Mortgage Loans in Group I
as of the last day of the related Remittance Period minus $__________.
"Class M-1F Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to Class M-1F as of
such Payment Date and (y) the excess of (i) the Group I Monthly Excess Cashflow
Amount over (ii) the sum of the Group I Extra Principal Distribution Amount and
the Class M-1F Interest Carry Forward Amount, in each case for such Payment
Date.
"Class M-2 Certificate": Any one of the Class M-2F Certificates or the
Class M-2A Certificates.
"Class M-2A Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-2A Certificate Principal Balance (after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-2A Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group
II Applied Realized Loss Amount as of such Payment Date over (ii) the Class B-1A
Applied Realized Loss Amount as of such Payment Date.
"Class M-2A Certificate": Any one of the Certificates designated on the
face thereof as a Class M- 2A Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-2A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2A Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2A Certificates, pursuant to Section 7.03(g) hereof on
all prior Payment Dates, (y) the aggregate, cumulative amount of Class M-2A
Applied Realized Loss Amounts on all prior Payment Dates, and (z) any Preference
Amount previously distributed to the Owners of the Class M-2A Certificates with
respect to principal.
"Class M-2A Certificate Termination Date": The Payment Date on which
the Class M-2A Certificate Principal Balance is reduced to zero.
"Class M-2A Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-2A Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-2A Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-2A Certificates as it relates to interest previously paid on the
Class M-2A Certificates.
"Class M-2A Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-2A Current Interest, (x) the Class M-2A Principal
Distribution Amount, if any, (y) the Class M-2A Interest Carry Forward Amount,
if any, and (z) the Class M-2A Realized Loss Amortization Amount, if any.
"Class M-2A Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-2A Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-2A Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-2A Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-2A
Pass-Through Rate.
"Class M-2A Pass-Through Rate": With respect to the Payment Date in
__________ 199_, _______% per annum. Thereafter, on any Payment Date on or prior
to the Group II Step Up Date, the lesser of (x) One-Month LIBOR plus _______%
per annum and (y) the Group II Available Funds Cap Rate for
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such Payment Date and on any Payment Date after the Group II Step Up Date, the
lesser of (x) One-Month LIBOR plus _______% per annum and (y) the Group II
Available Funds Cap Rate.
"Class M-2A Principal Distribution Amount": As of any Payment Date on
or after the Group II Stepdown Date and as long as a Group II Trigger Event is
not in effect, the excess of (x) the sum of (i) the Class A-7 Certificate
Principal Balance (after taking into account the payment of the Group II Class A
Principal Distribution Amount on such Payment Date), (ii) the Class M-1A
Certificate Principal Balance (after taking into account the payment of the
Class M-1A Principal Distribution Amount on such Payment Date) and (iii) the
Class M-2A Certificate Principal Balance immediately prior to such Payment Date
over (y) the lesser of (A) the product of (i) _______% and (ii) the outstanding
Loan Balance of the Mortgage Loans in Group II as of the last day of the related
Remittance Period and (B) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group II as of the last day of the related Remittance Period minus
$____________.
"Class M-2A Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to the Class M-2A
Certificates as of such Payment Date and (y) the excess of (i) the Group II
Monthly Excess Cashflow Amount over (ii) the sum of the Group II Extra Principal
Distribution Amount, the Class M-1A Realized Loss Amortization Amount, the Class
M-1A Interest Carry Forward Amount and the Class M-2A Interest Carry Forward
Amount, in each case for such Payment Date.
"Class M-2F Applied Realized Loss Amount": As to any Payment Date, the
lesser of (x) the Class M-2F Certificate Principal Balance (after taking into
account the distribution of the Group I Principal Distribution Amount on such
Payment Date, but prior to the application of the Class M-2F Applied Realized
Loss Amount, if any, on such Payment Date) and (y) the excess of (i) the Group I
Applied Realized Loss Amount as of such Payment Date over (ii) the Class B-1F
Applied Realized Loss Amount as of such Payment Date.
"Class M-2F Certificate": Any one of the Certificates designated on the
face thereof as a Class M-2F Certificate, substantially in the form annexed
hereto as Exhibit A, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the Upper-Tier REMIC created hereunder for
purposes of the REMIC Provisions.
"Class M-2F Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class M-2F Certificates less the sum of (x) any amounts actually distributed to
the Owners of the Class M-2F Certificates pursuant to Section 7.03(f) hereof on
all prior Payment Dates and (y) the aggregate, cumulative amount of Class M-2F
Applied Realized Loss Amounts on all prior Payment Dates plus any Preference
Amount previously distributed to the Owners of the Class M-2F Certificates with
respect to principal.
"Class M-2F Certificate Termination Date": The Payment Date on which
the Class M-2F Certificate Principal Balance is reduced to zero.
"Class M-2F Current Interest": With respect to any Payment Date, the
amount of interest accrued on the Class M-2F Certificate Principal Balance
immediately prior to such Payment Date during the related Accrual Period at the
Class M-2F Pass-Through Rate plus the Preference Amount owed to the Owners of
the Class M-2F Certificates as it relates to interest previously paid on the
Class M-2F Certificates.
"Class M-2F Distribution Amount": With respect to any Payment Date, the
sum of (w) the Class M-2F Current Interest, (x) the Class M-2F Principal
Distribution Amount, if any, (y) the Class M-2F Interest Carry Forward Amount,
if any, and (z) the Class M-2F Realized Loss Amortization Amount, if any.
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"Class M-2F Interest Carry Forward Amount": With respect to any Payment
Date, the sum of (x) the amount, if any, by which (i) the sum of (A) the Class
M-2F Current Interest as of the immediately preceding Payment Date and (B) any
unpaid Class M-2F Interest Carry Forward Amount from all previous Payment Dates
exceeds (ii) the amount of the actual distribution with respect to interest made
to the Owners of the Class M-2F Certificates on such immediately preceding
Payment Date and (y) 30 days' interest on such amount at the Class M-2F
Pass-Through Rate.
"Class M-2F Pass-Through Rate": On any Payment Date, the lesser of (x)
_______% per annum and (y) the Group I Net Weighted Average Coupon Rate.
"Class M-2F Principal Distribution Amount": As of any Payment Date on
or after the Group I Stepdown Date and as long as a Group I Trigger Event is not
in effect, the excess of (x) the sum of (i) the aggregate Certificate Principal
Balance of the Class A Certificates related to Group I (after taking into
account the payment of the Group I Class A Principal Distribution Amount on such
Payment Date), (ii) the Class M-1F Certificate Principal Balance (after taking
into account the payment of the Class M-1F Principal Distribution Amount on such
Payment Date) and (iii) the Class M-2F Certificate Principal Balance immediately
prior to such Payment Date over (y) the lesser of (A) the product of (i)
_______% and (ii) the outstanding Loan Balance of the Mortgage Loans in Group I
as of the last day of the related Remittance Period and (B) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group I as of the last day of
the related Remittance Period minus $__________.
"Class M-2F Realized Loss Amortization Amount": As of any Payment Date,
the lesser of (x) the Unpaid Realized Loss Amount relating to Class M-2F as of
such Payment Date and (y) the excess of (i) the Group I Monthly Excess Cashflow
Amount over (ii) the sum of the Group I Extra Principal Distribution Amount, the
Class M-1F Realized Loss Amortization Amount, the Class M-1F Interest Carry
Forward Amount and the Class M-2F Interest Carry Forward Amount, in each case
for such Payment Date.
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit B-3, authenticated and delivered by the Trustee, representing the
right to distributions as set forth herein, and evidencing an interest
designated as the "residual interest" in the Upper-Tier REMIC for the purposes
of the REMIC Provisions.
"Class S Certificate": Any one of the Certificates designated on the
face thereof as a Class S Certificate, substantially in the form annexed hereto
as Exhibit B-4, authenticated and delivered by the Trustee representing the
right to distributions as set forth herein. The Class S Certificates are a
"regular interest" in the Lower-Tier REMIC for the purposes of the REMIC
Provisions.
"Class S Distribution Amount": With respect to any Payment Date, the
sum of (a) the product of (x) the outstanding Loan Balance of each
_________________________Loan as of the first day of the related Remittance
Period and (y) one-twelfth of the difference between the Aggregate Servicing Fee
Rate and the Servicing Fee Rate for such Mortgage Loans, and (b) any unpaid
Preference Amount, if any, for the Class S Certificates. The Class S
Distribution Amount shall be calculated on a loan-by-loan basis.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
"Collection Period": The period beginning on the first day of the
calendar month immediately preceding the month in which a Monthly Remittance
Date occurs and ending on the last day of such
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immediately preceding calendar month; provided that in the case of the first
Monthly Remittance Date, the Collection Period is the period from __________ __,
199_ to __________ __, 199_.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at _______________ _______________, _______________ _______________ or
any other address that the Trustee advises the parties hereto is its principal
corporate trust office.
"Coupon Rate": The rate of interest borne by each Note from time to
time.
"Cram Down Loss": With respect to a Mortgage Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Mortgage Loan, the amount
of such reduction. A "Cram Down Loss" shall be deemed to have occurred on the
date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination thereof,
the Cumulative Realized Losses as a percentage of the Maximum Collateral Amount
(and with respect to the Servicer Loss Test the aggregate portion thereof
applicable to the related Servicer as set forth in the definition of Maximum
Collateral Amount).
"Cumulative Realized Losses": As of any date of determination, the
aggregate amount of Realized Losses with respect to the Mortgage Loans in the
related Group (and with respect to the Servicer Loss Test with respect to the
Mortgage Loans in the related Mortgage Loan Servicing Group) since the Cut-Off
Date.
"Current Interest": With respect to any Payment Date, the sum of the
Class A-1 Current Interest, the Class A-2 Current Interest, the Class A-3
Current Interest, the Class A-4 Current Interest, the Class A-5 Current
Interest, the Class A-6 Current Interest, the Class A-7 Current Interest, the
Class M-1F Current Interest, the Class M-1A Current Interest, the Class M-2F
Current Interest, the Class M-2A Current Interest, the Class B-1F Current
Interest, the Class B-1A Current Interest, the Class C-AIO Current Interest, the
Class C-FIO Current Interest, and the Class S Distribution Amount for such
Payment Date.
"Custodial Agreement": The Custodial Agreement dated as of June 1, 1998
among the Custodian, the Trustee, the Depositor, the Seller, the Master Servicer
and the Servicers.
"Custodian": _______________ _______________, or any successor thereto.
"Cut-Off Date": As of the close of business on __________ __, 199_.
"DCR": Duff & ▇▇▇▇▇▇ Credit Rating Co., or any successor thereto.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Mortgage Loan is "Delinquent" if any payment due
thereon is not made by the close of business on the corresponding 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 G
hereto and delivered by the Seller to the Trustee on the Startup Day pursuant to
Section 4.01 hereof.
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"Depositor": AMRESCO Residential Securities Corporation, a Delaware
corporation, or any successor thereto.
"Depository": The Depository Trust Company, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and any successor Depository hereafter named.
"Designated Depository Institution": With respect to each Principal and
Interest Account, a trust account maintained by_______________ _______________,
as long as it remains the Trustee, or by the trust department of a federal or
state chartered depository institution acting in its fiduciary capacity, having
combined capital and surplus of at least $50,000,000; provided, however, that if
a Principal and Interest Account is not maintained with the Trustee, (i) such
institution shall have a long-term debt rating of at least "A2" by ▇▇▇▇▇'▇ and,
if rated by Fitch or DCR at least "A" by Fitch or DCR and (ii) the Servicers
shall provide the Trustee and the Owners with an Officer's Certificate
identifying the location of the related Principal and Interest Account.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Offered Certificates
from time to time as a securities depository.
"Disqualified Organization": The meaning set forth from time to time in
the definition thereof at Section 860E(e)(5) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Due Date": The day of the month on which each Scheduled Payment is due
on a Mortgage Loan, exclusive of any grace period.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"Escrow Payment": The amounts constituting ground rents, taxes,
assessments, water rates, sewer rents, municipal charges, mortgage insurance
premiums, fire and hazard insurance premiums, condominium charges, and any other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant to
the Mortgage or any other document.
"FannieMae": FannieMae, a federally-chartered and privately-owned
corporation existing under the Federal National Mortgage Association Charter
Act, as amended, or any successor thereof.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Custodian, on behalf of the
Trustee pursuant to Section 3.05(b) hereof pertaining to a particular Mortgage
Loan and any additional documents required to be added to the File pursuant to
this Agreement.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Scheduled Payment Date": For each Class of the Offered
Certificates is as set out in Section 2.08(a).
"First Mortgage": Mortgage Loans secured by a valid Mortgage which
represents a first lien.
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"Fitch": Fitch IBCA, Inc., or any successor thereto.
"Formula Certificates": With respect to any Payment Date, each Class of
Group II Certificates that has a Formula Rate less than the Group II Weighted
Average Coupon Rate.
"Formula Rate": With respect to any Payment Date and a Class of Group
II Certificates, the rate determined in accordance with clause (x) of the
definition of "Pass-Through Rate" for such Class.
"Funding Period": With respect to each of Group I and Group II, the
respective period commencing on the Startup Day and ending on the earliest to
occur of (i) the date on which the amount on deposit in the Pre-Funding Account
with respect to such Group (exclusive of any investment earnings) is less than
$100,000 and (ii) __________ __, 199_.
"Group I": The pool of Mortgage Loans identified in the related
Schedule of Mortgage Loans as having been assigned to Group I in Schedule I-A
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof and each Subsequent Mortgage Loan delivered to the Trust for inclusion
therein.
"Group I Applied Realized Loss Amount": As of any Payment Date, the
excess of (x) the aggregate Certificate Principal Balance of the Group I
Certificates on such Payment Date, after taking into account the distribution of
the Group I Principal Distribution Amount on such Payment Date but prior to the
application of the Group I Applied Realized Loss Amount, if any, on such Payment
Date over (y) the aggregate outstanding Loan Balance of the Mortgage Loans in
Group I as of the last day of the related Remittance Period.
"Group I Auction Sale Bid Date": The first Monthly Remittance Date on
which the aggregate outstanding Certificate Principal Balance of the Group I
Certificates has declined to less than $__________.
"Group I Capitalized Interest Requirement": With respect to the Payment
Date in __________ 199_, the excess, if any, of (x) the interest on the Group I
Certificates on such Payment Date calculated at the Group I Weighted Average
Pass-Through Rate over (y) the sum of (i) one-month's interest on the aggregate
Loan Balances of the Mortgage Loans in Group I as of the close of business on
the last day of the immediately preceding Remittance Period calculated at a rate
equal to 1/12 of the weighted average of the Coupon Rates of the Mortgage Loans
in Group I less the applicable Servicing Fee Rate as of such Payment Date and
(ii) any Group I Pre-Funding Account Earnings to be transferred to the
Capitalized Interest Account on such Payment Date pursuant to Section 7.04(d)
hereof.
"Group I Certificates": The Class A Certificates (other than the Class
A-7 Certificates and the Class A-8 Certificates), the Class M-1F Certificates,
the Class M-2F Certificates, the Class B-1F Certificates and the Class C-FIO
Certificates.
"Group I Class A Principal Distribution Amount": As of any Payment Date
(a) prior to the Group I Stepdown Date or on or after the Group I Stepdown Date
if a Group I Trigger Event is in effect, 100% of the Group I Principal
Distribution Amount or (b) on or after the Group I Stepdown Date and as to which
a Group I Trigger Event is not in effect, the excess of (x) the aggregate
Certificate Principal Balance of the Class A Certificates relating to Group I
immediately prior to such Payment Date over (y) the lesser of (A) the product of
(i) _______% and (ii) the outstanding Loan Balance of the Mortgage Loans in
Group I as of the last day of the related Remittance Period and (B) the
outstanding aggregate Loan Balance of the Mortgage Loans in Group I as of the
last day of the related Remittance Period minus $__________.
21
"Group I Extra Principal Distribution Amount": As of any Payment Date,
the lesser of (x) the Group I Monthly Excess Interest Amount for such Payment
Date and (y) the Group I Overcollateralization Deficiency for such Payment Date.
"Group I Interest Amount Available": As of any Payment Date, the Group
I Interest Remittance Amount less the portion of the Trustee Fee and the Master
Servicer Fee related to Group I.
"Group I Interest Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest collected or required to
be advanced with respect to the related Remittance Period with respect to the
Mortgage Loans in Group I (less the Servicing Fee with respect to such Mortgage
Loans), (ii) all Compensating Interest paid by the Servicers on such Monthly
Remittance Date with respect to Mortgage Loans in Group I, (iii) the portion of
the Substitution Amount relating to interest on the Mortgage Loans in Group I,
(iv) any amounts related to Group I required to be transferred from the
Capitalized Interest Account to the Certificate Account pursuant to Section
7.04(e) hereof on the related Payment Date and (v) all Net Liquidation Proceeds
relating to interest not previously advanced with respect to the Mortgage Loans
in Group I.
"Group I Monthly Excess Cashflow Amount": For any Payment Date, the sum
of (x) the Group I Monthly Excess Interest Amount (plus any interest on the
Group I Overcollateralization Amount) and (y) the Group I Overcollateralization
Release Amount for such Payment Date.
"Group I Monthly Excess Interest Amount": With respect to any Payment
Date, the excess, if any, of (i) the Group I Interest Amount Available for the
related Remittance Period over (ii) the sum of (x) the Current Interest on the
Group I Certificates on such Payment Date and (y) the Interest Carry Forward
Amount with respect to the Class A Certificates related to Group I.
"Group I Net Weighted Average Coupon Rate": With respect to any Payment
Date, the weighted average of the Coupon Rates of the Mortgage Loans in Group I
(weighted by the Loan Balances of the Mortgage Loans in Group I), less _______%
per annum.
"Group I Overcollateralization Amount": As of any Payment Date, the
difference between (x) the sum of (i) the Loan Balance of the Mortgage Loans in
Group I as of the last day of the immediately preceding Remittance Period and
(ii) any amounts on deposit in the Pre-Funding Account relating to Group I and
(y) the aggregate Certificate Principal Balance of the Group I Certificates
(after taking into account all distributions of principal on such Group I
Certificates as of such Payment Date).
"Group I Overcollateralization Deficiency": As of any Payment Date, the
excess, if any, of (x) the Group I Targeted Overcollateralization Amount for
such Payment Date over (y) the Group I Overcollateralization Amount for such
Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance of
the Group I Certificates resulting from the distribution of the Group I
Principal Remittance Amount (but not the Group I Extra Principal Distribution
Amount) on such Payment Date, but prior to taking into account any Group I
Applied Realized Loss Amount on such Payment Date.
"Group I Overcollateralization Release Amount": As of any Payment Date,
the lesser of (x) the Group I Principal Remittance Amount for such Payment Date
and (y) the excess, if any, of (i) the Group I Overcollateralization Amount for
such Payment Date, assuming that 100% of the Group I Principal Remittance Amount
is applied on such Payment Date to the payment of principal on the Group I
Certificates and (ii) the Group I Targeted Overcollateralization Amount for such
Payment Date, provided that if a Group I Subordinated Trigger Event is in
effect, the Group I Overcollateralization Release Amount shall be zero.
22
"Group I Pre-Funding Account Earnings": With respect to the __________
199_ Payment Date, the actual investment earnings earned during the period from
the Startup Day through __________ __, 199_ (inclusive) on the portion of the
Pre-Funded Amount remaining and allocable to Group I during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof.
"Group I Principal Distribution Amount": As of any Payment Date, the
sum of (i) the Group I Principal Remittance Amount (minus, for Payment Dates
occurring on and after the Group I Stepdown Date and with respect to which a
Trigger Event is not in effect, the Group I Overcollateralization Release
Amount, if any) and (ii) the Group I Extra Principal Distribution Amount, if
any.
"Group I Principal Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) the scheduled principal collected or
required to be advanced by the Servicers with respect to Mortgage Loans in Group
I with respect to the related Remittance Period, (ii) all unscheduled principal
collected during the related Collection Period, (iii) the Loan Balance of each
Mortgage Loan in Group I that was purchased from the Trustee on or prior to such
Monthly Remittance Date, to the extent such Loan Balance was actually deposited
in the Principal and Interest Account, (iv) any Substitution Amounts relating to
principal delivered to the Trust in connection with a substitution of a Mortgage
Loan in Group I to the extent such Substitution Amounts were actually deposited
in the Principal and Interest Account on or prior to such Monthly Remittance
Date, (v) any amounts relating to Group I required to be transferred from the
Pre-Funding Account to the Certificate Account pursuant to Section 7.04(c) and
(vi) all Net Liquidation Proceeds actually collected by the Servicers with
respect to the Mortgage Loans in Group I during the related Remittance Period
(to the extent such Net Liquidation Proceeds related to principal).
"Group I Senior Enhancement Percentage": For any Payment Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates relating to Group I and (ii)
the Group I Overcollateralization Amount, in each case after taking into account
the distribution of the Group I Principal Distribution Amount on such Payment
Date, by (y) the Loan Balance of the Mortgage Loans in Group I as of the last
day of the related Remittance Period.
"Group I Senior Specified Enhancement Percentage": On any date of
determination thereof means _______%.
"Group I Servicer Clean-Up Call Date": The first Monthly Remittance
Date on which the outstanding Certificate Principal Balance of the Group I
Certificates has declined to $__________.
"Group I Stepdown Date": The later to occur of (x) the Payment Date in
July 2001 and (y) the first Group I Payment Date on which the Group I Senior
Enhancement Percentage (after taking into account distributions of principal
with respect to Group I on such Payment Date) is equal to or greater than the
Group I Senior Specified Enhancement Percentage.
"Group I Step Up Date": provided that the auction sale described in
Section 9.02(a) hereof with respect to Group I has not occurred, the date that
is 90 days after the Group I Auction Sale Bid Date.
"Group I Subordinated Trigger Event": A Group I Subordinated Trigger
Event has occurred with respect to a Payment Date if both of the following tests
are failed on such Payment Date:
A Group I Cumulative Loss Test is failed with respect to a Payment Date
if the amount of the Cumulative Loss Percentage with respect to Group I equals
or exceeds the percentage set out for the corresponding Payment Date below:
23
Payment Dates Cumulative Loss Percentage
A Group I Delinquency Test is failed with respect to a Payment Date if
the amount of 60+ Day Delinquent Loans, with respect to Group I as a percentage
of the aggregate outstanding Loan Balance of Group I equals or exceeds the
percentage set out for the corresponding Payment Date below:
Payment Dates 60+ Day Delinquent Percentage
"Group I Targeted Overcollateralization Amount": On any Payment Date
(x) prior to the Group I Stepdown Date, _______% of the aggregate Certificate
Principal Balance of the Group I Certificates as of the Startup Day and (y) on
or after the Group I Stepdown Date, the greater of (A) _______% of the aggregate
outstanding Loan Balance of the Mortgage Loans in Group I as of the last day of
the related Remittance Period and (B) $__________.
"Group I Trigger Event": A Group I Trigger Event has occurred with
respect to a Payment Date if the percentage obtained by dividing (x) the
principal amount of 60+ Day Delinquent Loans in Group I by (y) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group I as of the last day of
the immediately preceding Remittance Period equals or exceeds 50% of the Group I
Senior Enhancement Percentage as of the last day of the immediately preceding
Remittance Period.
"Group I Weighted Average Pass-Through Rate": As to any Payment Date,
the weighted average of the Class A-1 Pass-Through Rate, the Class A-2
Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4 Pass-Through
Rate, the Class A-5 Pass-Through Rate, the Class A-6 Pass-Through Rate, the
Class M-1F Pass-Through Rate, the Class M-2F Pass-Through Rate and the Class
B-1F Pass-Through Rate (such rate calculated for this purpose on the basis of
360-day year assumed to consist of twelve 30 day months) weighted by the
respective Certificate Principal Balance of the related Class as of such Payment
Date before taking into account any distributions to be made on such Payment
Date.
"Group II": The pool of Mortgage Loans identified in the related
Schedule of Mortgage Loans as having been assigned to Group II in Schedule I-B
hereto, including any Qualified Replacement Mortgages delivered in replacement
thereof and each Subsequent Mortgage Loan delivered to the Trust for inclusion
therein.
"Group II Applied Realized Loss Amount": As of any Payment Date, the
excess of (x) the aggregate Certificate Principal Balance of the Group II
Certificates on such Payment Date, after taking into account the distribution of
the Group II Principal Distribution Amount on such Payment Date but prior to the
application of the Group II Applied Realized Loss Amount, if any, on such
Payment Date over (y) the aggregate outstanding Loan Balance of the Mortgage
Loans in Group II as of the last day of the related Remittance Period.
"Group II Auction Sale Bid Date": The first Monthly Remittance Date on
which the aggregate Certificate Principal Balance of the Group II Certificates
has declined to less than $__________.
24
"Group II Available Escalation Amount": With respect to any Payment
Date, an amount (but not less than zero) equal to the sum of, with respect to
each Class of Formula Certificates, the product of (i) a rate equal to the Group
II Net Weighted Average Coupon Rate minus the Formula Rate for such Class and
(ii) the Certificate Principal Balance of such Class.
"Group II Available Funds Cap Rate": With respect to Group II, on any
Payment Date, a rate equal to the sum of (i) the Group II Net Weighted Average
Coupon Rate and (ii) the percentage equivalent of a fraction, the numerator of
which is the Group II Available Escalation Amount and the denominator of which
is the sum of the Certificate Principal Balances for each Class of the Group II
Capped Certificates.
"Group II Available Funds Cap Shortfall Amortization Amount": As of any
Payment Date, any amount distributed from the Group II Available Funds Cap
Shortfall Amount Account on such Payment Date.
"Group II Available Funds Cap Shortfall Amount": As of any Payment
Date, the excess, if any, of (x) the excess, if any, of (a) the aggregate amount
of interest due on the Group II Capped Certificates on all prior Payment Dates,
calculated at the related Formula Rate applicable to each such Payment Date over
(b) the aggregate amount of interest due on the Group II Capped Certificates on
all prior Payment Dates, calculated at the related Pass-Through Rates applicable
to each such Payment Date over (y) all Group II Available Funds Cap Shortfall
Amortization Amounts actually funded on all prior Payment Dates.
"Group II Capped Certificates": With respect to any Payment Date, each
Class of Group II Certificates that has a Formula Rate greater than the Group II
Net Weighted Average Coupon Rate.
"Group II Capitalized Interest Requirement": With respect to the
Payment Date in __________ 199_, the excess, if any, of (x) the interest on the
Group II Certificates on such Payment Date calculated at the Group II Weighted
Average Pass-Through Rate over (y) the sum of (i) one-month's interest on the
aggregate Loan Balances of the Mortgage Loans in Group II as of the close of
business on the last day of the immediately preceding Remittance Period
calculated at a rate equal to 1/12 of the weighted average of the Coupon Rates
of the Mortgage Loans in Group II less the applicable Servicing Fee Rate as of
such Payment Date and (ii) any Group II Pre-Funding Account Earnings to be
transferred to the Capitalized Interest Account on such Payment Date pursuant to
Section 7.04(d) hereof.
"Group II Certificates": The Class A-7 Certificates, the Class A-8
Certificates, the Class M-1A Certificates, the Class M-2A Certificates, the
Class B-1A Certificates and the Class C-AIO Certificates.
"Group II Class A Principal Distribution Amount": As of any Payment
Date (a) prior to the Group II Stepdown Date or on or after the Group II
Stepdown Date if a Group II Trigger Event is in effect, 100% of the Group II
Principal Distribution Amount or (b) on or after the Group II Stepdown Date and
as to which a Group II Trigger Event is not in effect, the excess of (x) the
aggregate Certificate Principal Balance of the Class A-7 Certificates
immediately prior to such Payment Date over (y) the lesser of (A) the product of
(i) _______% and (ii) the outstanding Loan Balance of the Mortgage Loans in
Group II as of the last day of the related Remittance Period and (B) the
outstanding aggregate Loan Balance of the Mortgage Loans in Group II as of the
last day of the related Remittance Period minus $__________.
"Group II Extra Principal Distribution Amount": As of any Payment Date,
the lesser of (x) the Group II Monthly Excess Interest Amount for such Payment
Date and (y) the Group II Overcollateralization Deficiency for such Payment
Date.
"Group II Interest Amount Available": As of any Payment Date, the Group
II Interest Remittance Amount less the portion of the Trustee Fee and the Master
Servicer Fee related to Group II.
25
"Group II Interest Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest collected or required to
be advanced with respect to the related Remittance Period with respect to the
Mortgage Loans in Group II (less the Servicing Fee with respect to such Mortgage
Loans), (ii) all Compensating Interest paid by the Servicers on such Monthly
Remittance Date with respect to Mortgage Loans in Group II, (iii) the portion of
the Substitution Amount relating to interest on the Mortgage Loans in Group II,
(iv) any amounts related to Group II required to be transferred from the
Capitalized Interest Account to the Certificate Account pursuant to Section
7.04(e) hereof on the related Payment Date and (v) all Net Liquidation Proceeds
relating to interest not previously advanced with respect to the Mortgage Loans
in Group II.
"Group II Monthly Excess Cashflow Amount": For any Payment Date, the
sum of (x) the Group II Monthly Excess Interest Amount (plus any interest on the
Group II Overcollateralization Amount) and (y) the Group II
Overcollateralization Release Amount for such Payment Date.
"Group II Monthly Excess Interest Amount": With respect to any Payment
Date, the excess, if any, of (i) the Group II Interest Amount Available for the
related Remittance Period over (ii) the sum of (x) the Current Interest on the
Group II Certificates on such Payment Date and (y) the Class A-7 Interest Carry
Forward Amount.
"Group II Net Weighted Average Coupon Rate": With respect to any
Payment Date, the weighted average of the Coupon Rates of the Mortgage Loans in
Group II (weighted by the Loan Balances of the Mortgage Loans in Group II), less
_______% per annum.
"Group II Overcollateralization Amount": As of any Payment Date, the
difference between (x) the sum of (i) the Loan Balance of the Mortgage Loans in
Group II as of the last day of the immediately preceding Remittance Period and
(ii) any amounts on deposit in the Pre-Funding Account relating to Group II and
(y) the aggregate Certificate Principal Balance of the Group II Certificates
(after taking into account all distributions of principal on such Group II
Certificates as of such Payment Date).
"Group II Overcollateralization Deficiency": As of any Payment Date,
the excess, if any, of (x) the Group II Targeted Overcollateralization Amount
for such Payment Date over (y) the Group II Overcollateralization Amount for
such Payment Date, calculated for this purpose after taking into account the
reduction on such Payment Date of the aggregate Certificate Principal Balance of
the Group II Certificates resulting from the distribution of the Group II
Principal Remittance Amount (but not the Group II Extra Principal Distribution
Amount) on such Payment Date, but prior to taking into account any Group II
Applied Realized Loss Amount on such Payment Date.
"Group II Overcollateralization Release Amount": As of any Payment
Date, the lesser of (x) the Group II Principal Remittance Amount for such
Payment Date and (y) the excess, if any, of (i) the Group II
Overcollateralization Amount for such Payment Date, assuming that 100% of the
Group II Principal Remittance Amount is applied on such Payment Date to the
payment of principal on the Group II Certificates over (ii) the Group II
Targeted Overcollateralization Amount for such Payment Date; provided, that if a
Group II Subordinated Trigger Event is in effect, the Group II
Overcollateralization Release Amount shall be zero.
"Group II Post Stepdown Amount": The lesser of (x) the Group II
Principal Distribution Amount and (y) the Group II Class A Principal
Distribution Amount.
"Group II Pre-Funding Account Earnings": With respect to the __________
199_ Payment Date, the actual investment earnings earned during the period from
the Startup Day through __________ __, 199_ (inclusive) on the portion of the
Pre-Funded Amount remaining and allocable to Group II during such period as
calculated by the Trustee pursuant to Section 3.07(d) hereof.
26
"Group II Principal Distribution Amount": As of any Payment Date, the
sum of (i) the Group II Principal Remittance Amount (minus, for Payment Dates
occurring on and after the Group II Stepdown Date and with respect to which a
Trigger Event is not in effect, the Group II Overcollateralization Release
Amount, if any) and (ii) the Group II Extra Principal Distribution Amount, if
any.
"Group II Principal Remittance Amount": As of any Monthly Remittance
Date, the sum, without duplication, of (i) the scheduled principal collected or
required to be advanced by the Servicers with respect to Mortgage Loans in Group
II with respect to the related Remittance Period, (ii) all unscheduled principal
collected during the related Collection Period, (iii) the Loan Balance of each
Mortgage Loan in Group II that was purchased from the Trustee on or prior to
such Monthly Remittance Date, to the extent such Loan Balance was actually
deposited in the Principal and Interest Account, (iv) any Substitution Amounts
relating to principal delivered to the Trust in connection with a substitution
of a Mortgage Loan in Group II to the extent such Substitution Amounts were
actually deposited in the Principal and Interest Account on or prior to such
Monthly Remittance Date, (v) any amounts relating to Group II required to be
transferred from the Pre-Funding Account to the Certificate Account pursuant to
Section 7.04(c) and (vi) all Net Liquidation Proceeds actually collected by the
Servicers with respect to the Mortgage Loans in Group II during the related
Remittance Period (to the extent such Net Liquidation Proceeds related to
principal).
"Group II Senior Enhancement Percentage": For any Payment Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates relating to Group II and (ii)
the Group II Overcollateralization Amount, in each case after taking into
account the distribution of the Group II Principal Distribution Amount on such
Payment Date by (y) the Loan Balance of the Mortgage Loans in Group II as of the
last day of the related Remittance Period.
"Group II Senior Specified Enhancement Percentage": On any date of
determination thereof means _______%.
"Group II Servicer Clean-Up Call Date": The first Monthly Remittance
Date on which the outstanding Certificate Principal Balance of the Group II
Certificates has declined to $__________.
"Group II Stepdown Date": The later to occur of (x) the Payment Date in
__________, __, 200_ and (y) the first Group II Payment Date on which the Group
II Senior Enhancement Percentage (after taking into account distributions of
principal with respect to Group II on such Payment Date) is equal to or greater
than the Group II Senior Specified Enhancement Percentage.
"Group II Step Up Date": Provided that the auction sale described in
Section 9.02(a) hereof with respect to Group II has not occurred, the date that
is 90 days after the Group II Auction Sale Bid Date.
"Group II Subordinated Trigger Event": A Group II Subordinated Trigger
Event has occurred with respect to a Payment Date if both of the following tests
are failed on such Payment Date:
A Group II Cumulative Loss Test is failed with respect to a Payment
Date if the Cumulative Loss Percentage with respect to Group II equals or
exceeds the percentage set out for the corresponding Payment Date below:
Payment Dates Cumulative Loss Percentage
------------- --------------------------
27
A Group II Delinquency Test is failed with respect to a Payment Date if
the amount of 60+ Day Delinquent Loans, with respect to Group II as a percentage
of the aggregate outstanding Loan Balance of Group II equals or exceeds the
percentage set out for the corresponding Payment Date below:
Payment Dates 60+ Day Delinquency Percentage
------------- ------------------------------
"Group II Targeted Overcollateralization Amount": On any Payment Date
(x) prior to the Group II Stepdown Date, _______% of the aggregate Certificate
Principal Balance of the Group II Certificates as of the Startup Day and (y) on
or after the Group II Stepdown Date, the greater of (A) _______% of the
aggregate outstanding Loan Balance of the Mortgage Loans in Group II as of the
last day of the related Remittance Period and (B) $____________.
"Group II Trigger Event": A Group II Trigger Event has occurred with
respect to a Payment Date if the percentage obtained by dividing (x) the
principal amount of 60+ Day Delinquent Loans in Group II by (y) the aggregate
outstanding Loan Balance of the Mortgage Loans in Group II as of the last day of
the immediately preceding Remittance Period equals or exceeds _______% of the
Group II Senior Enhancement Percentage.
"Group II Weighted Average Pass-Through Rate": As to any Payment Date,
the weighted average of the Class A-7 Pass-Through Rate, the Class A-8
Pass-Through Rate, the Class M-1A Pass-Through Rate, the Class M-2A Pass-Through
Rate, and the Class B-1A Pass-Through Rate weighted by the respective
Certificate Principal Balance of the related Class as of such Payment Date
before taking into account any distributions to be made on such Payment Date.
"Highest Lawful Rate": As defined in Section 11.13.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in an Offered Certificate.
"Initial Mortgage Loans": The Mortgage Loans to be conveyed to the
Trust by the Depositor on the Startup Day.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Mortgage Loan, provided that any amount remitted
under Section 8.11 hereof shall be considered a payment under an Insurance
Policy.
"Interest Rate Adjustment Date": With respect to an adjustable rate
Mortgage Loan, the date on which the Coupon Rate is adjusted with respect to
such Mortgage Loan. The first Interest Rate Adjustment Date for each adjustable
rate Mortgage Loan is the date set forth on the Schedule of Mortgage Loans.
"Interest Remittance Amount": The sum of the Group I Interest
Remittance Amount and the Group II Interest Remittance Amount.
"Liquidated Loan": As defined in Section 8.13(b) hereof.
28
"Liquidation Expenses": Expenses, not to exceed Liquidation Proceeds,
which are incurred by a Servicer in connection with the liquidation of any
defaulted Mortgage Loan, such expenses, including, without limitation, legal
fees and expenses and accrued but unpaid Servicing Fees, and any unreimbursed
Servicing Advances expended by that Servicer pursuant to Section 8.09(b) with
respect to the related Mortgage Loan.
"Liquidation Proceeds": With respect to any Liquidated Loan, any
amounts (including the proceeds of any Insurance Policy) recovered by a Servicer
in connection with such Liquidated Loan, whether through trustee's sale,
foreclosure sale or otherwise.
"Loan Balance": With respect to each Mortgage Loan and as of any date
of determination, the outstanding principal balance thereof, on the Cut-Off Date
with respect to the Initial Mortgage Loans or relevant Subsequent Cut-Off Date
with respect to the Subsequent Mortgage Loans, less the sum of (i) any principal
payments relating to such Mortgage Loan (whether received from the related
Mortgagor or advanced by the related Servicer) included in previous Monthly
Remittance Amounts, and (ii) any Cram Down Losses relating to such Mortgage
Loan; provided, however, that the Loan Balance for any Mortgage Loan that has
become a Liquidated Loan shall be zero as of the first day of the Remittance
Period following the Remittance Period in which such Mortgage Loan becomes a
Liquidated Loan, and at all times thereafter.
"Loan Purchase Price": With respect to any Mortgage Loan purchased from
the Trust on a Monthly Remittance Date pursuant to Section 3.03, 3.04, 3.05,
3.06(b), 8.10(b) or 8.13(a) hereof, an amount equal to the Loan Balance of such
Mortgage Loan as of the date of purchase (assuming that the related Delinquency
Advance has already been remitted), plus one month's interest on the Loan
Balance thereof as of the beginning of the related Remittance Period computed at
the then applicable Coupon Rate, together with (without duplication) the
aggregate amounts of (i) all unreimbursed Delinquency Advances and Servicing
Advances theretofore made with respect to such Mortgage Loan, (ii) the interest
portion of any Delinquency Advances which the related Servicer has theretofore
failed to remit with respect to such Mortgage Loan as required by this Agreement
and (iii) all reimbursed Delinquency Advances to the extent that reimbursement
is not made from the Mortgagor or from Liquidation Proceeds from the respective
Mortgage Loan.
"Loan-to-Value Ratio": As of any particular date, the percentage
obtained by dividing the Appraised Value into the original principal balance of
the Note.
"London Business Day": Any day on which banks are open for dealing in
foreign currency and exchange in London and New York City.
"Lower-Tier A-1 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-1 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-1 Pass-Through Rate.
"Lower-Tier A-1 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-2 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-2 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-2 Pass-Through Rate.
"Lower-Tier A-2 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
29
"Lower-Tier A-3 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-3 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-3 Pass-Through Rate.
"Lower-Tier A-3 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-4 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-4 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-4 Pass-Through Rate.
"Lower-Tier A-4 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-5 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-5 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-5 Pass-Through Rate.
"Lower-Tier A-5 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-6 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-6 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-6 Pass-Through Rate.
"Lower-Tier A-6 Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier A-7 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-7 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-7 Pass-Through Rate.
"Lower-Tier A-7 Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier A-8 Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest A-8 immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier A-8 Pass-Through Rate.
"Lower-Tier A-8 Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier B-1A Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest B-1A immediately prior to such Payment Date during the related Accrual
Period of the Lower-Tier B-1A Pass-Through Rate.
"Lower-Tier B-1A Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier B-1F Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest B-1F immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier B-1F Pass-Through Rate.
30
"Lower-Tier B-1F Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier Balance": As to each Class of Lower-Tier Interests and any
Payment Date, the Initial Lower-Tier Balance as set forth in Section 2.08(a)
minus an amount equal to the aggregate amount distributed as principal to the
corresponding Classes of the Offered Certificates on previous Payment Dates
pursuant to Section 7.03(f) and (g).
"Lower-Tier Group I Distribution Amount": With respect to any Payment
Date, the sum of the Lower-Tier A-1 Monthly Interest, the Lower-Tier A-2 Monthly
Interest, the Lower-Tier A-3 Monthly Interest, the Lower-Tier A-4 Monthly
Interest, the Lower-Tier A-5 Monthly Interest, the Lower-Tier A-6 Monthly
Interest, the Lower-Tier B-1F Monthly Interest, the Lower-Tier M-1F Monthly
Interest, the Lower-Tier M-2F Monthly Interest, the Class A Group I Principal
Distribution Amount, the Class M-1F Principal Distribution Amount, the Class
M-2F Principal Distribution Amount and the Class B-1F Principal Distribution
Amount. Such Group I Class A Principal Distribution Amount is allocated as
follows: (a) to the Lower-Tier Interest A-6 an amount equal to the Class A-6
Lockout Distribution Amount and (b) as a distribution on the Lower-Tier Interest
A-1 until the Lower-Tier Interest A-1 Termination Date, the Class A-1 Principal
Distribution Amount; as a distribution on the Lower-Tier Interest A-2 until the
Lower-Tier Interest A-2 Termination Date, the Class A-2 Distribution Amount; as
a distribution on the Lower-Tier Interest A-3 until the Lower-Tier Interest A-3
Termination Date, the Class A-3 Distribution Amount; as a distribution on the
Lower-Tier Interest A-4 until the Lower-Tier Interest A-4 Termination Date, the
Class A-4 Distribution Amount; as a distribution on the Lower-Tier Interest A-5
until the Lower-Tier Interest A-5 Termination Date, the Class A-5 Distribution
Amount; and as a distribution on the Lower-Tier Interest A-6 until the
Lower-Tier Interest A-6 Termination Date, the Class A-6 Distribution Amount.
"Lower-Tier Group II Distribution Amount": With respect to any Payment
Date, the sum of the Lower-Tier A-7 Monthly Interest, the Lower-Tier A-8 Monthly
Interest, the Lower-Tier M-1A Monthly Interest, the Lower-Tier M-2A Monthly
Interest, the Lower-Tier B-1A Monthly Interest, the Class A Group II Principal
Distribution Amount, the Lower-Tier M-1A Principal Distribution Amount, the
Class M-2A Principal Distribution Amount and the Class B-1A Principal
Distribution Amount.
"Lower-Tier Interest A-1": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-2": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-3": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-4": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-5": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-6": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-7": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-8": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest B-1A": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest B-1F": The interest of that name established
pursuant to Section 2.08(a) hereof.
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"Lower-Tier Interest M-1A": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-1F": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-2A": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest M-2F": The interest of that name established
pursuant to Section 2.08(a) hereof.
"Lower-Tier Interest A-1 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-1 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-1 on such Payment Date.
"Lower-Tier Interest A-2 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-2 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-2 on such Payment Date.
"Lower-Tier Interest A-3 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-3 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-3 on such Payment Date.
"Lower-Tier Interest A-4 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-4 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-4 on such Payment Date.
"Lower-Tier Interest A-5 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-5 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-5 on such Payment Date.
"Lower-Tier Interest A-6 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-6 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-6 on such Payment Date.
"Lower-Tier Interest A-7 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-7 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-7 on such Payment Date.
"Lower-Tier Interest A-8 Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest A-8 is reduced to zero through the
distribution made in respect of Lower-Tier Interest A-8 on such Payment Date.
"Lower-Tier Interest B-1A Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest B-1A is reduced to zero through
the distribution made in respect of Lower-Tier Interest B-1A on such Payment
Date.
"Lower-Tier Interest B-1F Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest B-1F is reduced to zero through
the distribution made in respect of Lower-Tier Interest B-1F on such Payment
Date.
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"Lower-Tier Interest M-1A Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-1A is reduced to zero through
the distribution made in respect of Lower-Tier Interest M-1A on such Payment
Date.
"Lower-Tier Interest M-1F Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-1F is reduced to zero through
the distribution made in respect of Lower-Tier Interest M-1F on such Payment
Date.
"Lower-Tier Interest M-2A Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-2A is reduced to zero through
the distribution made in respect of Lower-Tier Interest M-2A on such Payment
Date.
"Lower-Tier Interest M-2F Termination Date": The Payment Date on which
the Lower-Tier Balance of Lower-Tier Interest M-2F is reduced to zero through
the distribution made in respect of Lower-Tier Interest M-2F on such Payment
Date.
"Lower-Tier M-1A Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-1A immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-1A Pass-Through Rate.
"Lower-Tier M-1A Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier M-1F Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-1F immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-1F Pass-Through Rate.
"Lower-Tier M-1F Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier M-2A Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-2A immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-2A Pass-Through Rate.
"Lower-Tier M-2A Pass-Through Rate": For any Payment Date, the Group II
Net Weighted Average Coupon Rate.
"Lower-Tier M-2F Monthly Interest": With respect to any Payment Date,
the amount of interest accrued on the Lower-Tier Balance of the Lower-Tier
Interest M-2F immediately prior to such Payment Date during the related Accrual
Period at the Lower-Tier M-2F Pass-Through Rate.
"Lower-Tier M-2F Pass-Through Rate": For any Payment Date, the Group I
Net Weighted Average Coupon Rate.
"Lower-Tier Pass-Through Rate": As to each of the respective Lower-Tier
Interests, the applicable "Lower-Tier Pass-Through Rate" set forth in Section
2.08 hereof.
"Lower-Tier REMIC": The segregated pool of assets referred to as the
Trust Estate, other than the Upper-Tier Group I Distribution Account and the
Upper-Tier Group II Distribution Account which are assets of the Upper-Tier
REMIC.
33
"Lower-Tier REMIC Residual Class": With respect to the Lower-Tier
REMIC, the interest therein designated as the "residual interest" therein for
purposes of the REMIC Provisions. The Lower-Tier REMIC Residual Class shall be
uncertificated, and shall be issuable only in Percentage Interests of 99.999% to
the Seller and 0.001% to, _______________ _______________ as Tax Matters Person.
Such interests shall be non-transferrable, except that __________________
_______________ may assign such interest to another person who accepts such
assignment and the designation as Tax Matters Person pursuant to Section 11.18
hereof. The Lower-Tier REMIC Residual Class is entitled only to any amounts at
any time held in the Certificate Account and not required to be paid to the
Upper-Tier REMIC, which is expected to be zero at all times during the term of
this Agreement.
"Master Servicer": AMRESCO Residential Capital Markets, Inc., a
Delaware corporation and any successor thereto.
"Master Servicer Fee": An amount equal to the product of (x) the
aggregate outstanding Loan Balance as of the last day of the related Collection
Period and (y) the Master Servicer Fee Rate.
"Master Servicer Fee Rate": _______% per annum.
"Maximum Collateral Amount": As to Group I, $______________; and as to
Group II, $_______________; provided that for purposes of calculating the
Servicer Loss Test with respect to each Servicer and each Mortgage Loan Group,
the Seller will provide the related Maximum Collateral Amounts per Servicer and
Mortgage Loan Group to the Trustee, each Servicer, the Master Servicer and the
Depositor within 10 days after the end of the Funding Period for such Mortgage
Loan Group.
"Mezzanine Certificates": Collectively, the Class M-1 Certificates and
the Class M-2 Certificates.
"Monthly Remittance Amount": The sum of the Interest Remittance Amount
and the Principal Remittance Amount.
"Monthly Remittance Date": The 20th day of each month or if such day is
not a Business Day, the Business Day succeeding such day, commencing in
__________ 199_.
"Moody's": ▇▇▇▇▇'▇ Investors Service Inc., or any successor thereto.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on an estate in fee simple interest in real property securing a Note.
"Mortgage Loan Group" or "Group": Group I or Group II, as the case may
be. References herein to the related Class of Offered Certificates, when used
with respect to a Mortgage Loan Group, shall mean (A) in the case of Group I,
the Group I Certificates and (B) in the case of Group II, the Group II
Certificates.
"Mortgage Loans": Such of the mortgage loans (including Initial
Mortgage Loans and Subsequent Mortgage Loans) transferred and assigned to the
Trust pursuant to Section 3.05(a) and 3.07(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the
Mortgage Loans originally so held being identified in the Schedules of Mortgage
Loans. The term "Mortgage Loan" includes any Mortgage Loan which is Delinquent,
which relates to a foreclosure or which relates to a Property which is REO
Property prior to such Property's disposition by the Trust. Any mortgage loan
which, although intended by the parties hereto to have been, and which
purportedly was, transferred and assigned to the Trust by the Depositor, in fact
was not transferred and assigned to the Trust for any reason whatsoever,
including, without limitation, the incorrectness of the statement in Section
3.04(a)(i) with respect to such mortgage loan, shall nevertheless be considered
a "Mortgage Loan" for all purposes of this Agreement.
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"Mortgagor": The obligor on a Note.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of Liquidation Expenses, unreimbursed Delinquency Advances,
unreimbursed Servicing Advances and accrued Servicing Fees relating to such
Mortgage Loan. In no event shall Net Liquidation Proceeds with respect to any
Liquidated Loan be less than zero.
"90+ Day Delinquent Loan": With respect to any date of determination
thereof, all REO Properties and each Mortgage Loan, with respect to which any
portion of a Scheduled Payment is, as of the last day of the related Collection
Period, 90 days or more Delinquent (including any Mortgage Loans which have gone
into foreclosure or have been discharged by reason of bankruptcy).
"90+ Delinquency Percentage (Rolling Three Month)": With respect to
each Mortgage Loan Servicing Group and any date of determination thereof, the
average of the percentage equivalents of the fractions determined for each of
the three immediately preceding Collection Periods the numerator of each of
which is equal to the aggregate Loan Balance of 90+ Day Delinquent Loans in the
related Mortgage Loan Servicing Group as of the last day of the preceding
Collection Period and the denominator of which is the aggregate Loan Balance of
all of the Mortgage Loans in the related Mortgage Loan Servicing Group as of the
last day of the preceding Collection Period.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
"Notional Principal Amount": With respect to a Class of the Class C-IO
Certificates, the related Class C-FIO Notional Principal Amount or the Class
C-AIO Notional Principal Amount.
"Offered Certificates": Collectively, the Class A Certificates, the
Mezzanine Certificates and the Class B-1 Certificates.
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Trustee.
"One-Month LIBOR": With respect to any Accrual Period for the Group II
Certificates, the rate determined by the Trustee on the related One-Month LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Trustee, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loans to leading European banks.
"One-Month LIBOR Determination Date": For the initial Accrual Period
for the Group II Certificates, the second London Business Day prior to the
Closing Date. With respect to any Accrual Period thereafter for the Group II
Certificates, the second London Business Day preceding the commencement of such
Accrual Period.
35
"Operative Documents": Collectively, this Agreement, the Subsequent
Transfer Agreements and the Certificates.
"Opinion of Counsel": A written opinion of counsel, who may be counsel
to the Depositor, Seller, any Servicer, the Master Servicer or the Trustee,
which counsel shall be reasonably acceptable to the Trustee.
"Original Aggregate Loan Balance": The aggregate Loan Balance of all
Initial Mortgage Loans as of the Cut-Off Date, i.e., $____________.
"Original Capitalized Interest Amount": $____________.
"Original Group I Pre-Funding Amount": $____________.
"Original Group II Pre-Funding Amount": $____________.
"Original Pre-Funded Amount": The amount deposited in the Pre-Funding
Account on the Startup Day from the proceeds of the sale of the Certificates,
which amount is $____________.
"Originator": Each of the companies from whom the Seller purchased the
Mortgage Loans.
"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Overcollateralization Release Amount": For any Payment Date, the sum
of the Group I Overcollateralization Release Amount and the Group II
Overcollateralization Release Amount.
"Overfunded Interest Amount": With respect to each Subsequent Transfer
Date, the sum, if any, of (x) with respect to the Group I Certificates, the
excess of (i) interest that would accrue from the related Subsequent Cut-Off
Date through __________ __, 199_ on the aggregate Loan Balances of the
Subsequent Mortgage Loans acquired by the Trust on such Subsequent Transfer
Date, calculated at a rate equal to the sum of (I) the Group I Weighted Average
Pass-Through Rate and (II) the Trustee Fee Rate and the Master Servicer Fee Rate
allocable to Group I (such fees calculated as an annual rate based on the
aggregate Loan Balances of the Mortgage Loans in Group I), over (ii) interest
that would accrue from the Subsequent CutOff Date through __________ __, 199_ on
the aggregate Loan Balances of the Subsequent Mortgage Loans related to Group I
acquired by the Trust on such Subsequent Transfer Date, calculated at the rate
at which
36
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date and
(y) with respect to the Group II Certificates the excess of (i) interest that
would accrue from the related Subsequent Cut-Off Date through __________ __,
199_ on the aggregate Loan Balances of the Subsequent Mortgage Loans acquired by
the Trust on such Subsequent Transfer Date, calculated at a rate equal to the
sum of (I) the Group II Weighted Average Pass-Through Rate and (II) the Trustee
Fee Rate and the Master Servicer Fee Rate allocable to Group II (such fees
calculated as an annual rate based on the aggregate Loan Balances of the
Mortgage Loans in Group II), over (ii) interest that would accrue from the
Subsequent Cut-Off Date through __________ __, 199_ on the aggregate Loan
Balances of the Subsequent Mortgage Loans related to Group II acquired by the
Trust on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date.
"Owner": The Person in whose name a Certificate is registered in the
Register, to the extent described in Section 5.06 hereof; provided that solely
for the purposes of determining the exercise of any voting rights hereunder, if
any Offered Certificates are beneficially owned by the Seller or any affiliate
thereof, the Seller or such affiliate shall not be considered an Owner.
"PAG": The Seller's "Performance Assumption Groupings" as described in
the Prospectus Supplement.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the month in which the Startup Day occurs and the Pre-
Funding Payment Date.
"Percentage Interest": With respect to an Offered Certificate or a
Class C-IO Certificate, a fraction, expressed as a decimal, the numerator of
which is the initial Certificate Principal Balance (or, in the case of the Class
C-IO Certificates, the related Notional Principal Amount) represented by such
Certificate and the denominator of which is the aggregate initial Certificate
Principal Balance (or, in the case of the Class C-IO Certificates, the related
Notional Principal Amount) represented by all the Certificates of the same
Class. With respect to a Class S Certificate, a Class D Certificate or a Class R
Certificate, the portion of the Class evidenced thereby, expressed as a
percentage, as stated on the face of such Certificate, all of which shall total
100% with respect to the related Class.
"Permitted Exceptions": The following: (a) the lien of current real
property taxes and assessments not yet due and payable; (b) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording acceptable to prudent mortgage lending
institutions generally and specifically referred to in the lender's title
insurance policy delivered to the related Originator of the Mortgage Loan and
referred to or otherwise considered in the appraisal made for the related
Originator of the Mortgage Loan; (c) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Property; and (d) a valid and current first lien
for Second Mortgages.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
37
"Preference Amount": With respect to the Offered Certificates and the
Class S Certificates, as the case may be, means, any amounts of Current Interest
and principal included in previous distributions to the Owners of such
Certificates which are recovered from such Owners as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such Owners.
"Pre-Funded Amount": As of any date of determination thereof, the
amount remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 7.02(b) hereof and maintained by the Trustee.
"Pre-Funding Determination Date": ________________ __, 199_
"Prepaid Installment": With respect to any Mortgage Loan, any
installment of principal thereof and interest thereon received by the related
Servicer prior to the scheduled due date for such installment, intended by the
Mortgagor as an early payment thereof and not as a Prepayment with respect to
such Mortgage Loan.
"Prepayment": Any payment of principal of a Mortgage Loan which is
received by a Servicer in advance of the scheduled due date for the payment of
such principal (other than the principal portion of any Prepaid Installment).
Substitution Amounts, the portion of the purchase price of any Mortgage Loan
purchased from the Trust pursuant to Section 3.03, 3.04, 3.05, 3.06(b) or
8.10(b) hereof representing principal and the proceeds of any Insurance Policy
which are to be applied as a payment of principal on the related Mortgage Loan
shall be deemed to be Prepayments for all purposes of this Agreement.
"Preservation Expenses": Expenditures made by a Servicer in connection
with a foreclosed Mortgage Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
"Principal and Interest Account": Each principal and interest account
established by a Servicer pursuant to Section 8.08(a) hereof.
"Principal Remittance Amount": As of any Monthly Remittance Date, the
sum of the Group I Principal Remittance Amount and the Group II Principal
Remittance Amount.
"Prohibited Transaction": The meaning set forth from time to time in
the definition thereof at Section 860F(a)(2) of the Code (or any successor
statute thereto) and applicable to the Trust.
"Property": The underlying property securing a Mortgage Loan.
"Prospectus": The Prospectus dated ________________ __, 199_
constituting part of the Registration Statement.
"Prospectus Supplement": The AMRESCO Residential Securities Corporation
Mortgage Loan Trust 199_-_ Prospectus Supplement dated ________________ __, 199_
to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
38
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Mortgage Loan substituted for
another pursuant to Section 3.03, 3.04, 3.05 or 3.06(b) hereof, which (i) has a
Coupon Rate not less than and not more than 1% greater than the Coupon Rate of
the Mortgage Loan being replaced, (ii) is of the same property type (i.e.,
single family, condominium, PUD unit, etc.) or is a single family dwelling and
the same occupancy status as the replaced Mortgage Loan or is a primary
residence, (iii) shall mature no later than ________________ __, 199_, (iv) has
a Loan-to-Value Ratio as of the Subsequent Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Mortgage Loan at such time, (v) shall be of
the same or higher credit quality classification (determined in accordance with
the PAGs) as the Mortgage Loan which such Qualified Subsequent Mortgage
replaces, (vi) has a Loan Balance as of the related Subsequent Cut-Off Date not
greater than and not substantially less than the Loan Balance of the replaced
Mortgage Loan as of such Subsequent Cut-Off Date, (vii) shall not provide for a
Balloon Payment if the related Mortgage Loan did not provide for a Balloon
Payment (and if such related Mortgage Loan provided for a Balloon Payment, such
Qualified Replacement Mortgage shall have an original maturity of not less than
the original maturity of such related Mortgage Loan), (viii) shall be a fixed
rate Mortgage Loan if the Mortgage Loan being replaced is a fixed rate Mortgage
Loan or an adjustable rate Mortgage Loan if the Mortgage Loan being replaced is
an adjustable rate Mortgage Loan, (ix) if such Mortgage Loan being replaced is
in Group II, (a) has the index of the replaced Mortgage Loan, (b) has the same
amount of time between rate adjustment dates as the replaced Mortgage Loan and
(c) has a margin no less than the replaced Mortgage Loan and (x) satisfies the
criteria set forth from time to time in the definition thereof at Section
860G(a)(4) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Rating Agencies": Collectively, ▇▇▇▇▇'▇, Fitch and DCR or any
successors thereto.
"Realized Loss": As to any Liquidated Loan, the amount, if any, by
which (x) the Loan Balance thereof plus any accrued and unpaid interest thereon
as of the date of liquidation exceeds (y) Net Liquidation Proceeds realized
thereon applied in reduction of such Loan Balance and accrued and unpaid
interest. As to any Mortgage Loan as to which there has been a Cram Down Loss,
the amount of such Cram Down Loss.
"Record Date": With respect to the Group I Certificates and each
Payment Date, the last day of the calendar month immediately preceding the
calendar month in which such Payment Date occurs and with respect to the Group
II Certificates and each Payment Date, the day immediately preceding such
Payment Date.
"Reference Banks": _________________________, _________________________
and National Westminster Bank PLC, provided that if any of the foregoing banks
are not suitable to serve as a Reference Bank, then any leading banks selected
by the Trustee which are engaged in transactions in Eurodollar deposits in the
international Eurocurrency market (i) with an established place of business in
London, (ii) not controlling, under the control of or under common control with
the Seller or any affiliate thereof, (iii) whose quotations appear on Telerate
Page 3750 on the relevant One-Month LIBOR Determination Date and (iv) which have
been designated as such by the Trustee.
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
39
"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
_____________), including all amendments thereto and including the Prospectus
Supplement relating to the Offered Certificates constituting a part thereof.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"Remittance Period": The period from and including the second day of
the calendar month preceding the month in which a Monthly Remittance Date occurs
to and including the first day of the calendar month in which a Monthly
Remittance Date occurs.
"REO Property": A Property acquired by a Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Reporting Date": The date on which the Master Servicer will provide
the Aggregate Monthly Servicing Report to the Trustee, which day shall be the
20th day of each calendar month (or if such day is not a Business Day, the next
succeeding Business Day).
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Offered Certificates
registered in the Register under the nominee name of the Depository.
"Retained Certificates": Collectively, the Class D Certificates and the
Class R Certificates.
"Schedule of Mortgage Loans": Each of the schedules of Mortgage Loans,
segregated by Mortgage Loan Group, with respect to the Initial Mortgage Loans
listing each Initial Mortgage Loan in the related Group to be conveyed on the
Startup Day and with respect to Subsequent Mortgage Loans listing each
Subsequent Mortgage Loan conveyed to the Trust for inclusion in the related
Group as of each Subsequent Transfer Date and the name of the related Servicer.
Such Schedules of Mortgage Loans shall identify each Mortgage Loan by (1) the
Servicer's loan number, (2) the related Servicing Fee, (3) borrower's name, (4)
address (including the state) of the Property, (5) the lien status thereof, (6)
the Loan-to-Value Ratio, (7) the Loan Balance as of the Cut-Off Date, (8) the
Coupon Rate thereof and (9) the paid-through date for such Mortgage Loan.
"Scheduled Payment": As of any date of calculation, with respect to a
Mortgage Loan, the then stated scheduled monthly installment of principal and
interest payable as it may have been reduced thereunder which, if timely paid,
would result in the full amortization of principal over the term thereof (or, in
the case of a "balloon" Note, the term to the nominal maturity date for
amortization purposes, without regard to the actual maturity date).
"Second Mortgage": Mortgage Loans secured by a valid mortgage which
represents a second lien.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": AMRESCO Residential Capital Markets, Inc., a Delaware
corporation.
40
"Servicers" or "Servicer": _________________________ and
_________________________ and their permitted successors and assigns. Any
reference to Servicers or Servicer shall mean the related Servicer with respect
to any Mortgage Loan or Mortgage Loan Servicing Group.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential mortgage loans.
"Servicer Loss Test": The Servicer Loss Test for each Servicer and with
respect to its related Mortgage Loan Servicing Group for any period set out
below is satisfied if the Cumulative Loss Percentage as it relates to such
Mortgage Loan Servicing Group and such period does not exceed the percentage set
out for such period below (provided, that for purposes of the calculation of the
Servicer Loss Test, Realized Losses attributable solely to Cram Down Losses
shall be excluded from the calculation of Cumulative Loss Percentage):
Cumulative Loss
Period Percentage
------ ---------------
"Servicer Termination Event": As defined in Section 8.20(a) hereof.
"Servicer Termination Test": The Servicer Termination Test for each
Servicer and with respect to the related Mortgage Loan Servicing Group is
satisfied for any date of determination thereof, if either (x) the 90+
Delinquency Percentage (Rolling Three Month) with respect to the related
Mortgage Loan Servicing Group is less than the greater of (i) 50% of the
weighted average of the Group I Senior Enhancement Percentage and the Group II
Senior Enhancement Percentage (weighted based on the outstanding Loan Balance
relating to Group I and Group II as of such date of determination) and (ii)
_______% or (y) the Servicer Loss Test is satisfied.
"Servicer's Monthly Servicing Report": Any report provided by a
Servicer pursuant to Section 8.29(a) hereof.
"Servicer's Trust Receipt": The Servicer's Trust Receipt, in the form
set out as Exhibit H hereto.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": With respect to any Mortgage Loan, an amount retained
by the related Servicer as compensation for servicing and administration duties
relating to such Mortgage Loan pursuant to Section 8.15.
"Servicing Fee Letter": Each of the servicing fee letters between the
Seller and the related Servicer, setting forth the Servicing Fee Rate and other
servicing compensation applicable to such Servicer.
"Servicing Fee Rate": The rate per annum set forth in the related
Servicing Fee Letter.
41
"Servicing Report Delivery Date": The date on which each Servicer will
provide its Servicer's Monthly Servicing Report to the Master Servicer and the
Seller, which day shall be the 10th day of each calendar month (or if such day
is not a Business Day, the next succeeding Business Day).
"60+ Day Delinquent Loan": With respect to any date of determination
thereof, all REO Properties and each Mortgage Loan, with respect to which any
portion of a Scheduled Payment is, as of the last day of the related Collection
Period, 60 days or more Delinquent (without giving effect to any grace period).
"60+ Day Delinquency Percentage": As of any date of determination
thereof, and as to the related Mortgage Loan Group, a fraction, expressed as a
percentage, the numerator of which is the outstanding aggregate Loan Balance of
60+ Day Delinquent Loans with respect to such Mortgage Loan Group and the
denominator of which is the outstanding aggregate Loan Balance of the Mortgage
Loans in such Mortgage Loan Group.
"Startup Day": ________________ __, 199_
"Subordinate Certificates": With respect to either Group, collectively,
the Mezzanine Certificates, the Class B Certificates and the Class C-IO
Certificates related to such Group.
"Subordinated Trigger Event": A Group I Subordinated Trigger Event or a
Group II Subordinated Trigger Event, as the case may be.
"Subsequent Cut-Off Date": The close of business on the first day of
the month in which a Qualified Replacement Mortgage or a Subsequent Mortgage
Loan is transferred and assigned to the Trust.
"Subsequent Mortgage Loans": The Mortgage Loans sold to the Trust after
the Startup Day pursuant to a fixed price contract for inclusion in Group I or
Group II pursuant to Section 3.07 hereof, which shall be listed on the Schedule
of Mortgage Loans attached to a Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee, the Depositor
and the Seller substantially in the form of Exhibit C hereto, by which
Subsequent Mortgage Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": With respect to Subsequent Mortgage Loans,
the date specified in each Subsequent Transfer Agreement, and with respect to a
Qualified Replacement Mortgage, the date upon which a conveyance of such
Qualified Replacement Mortgage to the Trust is effective.
"Subservicer": Any Person with whom a Servicer has entered into a
subservicing agreement and who satisfies all requirements set forth in Section
8.03 hereof in respect of the qualification of a subservicer.
"Subservicing Agreement": The written contract between a Servicer and
any Subservicer relating to servicing and/or administration of certain Mortgage
Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tape": The meaning provided in Section 8.29(d) hereof.
"Tax Matters Certificate": The Class R Certificate, representing a
0.001% Percentage Interest of such Class of Certificates, initially issued
to_______________ _______________ as the initial Tax Matters Person.
42
"Tax Matters Person": The Person appointed for the Trust pursuant to
Section 11.18 hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates, which shall be issued to and held by _______________
_______________ throughout the term hereof unless another Person shall accept an
assignment of such interest and the designation of Tax Matters Person pursuant
to Section 11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the Dow
▇▇▇▇▇ Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Date Pass-Through Rate": A rate equal to the sum of (a)(i)
the Group I Weighted Average Pass-Through Rate in the case of Mortgage Loans in
Group I or (ii) the Group II Weighted Average Pass-Through Rate in the case of
Mortgage Loans in Group II, plus (b) the sum of (x) the Trustee Fee and (y) the
Master Servicer Fee (calculated as an annual rate based on the outstanding
principal amount of the related Certificates) then accrued and outstanding.
"Termination Notice": As defined in Section 9.03(a) hereof.
"Termination Price": As defined in Section 9.02(b) hereof.
"Trust": AMRESCO Residential Securities Corporation Mortgage Loan Trust
1998-2, the trust created under this Agreement.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": Norwest Bank Minnesota, National Association, a national
banking association, not in its individual capacity but solely as Trustee under
this Agreement, and any successor hereunder.
"Trustee Fee": An amount equal to the product of (x) the aggregate
outstanding Loan Balance as of the last day of the related Collection Period and
(y) the Trustee Fee Rate.
"Trustee Fee Rate": _______% per annum.
"Underwriters": ______________________________ and
______________________________.
"Unpaid Realized Loss Amount": For any Class of the Subordinate
Certificates and as to any Payment Date, the excess of (x) the aggregate
cumulative amount of related Applied Realized Loss Amounts with respect to such
Class for all prior Payment Dates over (y) the aggregate, cumulative amount of
related Realized Loss Amortization Amounts with respect to such Class for all
prior Payment Dates.
"Upper-Tier Group I Distribution Account": The Upper-Tier Group I
Distribution Account established pursuant to Section 7.02(c) hereof.
"Upper-Tier Group II Distribution Account": The Upper-Tier Group II
Distribution Account established pursuant to Section 7.02(c) hereof.
"Upper-Tier REMIC": The REMIC established pursuant to Section 2.08
hereof with respect to the Certificates. The assets of the Upper-Tier REMIC
shall include the Upper-Tier Group I Distribution Account and the Upper-Tier
Group II Distribution Account, and the right to receive the distributions
deposited therein with respect to each Lower-Tier Interest.
43
Section 1.02 Use of Words and Phrases.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction.
END OF ARTICLE I
44
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto (excluding the Servicers) do hereby create and
establish, pursuant to the laws of the State of New York and this Agreement, the
Trust, which, for convenience, shall be known as "AMRESCO Residential Securities
Corporation Mortgage Loan Trust 199_-_".
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
the Corporate Trust Office or at such other address as the Trustee may designate
by notice to the Depositor, the Seller, the Servicers and the Owners.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning, holding and disposing of the Mortgage Loans and the Trust Estate in
connection therewith; (ii) activities that are necessary, suitable or convenient
to accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of either the Lower-Tier REMIC or the Upper-Tier
REMIC as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Depositor hereby appoints the Trustee as trustee of the Trust
effective as of the Startup Day, to have all the rights, powers and duties set
forth herein. The Trustee hereby acknowledges and accepts such appointment,
represents and warrants its eligibility as of the Startup Day to serve as
Trustee pursuant to Section 10.08 hereof and declares that it will hold the
Trust Estate in trust upon and subject to the conditions set forth herein for
the benefit of the Owners.
Section 2.05 Expenses of the Trust.
The expenses of the Trust, including (i) the Trustee Fee, if any, (ii)
the Master Servicer Fee, and (iii) any reasonable expenses of the Trustee that
are "unanticipated expenses of the REMIC" within the meaning of Treasury
Regulations Section 1.860G-1(b)(3), shall be paid pursuant to Section 7.03(c)(i)
and (d)(i). The Seller shall pay directly the reasonable fees and expenses of
counsel to the Trustee pursuant to a fee letter between the Seller and the
Trustee. The reasonable fees and expenses of the Trustee's counsel in connection
with the review and delivery of this Agreement and related documentation shall
be paid by the Seller on the Startup Day.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Reserved.
45
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the Lower-Tier REMIC shall be
evidenced by the interests having the characteristics and terms as follows,
including for federal income tax purposes the month in which the Final Scheduled
Payment Dates occur:
Lower-Tier Initial Month and Year
Pass-Through Lower-Tier of Final Scheduled
Class Designation Rate Balance Payment Dates
----------------- ---- ------- -------------
Lower-Tier Interest A-1 (1)
Lower-Tier Interest A-2 (1)
Lower-Tier Interest A-3 (1)
Lower-Tier Interest A-4 (1)
Lower-Tier Interest A-5 (1)
Lower-Tier Interest A-6 (1)
Lower-Tier Interest A-7 (2)
Lower-Tier Interest A-8 (2)
Lower-Tier Interest M-1F (1)
Lower-Tier Interest M-1A (2)
Lower-Tier Interest M-2F (1)
Lower-Tier Interest M-2A (2)
Lower-Tier Interest B-1F (1)
Lower-Tier Interest B-1A (2)
Lower-Tier REMIC Residual Class (3)
--------------------
(1) On any Payment Date, the Group I Net Weighted Average Coupon Rate.
(2) On any Payment Date, the Group II Net Weighted Average Coupon Rate.
(3) The Lower-Tier REMIC Residual Class is not issued with a Lower-Tier
Balance or a Lower-Tier Pass-Through Rate.
(b) The Lower-Tier Interests ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇,
▇-▇▇, ▇-▇▇, ▇-▇▇, M- 2A, B-1F and B-1A Certificates shall be issued as
non-certificated interests. The Lower-Tier REMIC Residual Class shall be issued
from the Lower-Tier REMIC as a non-certificated interest.
(c) The Depositor hereby designates Lower-Tier Interest ▇-▇, ▇▇▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ ▇-▇, ▇▇▇▇▇-▇▇▇▇ Interest ▇-▇, ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇-▇, ▇▇▇▇▇-▇▇▇▇
Interest A-5, Lower-Tier Interest ▇-▇, ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇-▇, ▇▇▇▇▇-▇▇▇▇
Interest ▇-▇, ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇-▇▇, Lower-Tier Interest M-1A, Lower-Tier
Interest ▇-▇▇, ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇-▇▇ and Lower-Tier
Interest B-2A as "regular interests" and the Lower-Tier REMIC Residual Class as
the single class of "residual interests" in the Lower-Tier REMIC for purposes of
the REMIC Provisions.
(d) The Depositor hereby designates the Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class M-1F, Class
M-1A, Class M-2F, Class M-2A, Class B-1F, Class B- 1A, Class C-FIO, Class C-AIO,
Class D and Class S as "regular interests," and the Class R Certificates as the
single class of "residual interests" in the Upper-Tier REMIC for purposes of the
REMIC Provisions. The Depositor hereby designates the Lower-Tier Interest A-1,
the Lower-Tier Interest A-2, the Lower-Tier Interest A-3, the Lower-Tier
Interest A-4, the Lower-Tier Interest A-5, the Lower-Tier Interest A-6, the
Lower-Tier Interest ▇-▇, ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇-▇, ▇▇▇▇▇-▇▇▇▇ Interest M-1F,
Lower-Tier Interest ▇-▇▇, ▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇-▇▇, Lower-Tier Interest ▇-▇▇,
▇▇▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇-▇▇, Lower-Tier Interest B-1A, the Upper-Tier Group I
Distribution Account and the Upper-Tier Group II Distribution Account as the
only assets of the Upper-Tier REMIC.
46
(e) The Startup Day is hereby designated as the "startup day" of the
Upper-Tier REMIC and the Lower-Tier REMIC within the meaning of Section
860G(a)(9) of the Code.
(f) The Owner of the Tax Matters Person Residual Interest in the
Upper-Tier REMIC and the Lower-Tier REMIC is hereby designated as "tax matters
person" as defined in the REMIC Provisions with respect to each such REMIC.
(g) The Trust and each REMIC included therein shall, for federal income
tax purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(h) The Trustee shall cause the Upper-Tier REMIC and the Lower-Tier
REMIC each to elect to be treated as a REMIC under Section 860D of the Code. Any
inconsistencies or ambiguities in this Agreement or in the administration of the
Trust shall be resolved in a manner that preserves the validity of such election
to be treated as a REMIC. The Trustee shall report all expenses of the Trust
Estate to the Lower-Tier REMIC.
(i) For all Federal tax law purposes amounts transferred by the Trustee
to the Owners of the Class R Certificates shall be treated as distributions by
the Upper-Tier REMIC and amounts, if any, distributed on the Lower-Tier REMIC
Residual Class shall be treated as distributions by the Lower-Tier REMIC. It is
expected that there shall not be any distributions to the Lower-Tier REMIC
Residual Class.
(j) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-1(b)(5)(ii), or any successor
regulation thereto with respect to both the Lower-Tier REMIC and the Upper-Tier
REMIC. Such information will be provided in the manner described in Treasury
Regulation Section 1.860E-2(a)(5), or any successor regulation thereto.
(k) For federal income tax purposes, the month in which Final Scheduled
Payment Date for each Class of the Offered Certificates is hereby set to be the
Payment Date indicated below:
Month and Year of
Final Scheduled
Class Payment Date
----- -----------------
Class A-1 Certificates
Class A-2 Certificates
Class A-3 Certificates
Class A-4 Certificates
Class A-5 Certificates
Class A-6 Certificates
Class A-7 Certificates
Class A-8 Certificates
Class M-1F Certificates
Class M-1A Certificates
Class M-2F Certificates
Class M-2A Certificates
Class B-1F Certificates
Class B-1A Certificates
Class C-FIO Certificates
Class C-AIO Certificates
Class D Certificates
Class R Certificates
Class S Certificates
47
END OF ARTICLE II
48
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEPOSITOR, THE SERVICERS, THE MASTER SERVICER
AND THE SELLER; COVENANT OF SELLER TO CONVEY MORTGAGE LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Seller, the Servicers, the Master Servicer and the Owners that as of the
Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under the Operative Documents to which it is a party.
(b) The execution and delivery by the Depositor and its performance and
compliance with the terms of the Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the
Depositor and will not violate the Depositor's certificate of incorporation or
bylaws or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in a breach of, any
material contract, agreement or other instrument to which the Depositor is a
party or by which the Depositor is bound or violate any statute or any order,
rule or regulation of any court, governmental agency or body or other tribunal
having jurisdiction over the Depositor or any of its properties.
(c) Each Operative Document to which the Depositor is a party, assuming
due authorization, execution and delivery by the other parties hereto and
thereto, constitutes a valid, legal and binding obligation of the Depositor,
enforceable against it in accordance with the terms hereof and thereof, except
as the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which would materially and adversely affect its
performance hereunder and under the Operative Documents to which the Depositor
is a party.
(e) No litigation is pending with respect to which the Depositor has
received service of process or, to the best of the Depositor's knowledge,
threatened against the Depositor, which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Depositor or its
properties or might have consequences that would materially and adversely affect
its performance hereunder and under the other Operative Documents to which the
Depositor is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered, or to be delivered, pursuant to the terms hereof by the
Depositor contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the certificate,
statement or report not misleading.
49
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements contained therein, in light of the circumstances under which
they were made, not misleading. The Registration Statement does not contain any
untrue statement of a material fact required to be stated therein or omit to
state any material fact necessary to make the statements contained therein, in
light of the circumstances under which they were made, not misleading. There is
no fact known to the Depositor that materially adversely affects or in the
future may (so far as the Depositor can now reasonably foresee) materially
adversely affect the Depositor or the Mortgage Loans or the ownership interests
therein represented by the Certificates that has not been set forth in the
Registration Statement.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the acquisition by the
Depositor of the Mortgage Loans, the conveyance by the Depositor of the Mortgage
Loans, the purchase and sale of the Certificates and the execution, delivery and
performance by the Depositor of the Operative Documents to which it is a party,
have been duly taken, given or obtained, as the case may be, are in full force
and effect on the date hereof, are not subject to any pending proceedings or
appeals (administrative, judicial or otherwise) and either the time within which
any appeal therefrom may be taken or review thereof may be obtained has expired
or no review thereof may be obtained or appeal therefrom taken, and are adequate
to authorize the consummation of the transactions contemplated by the Operative
Documents on the part of the Depositor and the performance by the Depositor of
its obligations under this Agreement and such of the other Operative Documents
to which it is a party.
(i) The transactions contemplated by the Operative Documents are in the
ordinary course of business of the Depositor.
(j) The Depositor is not insolvent, nor will it be made insolvent by
the transfer of the Mortgage Loans, nor is the Depositor aware of any pending
insolvency.
(k) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Depositor hereunder are not subject to the bulk transfer laws
or any similar statutory provisions in effect in any applicable jurisdiction.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Mortgage
Loans to the Trustee.
Section 3.02 Representations and Warranties of the Servicers and the
Master Servicer.
(a) Each Servicer hereby represents and warrants to the Trustee, the
Depositor, the Seller, the Servicers, the Master Servicer and the Owners, as to
itself and its Mortgage Loan Servicing Group only, that as of the Startup Day:
(i) It is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation, is in compliance
with the laws of each state in which any Property is located to the extent
necessary to enable it to perform its obligations hereunder and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. Such Servicer has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be
50
conducted and to enter into and discharge its obligations under the Operative
Documents to which it is a party.
(ii) The execution and delivery of the Operative Documents to
which such Servicer is a party by such Servicer and its performance and
compliance with the terms thereof have been duly authorized by all necessary
corporate action on the part of such Servicer and will not violate such
Servicer's articles or certificate of incorporation or bylaws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which such Servicer is a party or by which such
Servicer is bound or violate any statute or any order, rule or regulation of any
court, governmental agency or body or other tribunal having jurisdiction over
such Servicer or any of its properties.
(iii) Each Operative Document to which such Servicer is a
party, assuming due authorization, execution and delivery by the other parties
thereto, constitutes a valid, legal and binding obligation of such Servicer,
enforceable against it in accordance with the terms thereof, except as the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(iv) Such Servicer is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which would materially and adversely affect
the condition (financial or otherwise) or operations of such Servicer or its
properties or would materially and adversely affect its performance hereunder.
(v) No litigation is pending with respect to which such
Servicer has received service of process or, to the best of such Servicer's
knowledge, threatened against such Servicer which litigation would prohibit its
entering into the Operative Documents to which such Servicer is a party or would
materially and adversely affect the condition (financial or otherwise) or
operations of such Servicer or its properties or would materially and adversely
affect its performance hereunder and under the other Operative Documents to
which such Servicer is a party.
(vi) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by such Servicer
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not misleading.
(vii) 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 such Servicer makes no such
representation or warranty), that are necessary or advisable in connection with
the execution, delivery and performance by such Servicer of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by such Operative Documents on the part of such
Servicer and the performance by such Servicer of its obligations under such
Operative Documents to which it is a party.
(viii) The collection practices used by such Servicer with
respect to the Mortgage Loans serviced by it have been, in all material
respects, legal, proper, prudent and customary in the mortgage servicing
business.
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(ix) The transactions contemplated by this Agreement are in
the ordinary course of business of such Servicer.
(x) The Servicer is working toward, and anticipates being year
2000 compliant by December 31, 1999.
(b) The Master Servicer hereby represents and warrants to the Trustee,
the Depositor, the Seller, the Servicers and the Owners that as of the Startup
Day:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation, is in compliance with the laws of each state in which any
Property is located to the extent necessary to enable it to perform its
obligations hereunder and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Master Servicer has all
requisite corporate power and authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under the Operative Documents to
which it is a party.
(ii) The execution and delivery of the Operative Documents to
which the Master Servicer is a party by the Master Servicer and its performance
and compliance with the terms thereof 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 or certificate of incorporation or bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
contract, agreement or other instrument to which 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.
(iii) Each Operative Document to which the Master Servicer is
a party, assuming due authorization, execution and delivery by the other parties
thereto, constitutes a valid, legal and binding obligation of the Master
Servicer, enforceable against it in accordance with the terms thereof, except as
the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law).
(iv) 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 agency, which would materially and adversely
affect the condition (financial or otherwise) or operations of the Master
Servicer or its properties or would materially and adversely affect its
performance hereunder.
(v) No litigation is pending with respect to which the Master
Servicer has received service of process or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which litigation
would prohibit its entering into the Operative Documents to which the Master
Servicer is a party or would materially and adversely affect the condition
(financial or otherwise) or operations of the Master Servicer or its properties
or would materially and adversely affect its performance hereunder and under the
other Operative Documents to which the Master Servicer is a party.
(vi) No certificate of an officer, statement furnished in
writing or report delivered pursuant to the terms hereof by the Master Servicer
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the certificate, statement or report not misleading.
(vii) 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,
52
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,
delivery and performance 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 such Operative Documents on the part of the Master
Servicer and the performance by the Master Servicer of its obligations under
such Operative Documents to which it is a party.
(viii) The transactions contemplated by this Agreement are in
the ordinary course of business of the Master Servicer.
(c) It is understood and agreed that the representations and warranties
set forth in this Section 3.02 shall survive delivery of the Mortgage Loans to
the Trustee.
(d) Upon discovery by any of the Seller, a Servicer, the Master
Servicer, the Depositor or the Trustee (each, for purposes of this paragraph, a
"party") of a breach of any of the representations and warranties set forth in
this Section 3.02 which materially and adversely affects the interests of the
Owners, the party discovering such breach shall give prompt written notice to
the other parties (provided that one Servicer need not give such notice to the
other Servicers). With respect to a breach by a Servicer, within 60 days of its
discovery or its receipt of notice of such breach, the related Servicer shall
cure such breach in all material respects, and (B) to the extent that such
breach is not cured in accordance with clause (A) above, the related Servicer
may thereafter be removed pursuant to Section 8.20(a)(iv) hereof; provided,
however, that if such Servicer can establish to the reasonable satisfaction of
the Seller that it is diligently pursuing remedial action, then the cure period
may be extended with the written approval of the Seller, which such written
approval shall not be unreasonably withheld.
Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Trustee,
the Depositor, the Servicers, the Master Servicer and the Owners as of the
Startup Day as follows:
(a) The Seller is a corporation duly organized, validly existing and in
good standing under the laws governing its creation and existence and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business, or the properties owned or leased by it make such qualification
necessary. The Seller has all requisite corporate power and authority to own and
operate its properties, to carry out its business as presently conducted and as
proposed to be conducted and to enter into and discharge its obligations under
the Operative Documents to which it is a party.
(b) The execution and delivery by the Seller and its performance and
compliance with the terms of the Operative Documents to which it is a party have
been duly authorized by all necessary corporate action on the part of the Seller
and will not violate the Seller's certificate of incorporation or bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in a breach of, any material
contract, agreement or other instrument to which the Seller is a party or by
which the Seller is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Seller or any of its properties.
(c) Each Operative Document to which the Seller is a party, assuming
due authorization, execution and delivery by the other parties hereto and
thereto, constitutes a valid, legal and binding obligation of the Seller,
enforceable against it in accordance with the terms hereof and thereof, except
as the enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or
53
other similar laws affecting creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law).
(d) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default would materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which would materially and adversely affect its performance
under the Operative Documents to which the Seller is a party.
(e) No litigation is pending with respect to which the Seller has
received service of process or, to the best of the Seller's knowledge,
threatened against the Seller, which litigation might have consequences that
would prohibit its entering into this Agreement or any other Operative Documents
to which it is a party or that would materially and adversely affect the
condition (financial or otherwise) or operations of the Seller or its properties
or might have consequences that would materially and adversely affect its
performance under the Operative Documents to which the Seller is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered or to be delivered pursuant to the terms hereof by the Seller
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary to make the certificate,
statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Seller or matters or activities for which the Seller is responsible
in accordance with the Operative Documents or which are attributable to the
Seller therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Seller required to be stated therein or necessary to make
the statements contained therein with respect to the Seller, in light of the
circumstances under which they were made, not misleading. There is no fact known
to the Seller that materially adversely affects or in the future may (so far as
the Seller can now reasonably foresee) materially adversely affect the Seller or
the Mortgage Loans or the ownership interests therein represented by the
Certificates that has not been set forth in the Registration Statement.
(h) Upon the receipt of each Mortgage Loan (including the related Note)
and other items of the Trust Estate by the Trustee under this Agreement, the
Trust will have good title to such Mortgage Loan (including the related Note)
and such other items of the Trust Estate free and clear of any lien, charge,
mortgage, encumbrance or rights of others.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution, delivery and performance by the Seller of the
Operative Documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals (administrative, judicial
or otherwise) and either the time within which any appeal therefrom may be taken
or review thereof may be obtained has expired or no review thereof may be
obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by the other Operative Documents
on the part of the Seller and the performance by the Seller of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
(j) The transactions contemplated by the Operative Documents are in the
ordinary course of business of the Seller.
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(k) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Mortgage Loans, nor is it aware of any insolvency pending.
(l) The transfer, assignment and conveyance of the Notes and the
Mortgages by the Seller hereunder are not subject to the bulk transfer laws or
any similar statutory provisions in effect in any applicable jurisdiction.
(m) The Seller is not aware that any Mortgage Loan breaches any
representation or warranty hereof that as of the Startup Date is not subject to
cure.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Mortgage
Loans to the Trustee.
Upon discovery by any of the Servicers, the Master Servicer, the
Depositor, the Seller or the Trustee (each, for purposes of this paragraph, a
"party") of a breach of any of the representations and warranties set forth in
this Section 3.03 which materially and adversely affects the interests of the
Owners, the party discovering such breach shall give prompt written notice to
the other parties. The Seller hereby covenants and agrees that within 60 days of
its discovery or its receipt of notice of breach, it shall cure such breach in
all material respects or, with respect to a breach of clause (h) above, it shall
on the Monthly Remittance Date next succeeding such discovery or receipt of
notice (i) within two years of the Startup Day, substitute in lieu of any
Mortgage Loan not in compliance with clause (h) a Qualified Replacement Mortgage
and, if the outstanding principal amount of such Qualified Replacement Mortgage
as of the applicable Subsequent Cut-Off Date is less than the Loan Balance of
such Mortgage Loan as of such Subsequent Cut-Off Date, deliver an amount equal
to such difference together with the aggregate amount of (A) all unreimbursed
Delinquency Advances and Servicing Advances theretofore made with respect to
such Mortgage Loan and (B) the interest portion of any Delinquency Advances
which the related Servicer has theretofore failed to remit with respect to such
Mortgage Loan (a "Substitution Amount") to the related Servicer for deposit in
the related Principal and Interest Account or (ii) purchase such Mortgage Loan
from the Trust at the Loan Purchase Price, which purchase price shall be
delivered to the related Servicer for deposit in the Principal and Interest
Account. Notwithstanding any provision of this Agreement to the contrary, with
respect to any Mortgage Loan which is not in default or as to which no default
is imminent, no repurchase or substitution pursuant hereto shall be made unless
the Seller obtains for the Trustee an opinion of counsel experienced in federal
income tax matters to the effect that such a repurchase or substitution would
not constitute a Prohibited Transaction for the Trust or any REMIC therein or
otherwise subject the Trust or any REMIC therein to tax and would not jeopardize
the status of either the Lower-Tier REMIC or the Upper-Tier REMIC as a REMIC (a
"REMIC Opinion") addressed to the Servicers, the Master Servicer and the Trustee
and acceptable to the Servicers, the Master Servicer and the Trustee. Any
Mortgage Loan as to which repurchase or substitution was delayed pursuant to
this Section because of the inability to deliver a REMIC Opinion shall be
repurchased or substituted for (subject to compliance with Sections 3.03, 3.04
or 3.06, as the case may be) upon the earlier of (a) the occurrence of a default
or imminent default with respect to such Mortgage Loan and (b) receipt by the
Trustee of a REMIC Opinion.
Section 3.04 Representations and Warranties Relating to the
Mortgage Loans; Covenants of Seller to Take Certain
Actions with Respect to the Mortgage Loans In Certain
Situations.
(a) With respect to each Mortgage Loan, the Seller represents and
warrants to, and covenants to the Trustee, the Depositor, the Master Servicer,
the Servicers and the Owners that, as of the Startup Date (with respect to the
Initial Mortgage Loans) and as of the Subsequent Transfer Date (with respect to
the Subsequent Mortgage Loans):
55
(i) Title to the Mortgage Loans. Immediately prior to the
transfer and assignment of the Mortgage Loans by the Seller to the
Depositor and by the Depositor to the Trust contemplated herein, the
Seller held good title to and was the sole owner of record and holder
of the Mortgage Loan and the indebtedness evidenced by each Note. There
has been no sale or hypothecation by Seller of the Mortgage Loan. The
Mortgage Loan has not been assigned or pledged, and the Seller has
good, indefeasible and marketable title thereto, and has full right to
transfer and sell the Mortgage Loan free and clear of any encumbrance,
equity interest, participation interest, lien, pledge, charge, claim or
security interest, and has full right and authority subject to no
interest or participation of, or agreement with, any other party, to
sell and assign each Mortgage Loan pursuant to this Agreement, and
following the sale of each Mortgage Loan, the Trustee will own such
Mortgage Loan free and clear of any encumbrance, equity interest,
participation interest, lien, pledge, charge, claim or security
interest.
(ii) Accuracy of the Schedule of Mortgage Loans. Each Initial
Mortgage Loan or Subsequent Mortgage Loan is as described in the
related Schedule of Mortgage Loans, and the information contained in
each Schedule of Mortgage Loans is true and correct as of the Cut-Off
Date (or in the case of the Subsequent Mortgage Loans, as of the
Subsequent Cut-Off Date) .
(iii) Payments. As of the Cut-Off Date, no Initial Mortgage
Loan is thirty (30) or more days Delinquent except that there are 94
and 61 Initial Mortgage Loans in Group I and Group II, respectively,
with an outstanding aggregate Loan Balance of $____________ and
$____________ in Group I and Group II, respectively, that are 30 or
more days Delinquent but not more than 59 days Delinquent.
(iv) No Outstanding Charges. There are no defaults in
complying with the terms of the Mortgage, nor, with respect to any
Second Mortgage, the terms of any senior mortgage. All taxes,
governmental assessments, insurance premiums, water, sewer and
municipal charges, leasehold payments or ground rents which previously
became due and owing have been paid, or an escrow of funds has been
established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and
payable. The Seller has not advanced funds, or induced or solicited or
knowingly received any advance of funds by a party other than the
Mortgagor, directly or indirectly, for the payment of any amount
required under the Mortgage Loan, except for interest accruing from the
date of the Note or date of disbursement of the Mortgage Loan proceeds,
whichever occurred later, to the day which precedes by one month the
Due Date of the first Scheduled Payment.
(v) Original Terms Unmodified. The terms of the Note and the
Mortgage have not been impaired, waived, altered or modified in any
respect, except by a written instrument which has been recorded, if
necessary to protect the interests of the Trust. The substance of any
such waiver, alteration or modification has been approved by the title
insurer, to the extent required by the policy, and its terms are
reflected on the related Schedule of Mortgage Loans. No Mortgagor has
been released, in whole or in part, except in connection with an
assumption agreement approved by the title insurer, to the extent
required by the policy, and which assumption agreement is part of the
File.
(vi) Absence of Defenses. The Mortgage and the Note are not
subject to any right of rescission, set-off, counterclaim, or defense
(including the defense of usury), based on the invalidity or
unenforceability of the Note and/or Mortgage or on any conduct of the
Seller, the Depositor or any of their officers, employees,
representatives, affiliates or assignors in originating or servicing
the Initial Mortgage Loan prior to the Cut-Off Date (or, in the case of
a Subsequent Mortgage Loan, the Subsequent Cut-Off Date), nor will the
operation of any of the terms of the Mortgage or the Note, or the
exercise of any right thereunder, render the Mortgage or the Note
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim, or defense (including
56
the defense of usury) based on any such invalidity, unenforceability or
conduct. No right of rescission, set-off, counterclaim, or defense with
respect thereto has been asserted to the Seller or, to Seller's
knowledge, has been asserted to any other person and no Mortgagor was a
debtor in any state or Federal bankruptcy or insolvency proceeding at
the time the Mortgage Loan was originated.
(vii) Hazard Insurance. Pursuant to the terms of the Mortgage,
all improvements upon the Mortgaged Property are insured by an insurer
acceptable to FannieMae against loss by fire and such other risks as
are usually insured against in the broad form of extended coverage
hazard insurance available from time to time, including flood hazards
if upon origination of the Mortgage Loan, the Property was in an area
identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards (and if flood insurance was
required by federal regulation and such flood insurance has been made
available). All such insurance policies (collectively, the "hazard
insurance policy") meet the requirements of the current guidelines of
the Federal Insurance Administration, conform to the requirements of
the FannieMae Seller's Guide and the FannieMae Servicers' Guide and are
a standard policy of insurance for the locale where the Property is
located. The amount of the insurance is at least in the amount of the
full insurable value of the Property on a replacement cost basis or the
unpaid balance of the Mortgage Loan, whichever is less. The hazard
insurance policy names (and will name) the Mortgagor as the insured and
contains a standard mortgagee loss payable clause in favor of the
related Originator and its successors and assigns. The Mortgage
obligates the Mortgagor thereunder to maintain the hazard insurance
policy at the Mortgagor's cost and expense, and on the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at such Mortgagor's cost and expense, and to
seek reimbursement therefor from the Mortgagor. Where required by state
law or regulation, the Mortgagor has been given an opportunity to
choose the carrier of the required hazard insurance policy, provided
the policy is not a "master" or "blanket" hazard insurance policy
covering a condominium, or any hazard insurance policy covering the
common facilities of a planned unit development. The hazard insurance
policy is the valid and binding obligation of the insurer, is in full
force and effect, and will be in full force and effect and inure to the
benefit of Trust upon the consummation of the transactions contemplated
by this Agreement. The Seller has not engaged in, and has no knowledge
of the Mortgagor's or any other party's having engaged in, any act or
omission which would impair the coverage of any such policy, the
benefits of the endorsement provided for therein, or the validity and
binding effect of either.
(viii) Compliance with Applicable Laws. Any and all
requirements of any federal, state or local law including, without
limitation, usury, truth-in-lending, real estate settlement procedures,
consumer credit protection, equal credit opportunity or disclosure laws
applicable to the Mortgage Loan have been complied with. The
consummation of the transactions contemplated hereby will not involve
the violation of any such laws or regulations.
(ix) No Satisfaction of Mortgage or Note. Neither the Mortgage
nor the Note has been satisfied, canceled, subordinated or rescinded,
in whole or in part, and the Property has not been released from the
lien of the Mortgage, in whole or in part, nor has any instrument been
executed that would effect any such release, cancellation,
subordination or rescission.
(x) Location and Type of Property. The Property consists of a
parcel of real property with a residential dwelling erected thereon.
The Property is either a fee simple estate or a long-term residential
lease. If the Mortgage Loan is secured by a long-term residential
lease, (A) the terms of such lease expressly permit the mortgaging of
the leasehold estate, the assignment of the lease without the lessor's
consent (or the lessor's consent has been obtained and such consent is
in the File) and the acquisition by the holder of the Mortgage of the
rights of the lessee upon foreclosure or assignment in lieu of
foreclosure to provide the holder of the Mortgage with substantially
similar protection; (B) the terms of such lease do not (i) allow the
termination thereof upon the lessee's
57
default without the holder of the Mortgage being entitled to receive
written notice of, and opportunity to cure, such default, (ii) allow
the termination of the lease in the event of damage or destruction as
long as the Mortgage is in existence or (iii) prohibit the holder of
the Mortgage from being insured under the hazard insurance policy
relating to the Property; (C) the original term of such lease is not
less than fifteen (15) years; (D) the term of such lease does not
terminate earlier than five (5) years after the maturity date of the
Note; and (E) the Property is located in a jurisdiction in which the
use of leasehold estates for residential properties is a widely
accepted practice.
(xi) Valid Lien. The Mortgage for any First Mortgage creates a
valid, subsisting, enforceable and perfected first lien on the
Property, and the Mortgage for any Second Mortgage creates a valid,
subsisting, enforceable and perfected second lien on the Property, and
in each case includes all buildings on the Property and all
installations and mechanical, electrical, plumbing, heating and air
conditioning systems located in or annexed to such buildings, and all
additions, alterations and replacements made at any time with respect
to the foregoing. The lien of the Mortgage is subject only to Permitted
Exceptions. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with a First Mortgage
established and created a valid, subsisting, enforceable and perfected
first lien and first priority security interest on the property
described therein, and with respect to a Second Mortgage, a second lien
and second priority security interest, and the Seller has full right to
sell and assign the same to the Trust.
(xii) Validity of Mortgage Documents. The Note and the
Mortgage and every other agreement, if any, executed and delivered by
the Mortgagor in connection with the Mortgage Loan are genuine, and
each is the legal, valid and binding obligation of the maker thereof
enforceable in accordance with its terms. All parties to the Note, the
Mortgage and each other such related agreement had legal capacity to
enter into the Mortgage Loan and to execute and deliver the Note, the
Mortgage and each other such related agreement, and the Note, the
Mortgage and each other such related agreement have been duly and
properly executed by the respective Mortgagors. The Seller has reviewed
all of the documents constituting the File and has made such inquiries
as it deems necessary to make and confirm the accuracy of the
representations set forth herein.
(xiii) Full Disbursement of Proceeds. The Mortgage Loan has
been closed and the proceeds of the Mortgage Loan have been fully
disbursed and there is no requirement for future advances thereunder,
and any and all requirements as to completion of any on-site or
off-site improvement and as to disbursements of any escrow funds
therefor have been complied with. All costs, fees and expenses incurred
in making or closing the Mortgage Loan and the recording of the
Mortgage were paid, and the Mortgagor is not entitled to any refund of
any amounts paid or due under the Note or Mortgage.
(xiv) Doing Business. All parties which have had any interest
in the Mortgage Loan, whether as mortgagee, assignee, pledgee or
otherwise, are (or, during the period in which they held and disposed
of such interest, were) (1) in compliance with any and all applicable
licensing requirements of the laws of the state where the Property is
located, and (2)(a) organized under the laws of such state, or (b)
qualified to do business in such state, or (c) federal savings and loan
associations, savings banks, or national banks having principal offices
in such state, or (d) not doing business in such state.
(xv) Loan-to-Value Ratio. The Loan-to-Value Ratio for each
First Mortgage was no greater than 90%, and the Combined Loan-to-Value
Ratio for each Second Mortgage was no greater than 90%.
(xvi) Title Insurance. The Mortgage Loan is covered by either
(a) an attorney's opinion of title and abstract of title the form and
substance of which is acceptable to FannieMae, or (b) an
58
ALTA lender's title insurance policy or other generally acceptable form
of policy of insurance issued by a title insurer qualified to do
business in the jurisdiction where the Property is located, insuring
the related Originator, its successors and assigns, as to the first
priority lien of the Mortgage in the original principal amount of the
First Mortgage, and as to the second priority lien of the Mortgage in
the original principal amount of the Second Mortgage, subject only to
the Permitted Exceptions, and against any loss by reason of the
invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment in the Coupon Rate
and Scheduled Payment. Additionally, such lender's title insurance
policy affirmatively insures ingress and egress, and against
encroachments by or upon the Property or any interest therein. Where
required by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of such lender's title insurance
policy. The related Originator, its successors and assigns, are the
sole insureds (except in the case of a joint protection policy, in
which case the related Originator's interest is insured) of such
lender's title insurance policy, and such lender's title insurance
policy is valid and remains in full force and effect and will be in
full force and effect upon the sale of the Mortgage Loan to the Trust.
No claims have been made under such lender's title insurance policy,
and no prior holder of the Mortgage, including the Seller, has done
anything which would impair the coverage of such lender's title
insurance policy.
(xvii) No Defaults. Except for payment delinquencies noted on
the related Mortgage Loan Schedule, there is no default, breach,
violation or event of acceleration existing under the Mortgage or the
Note or related documents and no event which, with the passage of time
or with notice and the expiration of any applicable grace or cure
period, would constitute a default, breach, violation or event of
acceleration, and neither the Seller nor any of its predecessors have
waived any default, breach, violation or event of acceleration.
(xviii) No Mechanics' Liens. There are no mechanics' or
similar liens or claims which have been filed for work, labor or
material (and no rights are outstanding that under the law could give
rise to such liens) affecting the related Property which are or may be
liens prior to, or equal or coordinate with, the lien of the related
Mortgage.
(xix) Location of Improvements; No Encroachments. All
improvements which were considered in determining the Appraised Value
of the Property lay wholly within the boundaries and building
restriction lines of the Property and no improvements on adjoining
properties encroach upon the Property. No improvement located on or
being part of the Property is in violation of any applicable zoning law
or regulation; provided, that in no event shall a legal non-conforming
use of the Property be considered a violation of any such zoning law or
regulation.
(xx) Payment Terms. For fixed rate Mortgage Loans, the Note is
payable on the same (or corresponding) day of each month in equal
monthly installments (other than the last payment) of principal and
interest sufficient to amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than thirty years from
inception of the Mortgage Loan. For adjustable rate Mortgage Loans, the
Coupon Rate is adjusted in accordance with the terms of the Note and
the Note is payable on the same (or corresponding) day of each month
and, during an adjustment period or initial period, in equal monthly
installments of principal and interest. Installments of interest are
subject to change due to the adjustments to the Coupon Rate on each
Interest Rate Adjustment Date, with interest calculated and payable in
arrears, sufficient to amortize the Mortgage Loan fully by the stated
maturity date, over an original term of not more than thirty years from
inception of the Mortgage Loan.
(xxi) Interest Rate Adjustments. All required notices of
interest rate and payment amount adjustments have been sent to the
Mortgagor on a timely basis and the computations of such adjustments
were properly calculated. All interest rate adjustments applicable to
the Mortgage
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Loans have been made in strict compliance with state and federal law
and the terms of the related Note. Any interest required to be paid
pursuant to state and local law has been properly paid and credited.
(xxii) Customary Provisions. The Mortgage contains customary
and enforceable provisions such as to render the rights and remedies of
the holder thereof adequate for the realization against the Property of
the benefits of the security provided thereby, including, (i) in the
case of a Mortgage designated as a deed of trust, by trustee's sale,
and (ii) otherwise by judicial or nonjudicial foreclosure. Upon default
by an Mortgagor on a Mortgage Loan and foreclosure on, or trustee's
sale of, the Property pursuant to the proper procedures, the holder of
the Mortgage Loan will be able to deliver good and merchantable title
to the Property. There is no homestead or other exemption available to
the Mortgagor which would interfere with the right to sell the Property
at a trustee's sale or the right to foreclose the Mortgage subject to
applicable federal and state laws and judicial precedent with respect
to bankruptcy and right of redemption.
(xxiii) Occupancy of the Property. All inspections, licenses
and certificates required to be made or issued with respect to all
occupied portions of the Property and with respect to the use and
occupancy of the same, including, but not limited to, certificates of
occupancy and fire underwriting certificates, have been made or
obtained from the appropriate authorities.
(xxiv) No Additional Collateral. The Note is not and has not
been secured by any collateral except the lien of the corresponding
Mortgage and the security interest of any applicable security agreement
or chattel mortgage referred to in subsection 3.04(a)(xi) above.
(xxv) Deeds of Trust. In the event the Mortgage constitutes a
deed of trust, a trustee, authorized and duly qualified under
applicable law to serve as such, has been properly designated and
currently so serves and is named in the Mortgage, and no fees or
expenses are or will become payable by Trust to such trustee under the
deed of trust, except in connection with a trustee's sale after default
by the Mortgagor.
(xxvi) Due on Sale. Each Mortgage, together with any such
documents as may be required under applicable law, contains a provision
for the acceleration of the payment of the unpaid Loan Balance of the
Mortgage Loan in the event that the Property is sold or transferred
without the prior written consent of the mortgagee thereunder, at the
option of the mortgagee. This provision provides that the mortgagee
cannot exercise its option if either (a) the exercise of such option is
prohibited by federal law or (b)(i) the Mortgagor causes to be
submitted to the mortgagee information required by the mortgagee to
evaluate the intended transferee as if a new loan were being made to
such transferee and (ii) the mortgagee reasonably determines that the
mortgagee's security will not be impaired by the assumption of such
Mortgage Loan by the transferee and that the risk of breach of any
covenant or agreement in the documents evidencing such Mortgage Loan is
acceptable to the mortgagee. To the best of the Seller's knowledge,
such provision is enforceable.
(xxvii) Transfer of Loans. Each of the Mortgages is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Property is located, and each Mortgage has
been delivered to the appropriate recorder's office for recording.
(xxviii) No Buydown Provisions; No Graduated Payments or
Contingent Interests. The Mortgage Loan does not contain provisions
pursuant to which Monthly Payments are paid or partially paid with
funds deposited in any separate account established by the Seller, the
Mortgagor or anyone on behalf of the Mortgagor, or paid by any source
other than the Mortgagor, nor does it contain any other similar
provisions currently in effect which may constitute a "buydown"
provision.
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The Mortgage Loan is not a graduated payment mortgage loan and the
Mortgage Loan does not have a shared appreciation or other contingent
interest feature.
(xxix) Consolidation of Future Advances. Any future advances
made to the Mortgagor prior to the Startup Day have been consolidated
with the outstanding principal amount secured by the Mortgage, and the
secured principal amount, as consolidated, bears a single interest
readjustment feature or rate and single repayment term. For First
Mortgages, the lien of the Mortgage securing the consolidated principal
amount is expressly insured as having first lien priority by a title
insurance policy, an endorsement to the policy insuring the mortgagee's
consolidated interest or by other title evidence acceptable to the
Trustee. For Second Mortgages, the lien of the Mortgage securing the
consolidated principal amount is expressly insured as having second
lien priority by a title insurance policy, an endorsement to the policy
insuring the mortgagee's consolidated interest or by other title
evidence acceptable to Trustee. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan. With
respect to Second Mortgages, no future advances are permitted under the
senior mortgage.
(xxx) Property Undamaged; No Condemnation Proceedings. There
is no proceeding pending or, threatened for the total or partial
condemnation of the Property. The Property is undamaged by waste, fire,
earthquake or earth movement, windstorm, flood, water, tornado or other
casualty so as to adversely affect the value of the Property as
security for the Mortgage Loan or the use for which the premises were
intended and each Property is in good repair. There have not been any
condemnation proceedings with respect to the Property and the Seller
and the Depositor have no knowledge of any such proceedings in the
future.
(xxxi) Appraisals. The related Originator has delivered to the
Seller an appraisal of the Property signed by a qualified appraiser,
who (i) is licensed in the state where the Property is located, (ii)
has no interest, direct or indirect, in the Property or in any Mortgage
Loan or the security therefor, and (iii) does not receive compensation
that is affected by the approval or disapproval of the Mortgage Loan.
The appraisal shall have been made within ninety (90) days of the
origination of the Mortgage Loan, be completed in compliance with the
Uniform Standards of Professional Appraisal Practice, and all
applicable Federal and state laws and regulations.
(xxxii) Soldier's and Sailors' Relief Act. The Mortgagor has
not notified the Seller and the Seller has no knowledge of any relief
requested or allowed to the Mortgagor under the Solider's and Sailors'
Civil Relief Act of 1940.
(xxxiii) Environmental Matters. There exists no violation of
any local, state or federal environmental law, rule or regulation in
respect of the Property which violation has or could have a material
adverse effect on the market value of such Property. The Seller has no
knowledge of any pending action or proceeding directly or indirectly
involving the related Property in which compliance with any
environmental law, rule or regulation is in issue; and, to the best of
the Seller's knowledge, nothing further remains to be done to satisfy
in full all requirements of each such law, rule or regulation
constituting a prerequisite to the use and enjoyment of such Property.
(xxxiv) Mortgagor Acknowledgment. The Mortgagor has executed a
statement to the effect that the Mortgagor has received all disclosure
materials required by applicable law with respect to the making of
adjustable rate mortgage loans. The Seller shall deliver such statement
to the Trustee in the related File.
(xxxv) No Construction Loans. The Mortgage Loan was not made
in connection with (a) the construction or rehabilitation of a Property
or (b) facilitating the trade-in or exchange of a Property.
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(xxxvi) Circumstances Affecting Value, Marketability or
Prepayment. Except as otherwise disclosed to Trustee, the Seller has no
knowledge of any circumstances or conditions with respect to the
Mortgage, the Property, or the Mortgagor, that could reasonably be
expected to adversely affect the value or the marketability of any
Property or Mortgage Loan, subject to the economic and geological
conditions generally and specifically to the area in which the
Mortgaged Property is located, or cause the Mortgage Loan to become
delinquent.
(b) Upon the earliest to occur of the Seller's discovery, its receipt
of notice of breach of a representation or warranty set out in subsection (a)
above from any one of the other parties hereto or such time as a breach of any
representation and warranty materially and adversely affects the interests of
the Owners, the Seller hereby covenants and warrants that it shall promptly cure
such breach in all material respects or, if such breach is not cured, the Seller
shall, subject to the further requirements of this paragraph (but in any case
for a Mortgage Loan that is not a "qualified mortgage", within 90 days of
discovery thereof) (i) within two years of the Startup Day, substitute in lieu
of each Mortgage Loan which has given rise to the requirement for action a
Qualified Replacement Mortgage and deliver the Substitution Amount applicable
thereto, to the related Servicer for deposit in the related Principal and
Interest Account or (ii) purchase such Mortgage Loan from the Trust at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the related Servicer for deposit in the related Principal
and Interest Account by the Seller. In connection with any such proposed
purchase or substitution, the Seller may deliver to the related Servicer, the
Master Servicer and the Trustee an opinion of counsel experienced in federal
income tax matters stating whether or not such a proposed purchase or
substitution would constitute a Prohibited Transaction for the Trust or would
jeopardize the status of the Trust as a REMIC, and the Seller shall only be
required to take either such action to the extent such action would not
constitute a Prohibited Transaction for the Trust or would not jeopardize the
status of the Trust as a REMIC. Any required purchase or substitution, if
delayed by the absence of such opinion, shall nonetheless occur upon the earlier
of (i) the occurrence of a default or imminent default with respect to the
Mortgage Loan or (ii) the delivery of such opinion by the Seller. Any repurchase
or substitution shall occur prior to the related Monthly Remittance Date and the
Seller shall provide the related Servicer with written notice no less than five
Business Days in advance of such repurchase or substitution. It is understood
and agreed that the obligation of the Seller to cure the defect, or substitute
for or purchase any Mortgage Loan as to which a representation or warranty is
untrue in any material respect and has not been remedied shall constitute the
sole remedy available to the Owners, the Depositor and the Trustee.
(c) [RESERVED]
(d) In the event that any Qualified Replacement Mortgage is delivered
by the Seller or Ameriquest to the Trust pursuant to this Section 3.04 or
Section 3.06 hereof, the Seller shall take the actions described in Section
3.04(b) with respect to such Qualified Replacement Mortgage upon the discovery
by any of the Owners, the Seller, a Servicer, the Master Servicer or the Trustee
that the representations and warranties set forth in Section 3.04(a) above, are
untrue in any material respect on the date such Qualified Replacement Mortgage
is conveyed to the Trust such that the interests of the Owners in the related
Qualified Replacement Mortgage are materially and adversely affected; provided,
however, that for the purposes of this subsection (d) the representations and
warranties as set forth in Section 3.04(a) above or in the Ameriquest Transfer
Agreement referring to items "as of the Cut-Off Date" or "as of the Startup Day"
shall be deemed to refer to such items as of the related Subsequent Cut-Off
Date.
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(e) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Mortgage Loans (including
Qualified Replacement Mortgages) to the Trustee.
(f) The Trustee, the Master Servicer and the Servicers shall have no
duty to conduct any affirmative investigation other than as specifically set
forth in this Agreement as to the occurrence of any condition requiring the
repurchase or substitution of any Mortgage Loan pursuant to this Section or the
eligibility of any Mortgage Loan for purposes of this Agreement.
Section 3.05 Conveyance of the Mortgage Loans, Subsequent Mortgage
Loans and Qualified Replacement Mortgages.
(a) On the Startup Day the Seller, concurrently with the execution and
delivery hereof, hereby transfers, assigns, sets over and otherwise conveys
without recourse to the Depositor and the Depositor, concurrently with the
execution and delivery hereof, transfers, assigns, sets over and otherwise
conveys without recourse, to the Trustee for the benefit of the Owners, all
their respective right, title and interest in and to the Trust Estate; provided,
however, that the Seller reserves and retains all its right, title and interest
in and to principal (including Prepayments collected) and interest due on each
Initial Mortgage Loan on or prior to the Cut-Off Date. The transfer by the
Depositor of the Initial Mortgage Loans set forth on the Schedule of Mortgage
Loans to the Trustee is absolute and is intended by the Owners and all parties
hereto to be treated as a sale by the Depositor.
It is intended that the sale, transfer, assignment and conveyance
herein contemplated constitute a sale of the Initial Mortgage Loans conveying
good title thereto free and clear of any liens and encumbrances from the Seller
to the Depositor and from the Depositor to the Trust and that the Initial
Mortgage Loans not be part of the Depositor's or the Seller's estate in the
event of insolvency. In the event that either such conveyance or a conveyance of
a Qualified Replacement Mortgage or a conveyance pursuant to Section 3.07 and
any Subsequent Transfer Agreement is deemed to be a loan, the parties intend
that the Seller shall be deemed to have granted to the Depositor and the
Depositor shall be deemed to have granted to the Trustee a security interest in
the Trust Estate, and that this Agreement shall constitute a security agreement
under applicable law.
In connection with such sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the States of Texas and Delaware, a UCC-1 financing statement
executed by the Seller as debtor, naming the Depositor as secured party and
listing the Initial Mortgage Loans, any Subsequent Mortgage Loans to be
delivered to the Depositor and the other property (including any Qualified
Replacement Mortgage) described above as collateral. The characterization of the
Seller as a debtor and the Depositor as the secured party on such financing
statements is solely for protective purposes and shall in no way be construed as
being contrary to the intent of the parties that this transaction be treated as
a sale of the Seller's entire right, title and interest in the Trust Estate. In
connection with such filing, the Seller agrees that it shall cause to be filed
all necessary continuation statements thereof and to take or cause to be taken
such actions and execute such documents as are necessary to perfect and protect
the Trustee's and the Owners' interest in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance,
from the Depositor to the Trustee, the Depositor has filed, in the appropriate
office or offices in the States of Texas and Delaware, a UCC-1 financing
statement executed by the Depositor as debtor, naming the Trustee as secured
party and listing the Initial Mortgage Loans, any Subsequent Mortgage Loans to
be delivered to the Trust and the other property (including any Qualified
Replacement Mortgage) described above as collateral. The characterization of the
Depositor as a debtor and the Trustee as the secured party in such financing
statements is solely for protective purposes and shall in no way be construed as
being contrary to the intent of the parties that this transaction be treated as
a sale of the Depositor's entire right, title and interest in the Trust Estate.
In connection with such filing, the Depositor agrees that it shall cause to be
filed all necessary
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continuation statements thereof and to take or cause to be taken such actions
and execute such documents as are necessary to perfect and protect the Trustee's
and the Owners' interest in the Trust Estate.
(b) In connection with the transfer and assignment of the Initial
Mortgage Loans and prior to each Subsequent Transfer Date with respect to any
Qualified Replacement Mortgage or Subsequent Mortgage Loan, the Depositor agrees
to:
(i) deliver without recourse to the Custodian, on behalf of
the Trustee, on the Startup Day with respect to each Initial Mortgage
Loan or on each Subsequent Transfer Date with respect to any Qualified
Replacement Mortgage or Subsequent Mortgage Loans, (A) the original
Notes endorsed in blank or to the order of the Trustee, (B) the
original title insurance policy or any one of an original title binder,
an original preliminary title report or an original title commitment or
a copy of any of the foregoing certified by the issuer of the title
insurance policy, or the attorney's opinion of title, (C) originals or
certified copies of all intervening recorded assignments, showing a
complete chain of title from origination to the Trustee, if any, with
evidence of recording thereon, (D) originals of all assumption,
modification, written assurance or substitution agreements, if any and
(E) either: (1) the original Mortgage, with evidence of recording
thereon, (2) a certified copy if such original Mortgage has not been
returned by the applicable recording office, or (3) a copy of the
Mortgage certified by the public recording office in those instances
where the original recorded Mortgage has been lost;
(ii) cause the Custodian, on behalf of the Trustee, within 60
days following the Startup Day with respect to the Initial Mortgage
Loans or each Subsequent Transfer Date with respect to the Qualified
Replacement Mortgages or Subsequent Mortgage Loans to complete the
assignments of the Mortgages to "______________________________, as
Trustee of AMRESCO Residential Securities Corporation Mortgage Loan
Trust 199_-_ under the Pooling and Servicing Agreement dated as of
________________ __, 199_ to be submitted to the Seller for recording
in the appropriate jurisdictions; provided, however, that the Depositor
shall not be required to cause the Seller to record an assignment for
any Mortgage with respect to a Property located in California or with
respect to which the original recording information is lacking;
(iii) if not delivered on the Startup Day, deliver the title
insurance policy or title searches, the original Mortgages and such
recorded assignments, together with originals or duly certified copies
of any and all prior assignments, to the Custodian, on behalf of the
Trustee within 15 days of receipt thereof by the Depositor (but in any
event, with respect to any Mortgage as to which original recording
information has been made available to the Depositor, within two years
after the Startup Day with respect to the Initial Mortgage Loans or
each Subsequent Transfer Date with respect to the Qualified Replacement
Mortgages or Subsequent Mortgage Loans); and
(iv) with respect to each Subsequent Transfer Date only,
furnish to the Trustee at the Depositor's expense, opinions of counsel
with respect to the true sale of the Subsequent Mortgage Loans
delivered to the Trust, corporate and enforceability matters and tax
consequences to the Trust, if any, resulting from the conveyance to the
Trust of the Subsequent Mortgage Loans, each in form and substance
satisfactory to the Trustee.
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor shall be deemed to have
satisfied its obligations hereunder upon delivery to the Custodian, on behalf of
the Trustee, of a copy of such Mortgage, such assignment or assignments of
Mortgage certified by the public recording office to be a true copy of the
recorded original thereof.
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Copies of all Mortgage assignments received by the Custodian, on behalf
of the Trustee, shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of the Seller.
(c) In the case of Initial Mortgage Loans which have been prepaid in
full after the Cut-Off Date and prior to the Startup Day, the Depositor, in lieu
of the foregoing, will deliver within six (6) days after the Startup Day to the
Trustee a certification of an Authorized Officer in the form set forth in
Exhibit D.
(d) The Seller shall transfer, assign, set over and otherwise convey
without recourse, to the Trustee all right, title and interest of such party in
and to any Qualified Replacement Mortgage delivered to the Trustee on behalf of
the Trust by such party pursuant to Section 3.03, 3.04 or 3.06 hereof and all
such party's right, title and interest to principal and interest due on such
Qualified Replacement Mortgage after the applicable Subsequent Cut-Off Date;
provided, however, that such party shall reserve and retain all right, title and
interest in and to payments of principal and interest due on such Qualified
Replacement Mortgage on or prior to the applicable Subsequent Cut-Off Date.
(e) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage therefor, the Trustee will
transfer, assign, set over and otherwise convey without recourse or
representation, to the party providing such Qualified Replacement Mortgage, all
of its right, title and interest in and to such released Mortgage Loan and all
the Trust's right, title and interest to principal and interest due on such
released Mortgage Loan after the applicable Subsequent Cut-Off Date; provided,
however, that the Trust shall reserve and retain all right, title and interest
in and to payments of principal and interest due on such released Mortgage Loan
on or prior to the applicable Subsequent Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Depositor and then to the Trustee on behalf of the
Trust, the Seller agrees to (i) deliver without recourse to the Custodian, on
behalf of the Trustee on the date of delivery of such Qualified Replacement
Mortgage the original Note relating thereto, endorsed in blank or to the order
of the Trustee, (ii) cause promptly to be recorded an assignment in the
appropriate jurisdictions, (iii) deliver the original Qualified Replacement
Mortgage and such recorded assignment, together with original or duly certified
copies of any and all prior assignments, to the Custodian, on behalf of the
Trustee within 15 days of receipt thereof by the Seller (but in any event within
120 days after the date of conveyance of such Qualified Replacement Mortgage),
(iv) deliver the title insurance policy, or where no such policy is required to
be provided under Section 3.05(b)(i)(B), the other evidence of title in same
required in Section 3.05(b)(i)(B) and (v) deliver originals of all assumption,
modification, written assurance or substitution agreements, if any.
(g) As to each Mortgage Loan released from the Trust in connection with
the conveyance of a Qualified Replacement Mortgage the Trustee shall cause the
Custodian, on behalf of the Trustee to deliver on the date of conveyance of such
Qualified Replacement Mortgage to the party providing such Qualified Replacement
Mortgage (i) the original Note relating thereto, endorsed without recourse or
representation, to such party, (ii) the original Mortgage so released and all
assignments relating thereto and (iii) such other documents as constituted the
File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller shall prepare a substitute assignment or cure such defect, as the
case may be, and thereafter cause each such assignment to be duly recorded.
(i) The Seller shall reflect on its records that the Mortgage Loans
have been sold to the Depositor and the Depositor shall reflect on its records
that the Mortgage Loans have been sold to the Trust.
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Section 3.06 Acceptance by Trustee; Certain Substitutions of
Mortgage Loans; Certification by Trustee.
(a) The Trustee agrees to cause the Custodian to execute and deliver on
the Trustee's behalf on the Startup Day an acknowledgment of receipt of the
items delivered by the Seller or the Depositor in the form attached as Exhibit E
hereto, and declares that it will hold such documents and any amendments,
replacement or supplements thereto, as well as any other assets included in the
definition of Trust Estate and delivered to the Custodian, on behalf of the
Trustee, as Trustee in trust upon and subject to the conditions set forth herein
for the benefit of the Owners. The Trustee agrees to cause the Custodian to
review on the Trustee's behalf, for the benefit of the Owners, such items within
45 days after the Startup Day (or, with respect to any document delivered after
the Startup Day, within 45 days of receipt and with respect to any Subsequent
Mortgage Loan or Qualified Replacement Mortgage, within 45 days after the
Subsequent Transfer Date) and to deliver to the Depositor, the Master Servicer,
the Seller and the related Servicer a certification in the form attached hereto
as Exhibit F (a "Pool Certification") to the effect that, as to each Mortgage
Loan listed in the Schedule of Mortgage Loans (other than any Mortgage Loan paid
in full or any Mortgage Loan specifically identified in such Pool Certification
as not covered by such Pool Certification), (i) all documents required to be
delivered to it pursuant to Section 3.05(b)(i) of this Agreement are in its
possession, (ii) such documents have been reviewed by it and have not been
mutilated, damaged or torn and relate to such Mortgage Loan and (iii) based on
its examination and only as to the foregoing documents, the information set
forth on items (1), (3) and (4) of the Schedule of Mortgage Loans accurately
reflects the information set forth in the File. Neither the Trustee nor the
Custodian shall have any responsibility for reviewing any File except as
expressly provided in this subsection 3.06(a). Without limiting the effect of
the preceding sentence, in reviewing any File, neither the Trustee nor the
Custodian shall have any responsibility for determining whether any document is
valid and binding, whether the text of any assignment is in proper form (except
to determine if the Trustee is the assignee), whether any document (other than
the assignments) has been recorded in accordance with the requirements of any
applicable jurisdiction or whether a blanket assignment is permitted in any
applicable jurisdiction, but shall only be required to determine whether a
document has been executed, that it appears to be what it purports to be, and,
where applicable, that it purports to be recorded. Neither the Trustee nor the
Custodian shall be under any duty or obligation to inspect, review or examine
any such documents, instruments, certificates or other papers to determine that
they are genuine, enforceable, or appropriate for the represented purpose or
that they are other than what they purport to be on their face, nor shall either
the Trustee or the Custodian be under any duty to determine independently
whether there are any intervening assignments or assumption or modification
agreements with respect to any Mortgage Loan.
(b) If the Trustee or the Custodian, on behalf of the Trustee during
such 45-day period finds any document constituting a part of a File which is not
executed, has not been received, or is unrelated to the Mortgage Loans
identified in the Schedule of Mortgage Loans, or that any Mortgage Loan does not
conform to the description thereof as set forth in the Schedule of Mortgage
Loans, the Trustee or the Custodian, on behalf of the Trustee shall promptly so
notify the Depositor, the Seller, the Master Servicer and the related Servicer.
In performing any such review, the Trustee or the Custodian, on behalf of the
Trustee may conclusively rely on the Seller as to the purported genuineness of
any such document and any signature thereon. It is understood that the scope of
the Trustee's and the Custodian's review of the items delivered by the Depositor
pursuant to Section 3.05(b)(i) or the Seller pursuant to Section 3.05(f) is
limited solely to confirming that the documents listed in Section 3.05(b)(i) or
Section 3.05(f), respectively, have been executed and received, relate to the
Files identified in the Schedule of Mortgage Loans and conform to the
description thereof in the Schedule of Mortgage Loans. The Seller agrees to use
reasonable efforts to remedy a material defect in a document constituting part
of a File of which it is so notified by the Trustee. If, however, within 60 days
after the Trustee's notice to the Seller respecting such defect the Seller has
not remedied the defect and the defect materially and adversely affects the
interest in the related Mortgage Loan of the Owners, the Seller will (i)
substitute in lieu of such Mortgage Loan a Qualified Replacement Mortgage and
deliver the Substitution Amount to the applicable Servicer for deposit in the
Principal and Interest
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Account or (ii) purchase such Mortgage Loan at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be delivered to the
applicable Servicer for deposit in the related Principal and Interest Account.
(c) In addition to the foregoing, the Trustee also agrees to cause the
Custodian to provide an updated report during the 12th month after the Startup
Day indicating the current status of the exceptions previously indicated on the
Pool Certification (the "Final Certification"). After delivery of the Final
Certification, the Trustee shall provide to the Servicers and the Master
Servicer no less frequently than monthly updated certifications indicating the
then current status of exceptions, until all such exceptions have been
eliminated.
Section 3.07 Conveyance of the Subsequent Mortgage Loans.
(a) Subject to the satisfaction of the conditions set forth in Section
3.05 and paragraphs (b) and (c) below in consideration of the Trustee's delivery
on the relevant Subsequent Transfer Dates to or upon the order of the Depositor
of all or a portion of the balance of funds in the Pre-Funding Account, the
Depositor shall on each Subsequent Transfer Date sell, transfer, assign, set
over and otherwise convey without recourse, to the Trustee, all of the
Depositor's right, title and interest in and to any and all benefits accruing to
the Depositor from the Subsequent Mortgage Loans (other than any principal and
interest payments due thereon on or prior to the relevant Subsequent Cut-Off
Date) which the Depositor will cause to be delivered to the Trustee therewith
(and all substitutions therefor as provided by Sections 3.03, 3.04 and 3.06),
together with the related Subsequent Mortgage Loan documents and the Depositor's
interest in any Property and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing and proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, hazard insurance and title insurance policy relating to the
Subsequent Mortgage Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing). There shall be no more than three Subsequent Transfer Dates.
The transfer of the Subsequent Mortgage Loans set forth on the Schedule
of Mortgage Loans by the Seller to the Depositor and by the Depositor to the
Trust shall be absolute and shall be intended by the Owners and all parties
hereto to be treated as a sale by the Seller to the Depositor and by the
Depositor to the Trust. Any Subsequent Mortgage Loan so transferred will be
included in the related Mortgage Loan Group. The amount released from the
Pre-Funding Account shall be one-hundred percent (100%) of the aggregate
principal balances of the Subsequent Mortgage Loans so transferred. Upon the
transfer by the Depositor of the Subsequent Mortgage Loans hereunder, such
Subsequent Mortgage Loans (and all principal (including Prepayments collected)
and interest due thereon subsequent to the Subsequent Cut-Off Date) and all
other rights and interests with respect to such Subsequent Mortgage Loans
transferred pursuant to a Subsequent Transfer Agreement shall be deemed for all
purposes hereunder to be part of the Trust Estate. The Seller hereby covenants
and agrees to use its best efforts to ensure that a sufficient amount of
Subsequent Mortgage Loans will be transferred to the Depositor and by the
Depositor to the Trust during the Funding Period to enable the Pre-Funded Amount
with respect to each Group to be reduced to less than $100,000.
(b) The obligation of the Trustee to accept the transfer of the
Subsequent Mortgage Loans and the other property and rights related thereto
described in paragraph (a) above is subject to the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Depositor shall have provided the Trustee with an
Addition Notice not less than ten (10) calendar days prior to the
proposed Subsequent Transfer Date (unless the
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Trustee agrees to a shorter time period) and shall have provided any
information reasonably requested by any of the foregoing with respect
to the Subsequent Mortgage Loans;
(ii) the Depositor shall have delivered to the Trustee a duly
executed written assignment (including an acceptance by the Trustee) in
substantially the form of Exhibit C, which shall include a Schedule of
Mortgage Loans, listing the Subsequent Mortgage Loans and any other
exhibits listed thereon;
(iii) the Depositor shall have deposited in the applicable
Principal and Interest Account all principal collected and interest
accruing in respect of such Subsequent Mortgage Loans on or after the
related Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, neither the
Depositor nor the Seller was insolvent, nor will either of them be made
insolvent by such transfer, nor is either of them aware of any pending
insolvency;
(v) the Funding Period for the related Group shall not have
ended;
(vi) the Depositor shall have delivered to the Trustee an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b) and in the related Subsequent
Transfer Agreement; and
(vii) such sale will not result in a materially adverse tax
consequence to the Trust as evidenced by an Opinion of Counsel
delivered to the Trustee by the Depositor at its own expense.
(c) The obligation of the Trust to purchase Subsequent Mortgage Loans
on a Subsequent Transfer Date is subject to the following requirements, among
others: (i) the ratings on the Offered Certificates shall not have been
downgraded by any Rating Agency; (ii) such Subsequent Mortgage Loan may not be
30 or more days contractually delinquent as of the related Subsequent Cut-Off
Date; (iii) the remaining term to maturity of such Subsequent Mortgage Loan may
not exceed 360 months; and (iv) following the purchase of all of the Subsequent
Mortgage Loans by the Trust, the Subsequent Mortgage Loans, as a whole, (a) will
have a weighted average Combined Loan-to-Value Ratio of not more than _______%
for Group I and a weighted average Loan-to-Value Ratio of not more than _______%
for Group II; (b) will have a weighted average gross margin for Group II that is
not more than ____ basis points less than the weighted average gross margin for
Group II as of the Cut-Off Date; (c) will have no more than _______% in the case
of Group I of such Subsequent Mortgage Loans with Combined Loan-to-Value Ratios
and _______% in the case of Group II of such Subsequent Mortgage Loans with
Loan-to-Value Ratios in excess of _______% (d) will have no more than _______%
in the case of Group I and _______% in the case of Group II with cash out
refinancings; (e) in the case of Group II only, will not be comprised of more
than _______% in the aggregate of 2/28 Loans and 3/27 Loans; (f) will have
weighted average PAG codes of less than __________ in the case of the Group I
and less than __________ in the case of Group II; (g) will include Subsequent
Mortgage Loans classified as PAG IV or PAG V comprising not more than _______%
of Group I and _______% of Group II; and (h) will have not more than _______% of
Group I and _______% of Group II that are secured by non-owner occupied
properties.
(d) In connection with each Subsequent Transfer Date and on the Payment
Date occurring in ________________ __, 199_, the Trustee shall determine: (i)
the amount and correct dispositions of each of the Group I and Group II
Capitalized Interest Requirements, the Overfunded Interest Amounts, the Pre-
Funding Account Earnings and the Pre-Funded Amount and (ii) any other necessary
matters in connection with the administration of the Pre-Funding Account and of
the Capitalized Interest Account. In the event that any amounts are released as
a result of an error in calculation to the Owners or Depositor from the Pre-
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Funding Account or from the Capitalized Interest Account, such Owners or the
Depositor shall immediately repay such amounts to the Trustee.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates
On the Startup Day, upon the Trustee's receipt from the Depositor of an
executed Delivery Order in the form set forth as Exhibit G hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 8 a.m., Pacific time on the Startup Day (the "Closing"), at the
offices of _______________ _______________ (or at such other location acceptable
to the Seller), the Seller will sell and convey the Initial Mortgage Loans and
the money, instruments and other property related thereto to the Depositor and
the Depositor will sell and convey the Initial Mortgage Loans and the money,
instruments and other property related thereto to the Trustee, and the Trustee
will deliver (i) to the Underwriters, the Offered Certificates with an aggregate
Percentage Interest in each Class equal to 100%, registered in the name of Cede
& Co., or in such other names as the Underwriters shall direct, against payment
of the purchase price thereof by wire transfer of immediately available funds to
the Trustee, (ii) to the initial purchasers thereof, Class S Certificates with a
cumulative Percentage Interest equal to 100%, (iii) to the initial purchasers
thereof, Class C-IO Certificates with an aggregate Percentage Interest in each
Class of 100%, (iv) to the respective registered owners thereof, a Class D
Certificate with a Percentage Interest equal to 100% and a Class R Certificate
with a Percentage Interest equal to 99.999%, registered in the names designated
by the Depositor and (v) to the Trustee, the Tax Matters Person Residual
Interest.
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Certificates the Depositor shall instruct the Trustee to deposit (a) an
amount equal to the Original Pre-Funded Amount in the Pre-Funding Account and
(b) an amount equal to the Original Capitalized Interest Amount to the
Capitalized Interest Account contributed by the Depositor out of such proceeds
or otherwise. The Trustee shall then remit the entire balance of such net
proceeds to the Depositor in accordance with instructions delivered by the
Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" no debt of any
Person is represented thereby, nor are the Certificates or the underlying Notes
guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law). The Certificates are payable
solely from payments received on or with respect to the Mortgage Loans (other
than the Servicing Fees), money in the Principal and Interest Account, except as
otherwise provided herein, money in the Pre-Funding Account and the Capitalized
Interest Account, earnings and the proceeds of property held as a part of the
Trust Estate. Each Certificate entitles the Owner thereof to receive monthly on
each Payment Date, in order of priority of distributions with respect to such
Class of Certificates as set forth in Section 7.03, a specified portion of such
payments with respect to the Mortgage Loans, pro rata in accordance with such
Owner's Percentage Interest.
(b) Each Owner is required, and hereby agrees, to return to the Trustee
any Certificate prior to receiving the final distribution due thereon. Any such
Certificate as to which the Trustee has made the final distribution thereon
shall be deemed cancelled and shall no longer be Outstanding for any purpose of
this Agreement, whether or not such Certificate is ever returned to the Trustee.
Section 5.02 Forms.
Each Class of the Offered Certificates shall be in substantially the
form set forth as Exhibit A hereto and the Class C-IO Certificates, the Class D
Certificates, the Class R Certificates and the Class S Certificates shall be in
substantially the forms set forth in Exhibits ▇-▇, ▇-▇, ▇-▇ and B-4 hereof,
respectively, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement or as may in the
Depositor's judgment be necessary, appropriate or convenient to comply, or
facilitate compliance, with applicable laws, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any applicable securities laws or
as may, consistently herewith, be determined by the Authorized Officer of the
Depositor executing such Certificates, as evidenced by his execution thereof.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed and authenticated on behalf of the
Trust, by the manual or facsimile signature of one of the Trustee's Authorized
Officers.
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Depositor shall, upon proper authentication
by the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the execution and delivery of
such Certificates or did not hold such offices at the date of authentication of
such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
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Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Owners and the Trustee shall have the right to inspect the
Register during the Registrar's normal hours and to obtain copies thereof, and
the Trustee shall have the right to rely upon a certificate executed on behalf
of the Registrar by an Authorized Officer thereof as to the names and addresses
of the Owners of the Certificates and the principal amounts and numbers of such
Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Offered Certificates then Outstanding or, if there are no longer any Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates, the Trustee will give the Owners prompt
written notice of the appointment of such Registrar and of the location, and any
change in the location, of the Register.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar the Depositor
shall execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
Class and in the aggregate principal amount or Percentage Interest of the
Certificate so surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate original principal amount or percentage interest and
bearing numbers not contemporaneously Outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Depositor and the Trustee shall execute,
authenticate and deliver the Certificate or Certificates which the Owner making
the exchange is entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to the same benefits under this Agreement as the
Certificates surrendered upon such registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(g) It is intended that the Offered Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Offered Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Offered Certificate of such Class. Upon initial issuance, the ownership of each
such Offered Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
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On the Startup Day, no Offered Certificates shall be issued in
denominations of less than $1,000 except that one certificate in each class may
be in an amount less than $1,000. No Class C-IO Certificates shall be issued in
denominations of less than $1,000 (based on the original Notional Principal
Amount thereof). The Class D Certificates, the Class R Certificates and the
Class S Certificates (other than the Tax Matters Person Residual Interest) shall
be issued in minimum percentage interests of 10%.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
With respect to the Offered Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicers, the Master Servicer, the Seller and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Offered Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicers, the Master Servicer, the Seller and the Trustee shall
have no responsibility or obligation with respect to (i) the accuracy of the
records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Offered Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Offered Certificate as shown in the Register, of any
notice with respect to the Offered Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Offered Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Offered
Certificates. No Person other than a registered Owner of a Offered Certificate
as shown in the Register shall receive a certificate evidencing such Offered
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to the registered Owners of
Offered Certificates appearing as registered Owners in the registration books
maintained by the Trustee at the close of business on a Record Date, the name
"Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(h) In the event that the Depository or the Depositor advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Offered Certificates and the Depositor or the Trustee is unable to locate a
qualified successor, the Offered Certificates shall no longer be restricted to
being registered in the Register in the name of Cede & Co. (or a successor
nominee) as nominee of the Depository. At that time, the Depositor may determine
that the Offered Certificates shall be registered in the name of and deposited
with a successor depository operating a global book-entry system, as may be
acceptable to the Depositor and at the Depositor's expense, or such depository's
agent or designee but, if the Depositor does not select such alternative global
book-entry system, then the Offered Certificates may be registered in whatever
name or names registered Owners of Offered Certificates transferring Offered
Certificates shall designate, in accordance with the provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Offered Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Offered Certificates and all notices with respect to such Offered
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or
73
stolen Certificate, there shall be first delivered to the Trustee such security
or indemnity as may be reasonably required by it to hold the Trustee harmless,
then, in the absence of notice to the Trustee or the Registrar that such
Certificate has been acquired by a bona fide purchaser, the Depositor shall
execute and the Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like Class, tenor and aggregate principal amount, bearing a
number not contemporaneously outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto; any
other expenses in connection with such issuance shall be an expense of the
Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in the Trust, and shall be entitled
to all the benefits of this Agreement equally and proportionately with any and
all other Certificates of the same Class duly issued hereunder and such
mutilated, destroyed, lost or stolen Certificate shall not be valid for any
purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
The Trustee and any agent of the Trustee may treat the Person in whose
name any Certificate is registered as the Owner of such Certificate for the
purpose of receiving distributions with respect to such Certificate and for all
other purposes whatsoever, and neither the Trustee nor any agent of the Trustee
shall be affected by notice to the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly cancelled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates may be held by the Trustee in accordance with its
standard retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership or
assignment of an interest in a Class R Certificate or assignment of an interest
in the Lower-Tier REMIC Residual Class (whether pursuant to a purchase, a
transfer resulting from a default under a secured lending agreement or
otherwise) shall be made to a Disqualified Organization or an agent of a
Disqualified Organization. The transfer, sale or other disposition of a Class R
Certificate or assignment of an interest in the Lower-Tier REMIC Residual Class
(whether pursuant to a purchase, a transfer resulting from a default under a
secured lending agreement or otherwise) to a Disqualified Organization shall be
deemed to be of no legal force or effect whatsoever and such transferee shall
not be deemed to be an Owner for any purpose hereunder, including, but not
limited to, the receipt of distributions on such Class R Certificate or
Lower-Tier REMIC Residual Class. Furthermore, in no event shall the Trustee
accept surrender for transfer, registration of transfer, or register the
transfer, of any Class R Certificate nor authenticate and make available any new
Class R Certificate unless the Trustee has received an affidavit from the
proposed transferee in the form attached hereto as Exhibit I. Each holder of a
Class R Certificate by his acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section 5.08(a). The Lower-Tier
REMIC Residual Class is not transferable except that the Owner of the Tax
Matters Person Residual Interest in the Lower-Tier REMIC
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may assign its interest to another Person who accepts such assignment and the
designation as Tax Matters Person pursuant to Section 11.18 hereof.
(b) No other sale or other transfer of record or beneficial ownership
of a Class C-IO Certificate, a Class D Certificate, a Class R Certificate, or a
Class S Certificate (collectively, the "Exempt Certificates") shall be made
unless such transfer is exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and any applicable
state securities laws or is made in accordance with said Securities Act and
laws. In the event such a transfer is to be made within three years from the
Startup Day, (i) the Trustee or the Depositor shall require a written Opinion of
Counsel acceptable to and in form and substance satisfactory to the Depositor in
the event that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from said Securities Act and
laws or is being made pursuant to said Securities Act and laws, which Opinion of
Counsel shall not be an expense of the Trustee, the Trust Estate, the Master
Servicer or the Servicers and (ii) the Trustee shall require the transferee to
execute an investment letter in substantially the form of Exhibit J hereto
acceptable to and in form and substance satisfactory to the Seller certifying to
the Trustee and the Seller the facts surrounding such transfer, which investment
letter shall not be an expense of the Trustee, the Trust Estate or the Seller.
The Owner of an Exempt Certificate desiring to effect such transfer shall, and
does hereby agree to, indemnify the Trustee, the Servicers, the Master Servicer,
the Depositor and the Seller against any liability that may result if the
transfer is not so exempt or is not made in accordance with such federal and
state laws.
(c) No transfer of a Class D Certificate or Class R Certificate shall
be made unless the Trustee shall have received a representation letter in
substantially the form of Exhibit J hereto from the transferee of such Class D
Certificate or Class R Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Title I of the Employee Retirement Income
Security Act ("ERISA") nor a plan or other arrangement subject to Section 4975
of the Code (collectively, a "Plan"), nor is acting on behalf of any Plan nor
using the assets of any Plan to effect such transfer. Notwithstanding anything
else to the contrary herein, any purported transfer of a Class D Certificate or
Class R Certificate to or on behalf of any Plan shall be null and void and of no
effect. Each transferee of a Mezzanine Certificate or a Class B-1 Certificate
shall be deemed to have represented either that it is not a Plan or that it is
an insurance company general account and that Prohibited Transaction Exemption
95-60 covers its acquisition and holding of such Certificates.
(d) No sale or other transfer of any Offered Certificate may be made to
the Depositor or the Seller or any Originator. No sale or other transfer of any
Offered Certificate may be made to a Seller affiliate unless the Trustee shall
have been furnished with an Opinion of Counsel acceptable to the Trustee
experienced in federal bankruptcy matters to the effect that such sale or
transfer would not adversely affect the character of the conveyance of the
Mortgage Loans to the Trust as a sale. No sale or other transfer of the Class R
Certificate issued to the Tax Matters Person appointed on the Startup Day may be
transferred or sold to any Person, except to a person who accepts the
appointment of Tax Matters Person pursuant to Section 11.18 hereof.
Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
related Account(s) and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) by check or draft mailed on each Payment Date or
(ii) if requested by any Owner of (A) an Offered Certificate having an original
principal balance of not less than $1,000,000, (B) a Class C-IO Certificate
having an original Notional Principal Amount of not less than $1,000,000, or (C)
a Class D, a Class R or Class S Certificate having a Percentage Interest of not
less than 10% in writing not later than five Business Days prior to the
applicable Record Date (which request does not have to be repeated unless it has
been withdrawn), to such Owner by wire transfer to an account within the United
States designated no later than five Business Days prior to the related Record
Date, made on each Payment Date, in each case to each Owner of record on the
immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust;
Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account shall be made by and on behalf of the Trustee, and no amounts may be so
withdrawn from the Certificate Account for payments of Certificates except as
provided in this Section.
(b) Whenever the Depositor has appointed one or more Paying Agents
pursuant to Section 11.15 hereof, the Trustee will, on the Business Day
immediately preceding each Payment Date, deposit with such Paying Agents in
immediately available funds an aggregate sum sufficient to pay the amounts then
becoming due (to the extent funds are then available for such purpose in the
Certificate Account for the Class to which such amounts are due) such sum to be
held in trust for the benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require each Paying Agent, including the
Trustee on behalf of the Trust, to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
(e) Any money held by the Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Offered Certificate and Class S
Certificate and remaining unclaimed by the Owner of such Certificate for the
period then specified in the escheat laws of the State of New York after such
amount has become due and payable shall be discharged from such trust and be
paid to the Owners of the Class R Certificates; and the Owner of such Offered
Certificate and Class S Certificate shall thereafter, as an unsecured general
creditor, look only to the Owners of the Class R Certificates for payment
thereof (but only to the extent of the amounts so paid to the Owners of the
Class R Certificates) and all liability of the Trustee or such Paying Agent with
respect to such trust money shall thereupon cease; provided, however, that the
Trustee or such Paying Agent before being required to make any such payment, may
at the expense of the Trust cause to be published once, in the eastern edition
of The Wall Street Journal, notice that such money remains unclaimed and that,
after a date specified therein, which shall be not fewer than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be paid to the Owners of the Class R Certificates. The Trustee shall, at
the direction of the Depositor, also adopt and
76
employ, at the expense of the Trust, any other reasonable means of notification
of such payment (including but not limited to mailing notice of such payment to
Owners whose right to or interest in moneys due and payable but not claimed is
determinable from the records of the Registrar, the Trustee or any Paying Agent,
at the last address of record for each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and, at the request of the Depositor, will from time to time execute
and deliver all such supplements and amendments hereto pursuant to Section 11.14
hereof and all instruments of further assurance and other instruments, and will
take such other action upon such request from the Depositor, to:
(i) more effectively hold in trust all or any portion of the
Trust Estate;
(ii) perfect, publish notice of, or protect the validity of
any grant made or to be made by this Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Trustee, and the interests of the Owners represented
thereby, in such Trust Estate against the contrary claims of all
Persons and parties.
The Trustee shall send copies of any request received from the
Depositor to take any action pursuant to this Section 6.03 to the other parties
hereto.
(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement or the Owners, by
action, suit or proceeding at law or equity; provided, however, that nothing in
this Section shall require any action by the Trustee unless the Trustee shall
first (i) have been furnished indemnity satisfactory to it and (ii) when
required by this Agreement, have been requested to take such action by the
Owners of a majority of the Percentage Interests represented by the Offered
Certificates then Outstanding or, if there are no longer any Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g).
77
Section 6.05 Negative Covenants.
The Trustee will not permit the Trust to:
(i) sell, transfer, exchange or otherwise dispose of any of
the Trust Estate except as expressly permitted by this Agreement;
(ii) claim any credit on or make any deduction from the
distributions payable in respect of, the Certificates (other than
amounts properly withheld from such payments under the Code) or assert
any claim against any present or former Owner by reason of the payment
of any taxes levied or assessed upon any of the Trust Estate;
(iii) incur, assume or guaranty any indebtedness of any Person
except pursuant to this Agreement;
(iv) dissolve or liquidate in whole or in part, except
pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this Agreement
to be impaired, or permit any Person to be released from any covenants
or obligations with respect to the Trust or to the Certificates under
this Agreement, except as may be expressly permitted hereby or (B)
permit any lien, charge, adverse claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise upon
or burden the Trust Estate or any part thereof or any interest therein
or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or for the appointment of a receiver
or trustee of the Trust, or for any other remedy with respect to an event of
default hereunder, unless:
(1) such Owner has previously given written notice to the
Depositor and the Trustee of such Owner's intention to
institute such proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Offered Certificates then Outstanding or,
if there are no Offered Certificates then Outstanding, by such
percentage of the Percentage Interests represented by the
Class D Certificates and the Class R Certificates, shall have
made written request to the Trustee to institute such
proceeding in its own name as Trustee establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners
of a majority of the Percentage Interests represented by the
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Offered Certificates or, if there are no Offered Certificates
then Outstanding, by such majority of the Percentage Interests
represented by the Class D Certificates and the Class R
Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
Section 6.08 Unconditional Rights of Owners to Receive
Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee or to the Owners is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. Except as otherwise provided herein, the assertion or employment of
any right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Seller or any Owner of any Certificate to
exercise any right or remedy under this Agreement with respect to any event
described in Section 8.20(a) or (b) shall impair any such right or remedy or
constitute a waiver of any such event or an acquiescence therein. Every right
and remedy given by this Article VI or by law to the Trustee or to the Owners
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Owners, as the case may be.
Section 6.11 Control by Owners.
The Owners of a majority of the Percentage Interests represented by the
Offered Certificates then Outstanding or, if there are no longer any Offered
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates then Outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.03 and
Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction; provided, however, that the Seller or the
Trustee, as the case may be, need not take any action which it
determines might involve it in liability or may be unjustly
prejudicial to the Owners not so directing.
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Section 6.12 Access to Owners of Certificates' Names and Addresses. (a)
If any Owner (for purposes of this Section 6.12, an "Applicant") applies in
writing to the Trustee, and such application states that the Applicant desires
to communicate with other Owners with respect to their rights under this
Agreement or under the Certificates and is accompanied by a copy of the
communication which such Applicant proposes to transmit, then the Trustee shall,
at the expense of such Applicant, within ten (10) Business Days after the
receipt of such application, furnish or cause to be furnished to such Applicant
a list of the names and addresses of the Owners of record as of the most recent
Payment Date.
(b) Every Owner, by receiving and holding such list, agrees with the
Trustee that the Trustee shall not be held accountable in any way by reason of
the disclosure of any information as to the names and addresses of the Owners
hereunder, regardless of the source from which such information was derived.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement, including all payments due on the
Mortgage Loans in accordance with the respective terms and conditions of such
Mortgage Loans and required to be paid over to the Trustee by the related
Servicer or by any Subservicer. The Trustee shall hold all such money and
property received by it, other than pursuant to or as contemplated by Section
6.02(e) hereof, as part of the Trust Estate and shall apply it as provided in
this Agreement.
Section 7.02 Establishment of Accounts.
(a) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain at the Corporate Trust Office as a segregated
account, the Certificate Account, to be held by the Trustee on behalf of the
Owners of the Certificates and the Trustee.
(b) The Depositor shall cause to be established, and the Trustee shall
maintain, at the Corporate Trust Office two segregated accounts, referred to
herein as the "Pre-Funding Account" and the "Capitalized Interest Account" to be
held by the Trustee in the name of the Trust for the benefit of the Owners. For
federal income tax purposes, the Depositor shall be the owner of such accounts.
(c) The Depositor shall cause to be established, and the Trustee shall
maintain, at the Corporate Trust Office, as two segregated accounts, the
Upper-Tier Group I Distribution Account and the Upper-Tier Group II Distribution
Account to be held by the Trustee in the name of the Upper-Tier REMIC for the
benefit of the Owners.
Section 7.03 Flow of Funds.
(a) (i) With respect to Group I, the Servicers shall, no later
than the related Monthly Remittance Date, remit and the Trustee shall deposit to
the Certificate Account, without duplication, (x) any proceeds received upon
liquidation of the Trust insofar as such proceeds relate to Group I, (y) all
remittances made to the Trustee pursuant to Section 8.09 insofar as such
remittances relate to Group I and (z) each portion of the Monthly Remittance
Amount relating to Group I remitted by the related Servicer.
(ii) On each Payment Date, the Trustee shall transfer the
Lower-Tier Group I Distribution Amount from the Certificate Account to the
Upper-Tier Group I Distribution Account.
(iii) On each Payment Date, the Trustee shall distribute from
the Certificate Account to the Owners of the Class S Certificates, the Class S
Distribution Amount relating to Group I.
(b) (i) With respect to Group II, the Servicers shall, no later
than the related Monthly Remittance Date, remit and the Trustee shall deposit to
the Certificate Account without duplication, (x) any proceeds received upon
liquidation of the Trust insofar as such proceeds relate to Group II, (y) all
remittances made to the Trustee pursuant to Section 8.09 insofar as such
remittances relate to Group II and (z) each portion of the Monthly Remittance
Amount relating to Group II remitted by the related Servicer.
(ii) On each Payment Date, the Trustee shall transfer the
Lower-Tier Group II Distribution Amount from the Certificate Account to the
Upper-Tier Group II Distribution Account.
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(iii) On each Payment Date, the Trustee shall distribute from
the Certificate Account to the Owners of the Class S Certificates, the Class S
Distribution Amount relating to Group II.
(c) With respect to the Upper-Tier Group I Distribution Account, on
each Payment Date, the Trustee shall make the following disbursements from the
Group I Interest Remittance Amount transferred thereto pursuant to subsection
(a)(ii), in the following order of priority, and each such disbursement shall be
treated as having occurred only after all preceding disbursements have occurred:
(i) First, to the Trustee, the portion of the Trustee Fee
and reasonable expenses, if any, incurred by the
Trustee relating to Group I and to the Master
Servicer, the portion of the Master Servicer Fee
relating to Group I;
(ii) Second, to the Owners of the Class A Certificates
related to Group I, the related Class A Current
Interest plus the related Class A Interest Carry
Forward Amount with respect to each such Class of
Class A Certificates without any priority among such
Class A Certificates; provided, that if the Group I
Interest Amount Available is not sufficient to make a
full distribution of interest with respect to all
Classes of the Class A Certificates related to Group
I, the Group I Interest Amount Available will be
distributed among the outstanding Classes of Class A
Certificates related to Group I pro rata based on the
aggregate amount of interest due on each such Class,
and the amount of the shortfall will be carried
forward with accrued interest at the related Class A
Pass-Through Rate;
(iii) Third, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class
M-1F Certificates, the Class M-1F Current Interest;
(iv) Fourth, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class
M-2F Certificates, the Class M-2F Current Interest;
(v) Fifth, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class
B-1F Certificates, the Class B-1F Current Interest;
(vi) Sixth, to the extent of the Group I Interest Amount
Available then remaining, to the Owners of the Class
C-FIO Certificates, the Class C-FIO Current Interest;
and
(vii) Seventh, the Group I Monthly Excess Interest Amount
shall be applied or distributed as provided in
subsection (h) of this Section 7.03.
(d) With respect to the Upper-Tier Group II Distribution Account on
each Payment Date, the Trustee shall make the following disbursements from the
Group II Interest Remittance Amount transferred thereto pursuant to subsection
(b)(ii), in the following order of priority, and each such disbursement shall be
treated as having occurred only after all preceding disbursements have occurred:
(i) First, to the Trustee, the portion of the Trustee Fee
and reasonable expenses, if any, incurred by the
Trustee relating to Group II and to the Master
Servicer, the portion of the Master Servicer Fee
relating to Group II;
(ii) Second, to the Owners of the Class A Certificates
related to Group II, the related Class A Current
Interest plus the related Class A Interest Carry
Forward Amount with respect to each such Class of
Class A Certificates without any priority among such
Class A Certificates; provided, that if the Group II
Interest Amount Available is not sufficient to make a
full distribution of interest with respect to all
Classes of
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the Class A Certificates related to Group II, the
Group II Interest Amount Available will be
distributed among the outstanding Classes of Class A
Certificates related to Group II pro rata based on
the aggregate amount of interest due on each such
Class, and the amount of the shortfall will be
carried forward with accrued interest at the related
Class A Pass-Through Rate;
(iii) Third, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
M-1A Certificates, the Class M-1A Current Interest;
(iv) Fourth, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
M-2A Certificates, the Class M-2A Current Interest;
(v) Fifth, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
B-1A Certificates, the Class B-1A Current Interest;
(vi) Sixth, to the extent of the Group II Interest Amount
Available then remaining, to the Owners of the Class
C-AIO Certificates, the Class C-AIO Current Interest;
and
(vii) Seventh, the Group II Monthly Excess Interest Amount
shall be applied or distributed as provided in
subsection (i) of this Section 7.03.
(e) Reserved.
(f) With respect to the Upper-Tier Group I Distribution Account on each
Payment Date, the Trustee shall make the following disbursements from amounts
relating to principal transferred thereto, in the following order of priority
and each such disbursement shall be treated as having occurred only after all
preceding disbursements have occurred:
(i) On each Payment Date (a) before the Group I
Stepdown Date or (b) on or after the Group I Stepdown
Date if a Group I Trigger Event is in effect, the
Owners of the Class A Certificates related to Group I
will be entitled to receive payment of 100% of the
Group I Principal Distribution Amount as follows: (I)
to the Owners of the Class A-6 Certificates, the
Class A-6 Lockout Distribution Amount and (II) to the
Owners of the Class A Certificates related to Group
I, as follows: first, to the Owners of the Class A-1
Certificates, until the Class A-1 Certificate
Principal Balance is reduced to zero; second, to the
Owners of the Class A-2 Certificates, until the Class
A-2 Certificate Principal Balance is reduced to zero;
third, to the Owners of the Class A-3 Certificates,
until the Class A-3 Certificate Principal Balance is
reduced to zero; fourth, to the Owners of the Class
A-4 Certificates, until the Class A-4 Certificate
Principal Balance is reduced to zero; fifth, to the
Owners of the Class A-5 Certificates, until the Class
A-5 Certificate Principal Balance is reduced to zero;
and, sixth, to the Owners of the Class A-6
Certificates, until the Class A-6 Certificate
Principal Balance is reduced to zero; provided,
however, that on any Payment Date on which the sum of
the Certificate Principal Balance of the Subordinate
Certificates related to Group I and the Group I
Overcollateralization Amount is zero, any amounts of
principal payable to the Owners of the Class A
Certificates related to Group I on such Payment Date
shall be distributed pro rata and not sequentially.
(ii) Notwithstanding the provisions of Section 7.03(g)(i),
if the Certificate Principal Balance of the Class A
Certificates related to Group I is reduced to zero
and it is prior to the Group I Stepdown Date or
during the continuation of a Group I Trigger
83
Event, the Owners of the Subordinate Certificates
relating to Group I will be entitled to receive
payment of 100% of the Group I Principal Distribution
Amount as follows:
(a) to the Class M-1F Certificates until the
Class M-1F Certificate Termination Date;
(b) to the Class M-2F Certificates until the
Class M-2F Certificate Termination Date; and
(c) to the Class B-1F Certificates, until the
Class B-1F Certificate Termination Date.
(iii) On each Payment Date on or after the Group I Stepdown
Date and as long as a Group I Trigger Event is not in
effect, the Owners of the Group I Certificates will
be entitled to receive payments of principal, in the
order of priority, in the amounts set forth below and
to the extent of the Group I Principal Distribution
Amount as follows:
(A) First, the lesser of (x) the Group I
Principal Distribution Amount and (y) the
Group I Class A Principal Distribution
Amount shall be distributed (I) to the
Owners of the Class A-6 Certificates, in an
amount equal to the Class A-6 Lockout
Distribution Amount and (II) the remainder
paid to the Owners of the Class A
Certificates related to Group I as follows:
first, to the Owners of the Class A-1
Certificates, until the Class A-1
Certificate Principal Balance is reduced to
zero; second, to the Owners of the Class A-2
Certificates, until the Class A-2
Certificate Principal Balance is reduced to
zero; third, to the Owners of the Class A-3
Certificates, until the Class A-3
Certificate Principal Balance is reduced to
zero; fourth, to the Owners of the Class A-4
Certificates, until the Class A-4
Certificate Principal Balance is reduced to
zero; fifth, to the Owners of the Class A-5
Certificates, until the Class A-5
Certificate Principal Balance is reduced to
zero; and, sixth, to the Owners of the Class
A-6 Certificates, until the Class A-6
Certificate Principal Balance is reduced to
zero; provided, however, that on any Payment
Date on which the sum of the Certificate
Principal Balance of the Subordinate
Certificates related to Group I and the
Group I Overcollateralization Amount is
zero, any amounts of principal payable to
the Owners of the Class A Certificates
related to Group I on such Payment Date
shall be distributed pro rata and not
sequentially;
(B) Second, the lesser of (x) the excess of (i)
the Group I Principal Distribution Amount
over (ii) the amount distributed to the
Owners of the Class A Certificates related
to Group I in clause (A) above and (y) the
Class M-1F Principal Distribution Amount
shall be distributed to the Owners of the
Class M-1F Certificates, until the Class
M-1F Certificate Principal Balance has been
reduced to zero;
(C) Third, the lesser of (x) the excess of (i)
the Group I Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A Certificates
related to Group I in clause (A) above and
the amount distributed to the Owners of the
Class M-1F Certificates in clause (B) above
and (y) the Class M-2F Principal
Distribution Amount shall be
84
distributed to the Owners of the Class M-2F
Certificates, until the Class M- 2F
Certificate Principal Balance has been
reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i)
the Group I Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A Certificates
related to Group I pursuant to clause (A)
above, the amount distributed to the Owners
of the Class M-1F Certificates pursuant to
clause (B) above and the amount distributed
to the Owners of the Class M-2F Certificates
pursuant to clause (C) above and (y) the
Class B-1F Principal Distribution Amount
shall be delivered to the Owners of the
Class B-1F Certificates, until the Class
B-1F Certificate Principal Balance has been
reduced to zero; and,
(E) Fifth, any portion of the Group I Principal
Remittance Amount remaining after making all
of the distributions in clauses (A), (B),
(C) and (D) above shall be distributed as
provided in subsection (h) of this Section
7.03.
(g) With respect to the Upper-Tier Group II Distribution Account on
each Payment Date, the Trustee shall make the following disbursements from
amounts relating to principal transferred thereto, in the following order of
priority and each such disbursement shall be treated as having occurred only
after all preceding disbursements have occurred:
(i) On each Payment Date (a) before the Group II Stepdown
Date or (b) on or after the Group II Stepdown Date if
a Group II Trigger Event is in effect, the Owners of
the Class A-7 Certificates will be entitled to
receive payment of 50% of the Group II Principal
Distribution Amount and the Owners of the Class A-8
Certificates will be entitled to receive payment of
50% of the Group II Principal Distribution Amount,
until the Class A-7 Certificate Principal Balance has
been reduced to zero and thereafter the Owners of the
Class A-8 Certificates will be entitled to receive
payment of 100% of the Group II Principal
Distribution Amount, until the Class A-8 Certificate
Termination Date.
(ii) Notwithstanding the provisions of Section 7.03(g)(i)
if the Class A-8 Certificate Principal Balance is
reduced to zero and it is prior to the Group II
Stepdown Date or during the continuation of a Group
II Trigger Event, the Owners of the Subordinate
Certificates relating to Group II will be entitled to
receive payment of 100% of the Group II Principal
Distribution Amount as follows:
(a) to the Class M-1A Certificates until
the Class M-1A Certificate
Termination Date;
(b) to the Class M-2A Certificates until
the Class M-2A Certificate
Termination Date; and
(c) to the Class B-1A Certificate; until
the Class B-1A Certificate
Termination Date.
(iii) On each Payment Date (a) on or after the Group II
Stepdown Date and (b) as long as a Group II Trigger
Event is not in effect, the Owners of the Group II
Certificates will be entitled to receive payments of
principal, in the order of priority, in the amounts
set forth below and to the extent of the Group II
Principal Distribution Amount as follows:
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(A) First, (1) until the Class A-7 Certificate
Termination Date, 50% of the Group II Post
Stepdown Amount shall be distributed of the
Class A-7 Certificates and 50% of the Group
II Post Stepdown Amount shall be distributed
to the Owners of the Class A-8 Certificates
and (2) during the period from the Class A-7
Certificate Termination Date until the Class
A-8 Certificate Termination Date, 100% of
the Group II Post Stepdown Amount shall be
distributed to the Owners of the Class A-8
Certificates;
(B) Second, the lesser of (x) the excess of (i)
the Group II Principal Distribution Amount
over (ii) the amount distributed to the
Owners of the Class A-7 Certificates and
Class A-8 Certificates in clause (A) above
and (y) the Class M-1A Principal
Distribution Amount shall be distributed to
the Owners of the Class M-1A Certificates,
until the Class M-1A Certificate Principal
Balance has been reduced to zero;
(C) Third, the lesser of (x) the excess of (i)
the Group II Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A-7 Certificates
and Class A-8 Certificates in clause (A)
above and the amount distributed to the
Owners of the Class M-1A Certificates in
clause (B) above and (y) the Class M-2A
Principal Distribution Amount shall be
distributed to the Owners of the Class M-2A
Certificates, until the Class M-2A
Certificate Principal Balance has been
reduced to zero;
(D) Fourth, the lesser of (x) the excess of (i)
the Group II Principal Distribution Amount
over (ii) the sum of the amount distributed
to the Owners of the Class A-7 Certificates
and Class A-8 Certificates pursuant to
clause (A) above, the amount distributed to
the Owners of the Class M-1A Certificates
pursuant to clause (B) above and the amount
distributed to the Owners of the Class M-2A
Certificates pursuant to clause (C) above
and (y) the Class B-1A Principal
Distribution Amount shall be delivered to
the Owners of the Class B-1A Certificates,
until the Class B-1A Certificate Principal
Balance has been reduced to zero; and
(E) Fifth, any portion of the Group II Principal
Remittance Amount remaining after making all
of the distributions in clauses (A), (B),
(C) and (D) above shall be distributed as
provided in subsection (i) of this Section
7.03.
(h) On any Payment Date, the Group I Monthly Excess Cashflow Amount is
required to be applied in the following order of priority on such Payment Date:
(1) to fund any remaining Class A Interest Carry Forward
Amount with respect to Group I;
(2) to fund the Group I Extra Principal Distribution
Amount for such Payment Date;
(3) to fund the Class M-1F Interest Carry Forward Amount,
if any;
(4) to fund the Class M-1F Realized Loss Amortization
Amount for such Payment Date;
(5) to fund the Class M-2F Interest Carry Forward Amount,
if any;
86
(6) to fund the Class M-2F Realized Loss Amortization
Amount for such Payment Date;
(7) to fund the Class B-1F Interest Carry Forward Amount,
if any;
(8) to fund the Class B-1F Realized Loss Amortization
Amount for such Payment Date;
(9) to fund the Class C-FIO Interest Carry Forward
Amount, if any;
(10) to fund any amounts listed in clauses (1) through (9)
of Section 7.03(i) to the extent such amounts have
not been funded in full through the application of
Group II Monthly Excess Cashflow Amounts; and,
(11) as provided in Section 7.03(j) hereof.
(i) On any Payment Date, the Group II Monthly Excess Cashflow Amount is
required to be applied in the following order of priority on such Payment Date:
(1) to fund any remaining Class A Interest Carry Forward
Amount with respect to Group II;
(2) to fund the Group II Extra Principal Distribution
Amount for such Payment Date;
(3) to fund the Class M-1A Interest Carry Forward Amount,
if any;
(4) to fund the Class M-1A Realized Loss Amortization
Amount for such Payment Date;
(5) to fund the Class M-2A Interest Carry Forward Amount,
if any;
(6) to fund the Class M-2A Realized Loss Amortization
Amount for such Payment Date;
(7) to fund the Class B-1A Interest Carry Forward Amount,
if any;
(8) to fund the Class B-1A Realized Loss Amortization
Amount for such Payment Date;
(9) to fund the Class C-AIO Interest Carry Forward
Amount, if any;
(10) to fund any amounts listed in clauses (1) through (9)
of Section 7.03(h) to the extent such amounts have
not been funded in full through the application of
Group I Monthly Excess Cashflow Amounts; and,
(11) as provided in Section 7.03(j) hereof.
(j) On any Payment Date, any Group I Monthly Excess Cashflow Amount
remaining after the application of Section 7.03(h)(1)(10) and any Group II
Monthly Excess Cashflow Amount remaining after the application of Section
7.03(i)(1)-(10) shall be distributed as follows:
87
(1) to the Servicer to the extent of any unreimbursed
Delinquency Advances or Servicing Advances, including
such Delinquency Advances and Servicing Advances
deemed by the related Servicer to be nonrecoverable;
(2) An amount equal to the lesser of (x) the amount
remaining after the distribution described in clause
(1) above and (y) the Group II Available Funds Cap
Shortfall Amount for such Payment Date distributed to
the Owners of the related Class or Classes of the
Group II Certificates;
(3) to fund a distribution to Owners of the Class D
Certificates, the lesser of (x) the amount of the sum
of the Group I Monthly Excess Cashflow Amount and the
Group II Monthly Excess Cashflow Amount then
remaining and (y) the sum of (i) the Class D
Distribution Amount and (ii) the
Overcollateralization Release Amount; provided,
however, that if the Overcollateralization Release
Amount is zero solely due to the existence of a
Subordinated Trigger Event for the related Group,
then the amount which otherwise would constitute the
related Overcollateralization Release Amount shall be
distributed as a reduction of the Certificate
Principal Balance of the Subordinate Certificates as
follows: first, to the Owners of the related Class
B-1 Certificates until the related Class B-1
Certificate Termination Date; second, to the Owners
of the related Class M-2 Certificates, until the
related Class M-2 Certificate Termination Date;
third, to the Owners of the related Class M-1
Certificates until the related Class M-1 Certificate
Termination Date; and fourth, to the Owners of the
Class D Certificates;
(4) to fund a distribution to the Owners of the Class R
Certificates, the remainder.
(k) On each Payment Date, the Trustee shall allocate the Group I
Applied Realized Loss Amount to reduce the Certificate Principal Balances of the
Subordinate Certificates related to Group I in the following order of priority:
(i) to the Class B-1F Certificates until the Class B-1F
Certificate Principal Balance is reduced to zero;
(ii) to the Class M-2F Certificates until the Class M-2F
Certificate Principal Balance is reduced to zero; and
(iii) to the Class M-1F Certificates until the Class M-1F
Certificate Principal Balance is reduced to zero.
(l) On each Payment Date, the Trustee shall allocate the Group II
Applied Realized Loss Amount to reduce the Certificate Principal Balances of the
Subordinate Certificates related to Group II in the following order of priority:
(i) to the Class B-1A Certificates until the Class B-1A
Certificate Principal Balance is reduced to zero;
(ii) to the Class M-2A Certificates until the Class M-2A
Certificate Principal Balance is reduced to zero; and
(iii) to the Class M-1A Certificates until the Class M-1A
Certificate Principal Balance is reduced to zero.
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(m) Notwithstanding the foregoing, in the event that the Certificate
Principal Balances of all of the Class A Certificates relating to a Group have
been reduced to zero, all amounts of principal that would have been distributed
to such Class A Certificates will be distributed to the related Subordinate
Certificates of such Group sequentially in the following order: Class M-1, Class
M-2 and Class B-1 Certificates, in that order. Similarly, if the Certificate
Principal Balance of the Class M-1 Certificates has been reduced to zero, all
amounts of principal that would have been distributed to such Class M-1
Certificates will be distributed to the related Class M-2 and Class B-1
Certificates, in that order. Finally, if the Certificate Principal Balance of
the Class M-2 Certificates has been reduced to zero, all amounts of principal
that would have been distributed on such Class M-2 Certificates will be
distributed to the related Class B-1 Certificates.
(n) Notwithstanding anything above, the aggregate amounts distributed
on all Payment Dates to the Owners of the Certificates on account of principal
pursuant to clauses (f) and (g) shall not exceed the original Certificate
Principal Balance of the related Certificates.
(o) The rights of the Owners to receive distributions from the proceeds
of the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class D Certificates and the Class R Certificates to
receive distributions in respect of the Class D Certificates and the Class R
Certificates, and all ownership interests of the Owners of the Class D
Certificates and the Class R Certificates, in and to such distributions, shall
be subject and subordinate to the preferential rights of the Owners of the
Offered Certificates and Class S Certificates to receive distributions thereon
and the ownership interests of such Owners in such distributions, as described
herein. In accordance with the foregoing, the ownership interests of the Owners
of the Class D Certificates and the Class R Certificates in amounts deposited in
the Accounts from time to time shall not vest unless and until such amounts are
distributed in respect of the Class D Certificates and the Class R Certificates
in accordance with the terms of this Agreement. Notwithstanding anything
contained in this Agreement to the contrary, the Owners of the Class D
Certificates and the Class R Certificates shall not be required to refund any
amount properly distributed on the Class D Certificates and the Class R
Certificates pursuant to this Section 7.03.
Section 7.04 Pre-Funding Account and Capitalized Interest Account.
(a) On the Startup Day, the Depositor will deposit in the Pre-Funding
Account, on behalf of the Owners of the Offered Certificates, from the proceeds
of the sale of the Offered Certificates, the Original Pre-Funded Amount.
(b) On any Subsequent Transfer Date, the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Loan Balances of the Subsequent Mortgage Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Depositor upon satisfaction of the conditions set forth in Sections 3.05 and
3.07 hereof with respect to such transfer; in connection with such instruction
the Depositor shall additionally inform the Trustee whether such Subsequent
Mortgage Loans are being transferred to Group I or Group II. In no event shall
the Depositor be permitted to instruct the Trustee to release from the
Pre-Funding Account to the Certificate Account with respect to Subsequent
Mortgage Loans to be transferred to a Group an amount in excess of the Original
Pre- Funded Amount with respect to such Group.
(c) If the Pre-Funded Amount with respect to a Mortgage Loan Group has
been reduced to $100,000 or less on or before ________________ __, 1998, the
Depositor shall instruct the Trustee to withdraw from the Pre-Funding Account
the amount (exclusive of any related Pre-Funding Account Earnings still on
deposit therein) remaining in the Pre-Funding Account with respect to such Group
of Mortgage Loans and deposit such amount to the Certificate Account, on the
Monthly Remittance Date in _____________ , 1998. If the Pre-Funded Amount in
respect to a Mortgage Loan Group has not been reduced to $100,000
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or less by ________________ __, 1998, then the Trustee shall withdraw on the
Pre-Funding Determination Date from the Pre-Funding Account the amount
(exclusive of any related Pre-Funding Account Earnings still on deposit therein)
remaining in the Pre-Funding Account and deposit on such date such amount to the
Certificate Account, which will be distributed on the Payment Date in
__________, 1998.
(d) On the Payment Date in __________ 1998, the Trustee shall transfer
from the Pre-Funding Account to the Capitalized Interest Account, (i) with
respect to Group I, the Group I Pre-Funding Account Earnings and (ii) with
respect to Group II, the Group II Pre-Funding Account Earnings, if any,
applicable to such Payment Date.
(e) On the Payment Date in __________ 1998, the Trustee shall transfer
from the Capitalized Interest Account to the Certificate Account, for the
benefit of the Owners of the related Certificates, the Group I or Group II
Capitalized Interest Requirement for such Payment Date.
(f) On each Subsequent Transfer Date the Trustee shall distribute the
Overfunded Interest Amount (calculated by the Trustee on the day prior to such
Subsequent Transfer Date) from the Capitalized Interest Account to the Seller
and on Payment Date immediately following the end of the Funding Period (but no
later than the day prior to such Subsequent Transfer Date) from the Capitalized
Interest Account to the Seller), the Trustee shall distribute to the Seller any
amounts remaining in the Capitalized Interest Account after taking into account
the transfers on such Payment Date described above. The Capitalized Interest
Account shall be closed at the end of the Funding Period. All amounts, if any,
remaining in the Capitalized Interest Account on such day shall be transferred
to the Seller.
(g) Any amounts transferred to the Certificate Account from the
Capitalized Interest Account on the Payment Date in __________ 1998 shall be
transferred to the related Upper-Tier Distribution Account and distributed to
the Owners of the related Class or Classes of Class A Certificates entitled to
such amount pursuant to Section 7.03(f) and (g) on such Payment Date.
(h) The Pre-Funding Account and the Capitalized Interest Account are
not an asset of either the Lower-Tier REMIC or the Upper-Tier REMIC.
Section 7.05 Investment of Accounts.
(a) Except as provided below, consistent with any requirements of the
Code, all or a portion of any Account held by the Trustee for the benefit of the
Owners shall be invested and reinvested by the Trustee in the name of the
Trustee for the benefit of the Owners, as directed in writing by the party who
benefits from such investment, which shall be the Depositor in the case of the
Pre-Funding Account and the Capitalized Interest Account and the related
Servicer in the case of the related Principal and Interest Account, in one or
more Eligible Investments bearing interest or sold at a discount. The earnings
on each Principal and Interest Account are payable to the related Servicer.
Earnings on the Certificate Account are payable to the Trustee. The bank serving
as Trustee or any affiliate thereof may be the obligor, manager or advisor on
any investment which otherwise qualifies as an Eligible Investment. No
investment in any Account shall mature later than the Business Day immediately
preceding the next Payment Date unless such investment is an obligation of the
Trustee or is a fund for which the Trustee or any affiliate of the Trustee is a
manager or advisor, in which case such investment may mature not later than the
next Payment Date.
If the Depositor shall have failed to give investment directions to the
Trustee then the Trustee shall invest the funds in such Accounts in money market
funds described in Section 7.07(k) to be redeemable without penalty no later
than the Business Day immediately preceding the next Payment Date.
(b) Subject to Section 10.01 hereof, the Trustee shall not in any way
be held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any loss on any Eligible Investment
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included therein (except to the extent that the bank serving as Trustee is the
obligor in its corporate capacity thereon).
(c) All income or other gain from investments in any Account held by
the Trustee shall be deposited in such Account immediately on receipt (other
than the Principal and Interest Accounts, which income or other gains shall be
retained by the related Servicer and the Certificate Account, which income or
other gains shall be retained by the Trustee), and any loss resulting from such
investments shall be charged to such Account, provided that the related Servicer
and the Trustee shall each contribute funds in an amount equal to such loss in
the case of the Principal and Interest Account and the Certificate Account,
respectively.
Section 7.06 Reserved.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, FHLMC senior debt obligations, and
FannieMae senior debt obligations, but excluding any of such securities whose
terms do not provide for payment of a fixed dollar amount upon maturity or call
for redemption;
(b) Federal Housing Administration debentures; provided, that any such
investment shall be rated in one of the two highest ratings categories by each
Rating Agency;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(e) FannieMae mortgage-backed securities (other than stripped mortgage
securities which are valued greater than par on the portion of unpaid principal)
and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated F-1+ or
better by Fitch and P-1 by ▇▇▇▇▇'▇;
(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by ▇▇▇▇▇'▇ and BBB by Fitch) which has
combined capital, surplus and undivided profits of at least $50,000,000 which
deposits are insured by the FDIC and held up to the limits insured by the FDIC;
(h) Investment agreements provided:
1. The agreement is with a bank or insurance company which has
unsecured, uninsured and unguaranteed senior debt obligations rated Aa2
or better by ▇▇▇▇▇'▇ and AA or better by Fitch, or is the lead bank of
a parent bank holding company with an uninsured, unsecured and
unguaranteed senior debt obligation meeting such rating requirements,
and
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2. Moneys invested thereunder may be withdrawn without any
penalty, premium or charge upon not more than one day's notice
(provided such notice may be amended or canceled at any time prior to
the withdrawal date), and
3. The agreement is not subordinated to any other obligations
of such insurance company or bank, and
4. The same guaranteed interest rate will be paid on any
future deposits made pursuant to such agreement, and
5. The Trustee receives an opinion of counsel (at the expense
of the party requesting the investment) that such agreement is an
enforceable obligation of such insurance company or bank;
(i) Repurchase agreements collateralized by securities described in
(a), (c), or (e) above with any registered broker/dealer subject to the
Securities Investors Protection Corporation's jurisdiction and subject to
applicable limits therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed short-term or long-term obligation rated
P-1 or Aa2, respectively, or better by ▇▇▇▇▇'▇, A-1+ or AA, respectively or
better by Fitch, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank or (b) a
bank which is a member of the FDIC and which has combined capital,
surplus and undivided profits of not less than $125 million, and the
Trustee shall have received written confirmation from such third party
that it holds such securities, free and clear of any lien, as agent for
the Trustee, and
c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1 et
seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less frequently
than monthly and will liquidate the collateral securities if any
deficiency in the required collateral percentage is not restored within
two business days of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106%.
(j) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of each Rating Agency;
and
(k) Investments in no load money market funds registered under the
Investment Company Act of 1940, whose shares are registered under the Securities
Act and rated Aaa by ▇▇▇▇▇'▇ and AAA, if rated by Fitch, including any such
funds for which the Trustee or any affiliate of the Trustee acts as manager or
advisor;
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such
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instrument provided a yield to maturity at par greater than 120% of the yield to
maturity at par of the underlying obligations; and provided, further, that all
instruments described hereunder shall mature at par on or prior to the next
succeeding Payment Date unless otherwise provided in this Agreement and that no
instrument described hereunder may be purchased at a price greater than par if
such instrument may be prepaid or called at a price less than its purchase price
prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
(a) On or before the Business Day preceding each Payment Date, the
Trustee shall notify (subject to the terms of Section 10.03(j) hereof) the
Depositor and the Seller of the following information with respect to such
Payment Date (which notification may be given by facsimile, or by telephone
promptly confirmed in writing):
(1) The aggregate amount then on deposit in the Certificate
Account;
(2) The Class A Distribution Amount, with respect to each
Class individually, and all Classes of the Class A Certificates in the
aggregate, on the next Payment Date, the related Class M-1 Distribution
Amount, the related Class M-2 Distribution Amount, the related Class
B-1 Distribution Amount, the Class C-IO Distribution Amount and the
Class S Distribution Amount;
(3) The application of the amounts described in clause (1)
above to the allocation and distribution of the related Class A
Distribution Amount, the related Class M-1 Distribution Amount, the
related Class M-2 Distribution Amount, the related Class B-1
Distribution Amount and the Class C-IO Distribution Amount, on such
Payment Date in accordance with Section 7.03 hereof;
(4) The Certificate Principal Balance of each Class of the
Offered Certificates, the Notional Principal Amount for each Class of
Class C-IO Certificates the aggregate amount of the principal of each
Class of the Offered Certificates to be paid on such Payment Date and
the remaining Certificate Principal Balance of each Class of the
Offered Certificates (or the Notional Principal Amount for each Class
of C-IO Certificates) following any such payment;
(5) The amount, if any, of Realized Losses relating to each
Group for the related Collection Period and the amount of Cumulative
Realized Losses relating to each Group as of the last day of the
related Collection Period;
(6) For the Payment Date in __________ 1998, and as to each
Group and in the aggregate (A) the related Pre-Funded Amount previously
used to purchase Subsequent Mortgage Loans, (B) the related Pre-Funded
Amount distributed as part of the related Principal Distribution
Amount, (C) the related Pre-Funding Account Earnings transferred to the
Capitalized Interest Account, (D) the amounts transferred from the
Capitalized Interest Account to the Certificate Account and (E) the
Overfunded Interest Amount transferred to the Seller, if any;
(7) The amount of the Class D Distribution Amount; and
(8) the amount of 60+ Day Delinquent Loans relating to each
Group.
Section 7.09 Reports by Trustee.
(a) On each Payment Date the Trustee shall report in writing to the
Depositor (which report shall be made available in electronic format), each
Owner, the Master Servicer, the Underwriters and their designees (designated in
writing to the Trustee) and the Rating Agencies:
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(i) the amount of the distribution with respect to the related
Class of the Certificates (based on a Certificate in the original
principal amount of $1,000);
(ii) (a) the amount of such distribution allocable to
scheduled principal on the Mortgage Loans in each Mortgage Loan Group,
separately identifying the aggregate amount of any Prepayments,
repurchases or Liquidation Proceeds and (b) with respect to each
Mortgage Loan Group, any Pre-Funded Amounts distributed as a Prepayment
at the end of the Funding Period (based on a Certificate in the
original principal amount of $1,000);
(iii) the amount of such distribution allocable to interest on
the Mortgage Loans in each Mortgage Loan Group (based on a Certificate
in the original principal amount of $1,000);
(iv) the Interest Carry-Forward Amount for each Class;
(v) the principal amount (or notional principal amount) of
each Class of Certificates (based on a Certificate in the original
principal amount of $1,000) which will be Outstanding and the aggregate
Loan Balance of each Mortgage Loan Group and in the aggregate, in each
case after giving effect to any payment of principal on such Payment
Date;
(vi) the aggregate Loan Balance of the Mortgage Loans in each
Mortgage Loan Group and in total, in each case, after giving effect to
any payment of principal on such Payment Date;
(vii) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect to
each Mortgage Loan Group and in the aggregate;
(viii) the weighted average Coupon Rate and the weighted
average remaining term to maturity of the Mortgage Loans with respect
to each Mortgage Loan Group and in the aggregate, calculated both as of
the first and last day of the related Collection Period;
(ix) the Servicing Fees, the Master Servicing Fees and Trustee
Fees allocable to each Mortgage Loan Group, and in the aggregate;
(x) the amount of any Group I Extra Principal Distribution
Amount or any Group II Extra Principal Distribution Amount;
(xi) the Group I Senior Enhancement Percentage and the Group
II Senior Enhancement Percentage and whether a Group I Trigger Event or
Group II Trigger Event has occurred as shown by the percentage of 60+
Day Delinquent Loans;
(xii) the Group I Overcollateralization Amount, the Group II
Overcollateralization Amount, and the Certificate Principal Balance of
each Class of the Offered Certificates then outstanding after giving
effect to any payment of principal on such Payment Date; and
(xiii) the amount of any Group I or Group II Applied Realized
Loss Amount and the Unpaid Realized Loss Amount for each Class of
Subordinated Certificates as of the close of such Payment Date.
The Master Servicer shall provide to the Trustee the information
required by Section 8.29(g) with respect to the Mortgage Loans to enable the
Trustee to perform its reporting obligations under this Section, and the
obligations of the Trustee under this Section are conditioned upon such
information being received and the information provided in clauses (ii)(a),
(vi), (viii), (x), (xi), (xii) and (xiii) above shall be based solely
94
upon information contained in the Aggregate Monthly Servicing Report provided by
the Master Servicer to the Trustee.
(b) In addition, on each Payment Date the Trustee will distribute to
the Depositor, each Owner, the Master Servicer, the Underwriters and the Rating
Agencies, together with the information described in Section 7.09(a), the
following information with respect to each Mortgage Loan Group which information
shall be in hard copy or tape format prepared by the Master Servicer (other than
the information in clause (i)) and furnished to the Trustee to the extent
provided for in Section 8.29(g) for such purpose on the Reporting Date:
(i) the number and aggregate principal balances of Mortgage
Loans in each Mortgage Loan Group (a) 30-59 days Delinquent, (b) 60-89
days Delinquent, and (c) 90 or more days Delinquent (exclusive of
foreclosures), as of the close of business on the last Business Day of
the related Collection Period;
(ii) the number and aggregate Loan Balances of all Mortgage
Loans in each Mortgage Loan Group as of the last day of the related
Collection Period;
(iii) the number and dollar amounts of all Mortgage Loans in
each Mortgage Loan Group in foreclosure proceedings as of the close of
business on the last day of the prior Collection Period;
(iv) the number of Mortgagors and the Loan Balances of the
related Mortgage Loans in each Mortgage Loan Group of the related
Mortgages involved in bankruptcy proceedings as of the close of
business on the last day of the prior Collection Period;
(v) the number and aggregate principal balance of Mortgage
Loans related to REO Properties and, to the extent reported by the
Servicers, the aggregate book value of the Mortgage Loans related to
REO Properties (as of the last day such value was determined);
(vi) the total of any Substitution Amounts and any Loan
Purchase Price amounts with respect to each Mortgage Loan Group and in
the aggregate;
(vii) the amount of Cumulative Realized Losses for each
Mortgage Loan Group and in the aggregate, the current period Realized
Losses and the Cumulative Loss Percentage for such Mortgage Loan Group,
in each case as of the last day of the prior Collection Period; and
(viii) the aggregate Loan Balance of 60+ Day Delinquent Loans
with respect to each Mortgage Loan Group as of the last day of the
prior Collection Period.
Within a reasonable time after the end of each calendar year, the
Trustee shall furnish to each person who at any time during the calendar year
was an Owner of a Certificate, if requested in writing by such person, a
statement containing the information described in clauses (ii) and (iii) above,
aggregated for such calendar year or applicable portion thereof during which
such person was an Owner. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information has been
prepared and furnished by the Trustee to Owners pursuant to any requirements of
the Code as in effect from time to time.
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(c) Each Servicer shall furnish to the Master Servicer and the Trustee,
during the term of this Agreement, such periodic, special, or other reports or
information not specifically provided for herein, with respect to Mortgage Loans
serviced by it, as may be necessary, reasonable, or appropriate with respect to
the purposes of this Agreement, all such reports or information to be provided
by and in accordance with such applicable instructions and directions as the
Master Servicer and the Trustee may reasonably require; provided, that the
related Servicer shall be entitled to be reimbursed by the requesting party, for
the fees and actual expenses associated with providing such reports, if such
reports are not generally produced in the ordinary course of business.
Section 7.10 Additional Reports by Trustee.
The Trustee shall provide monthly bank statements to the Depositor, the
Seller, the Underwriters and each Owner, with respect to the amount on deposit
in the Certificate Account and the identity of the investments included therein,
as the Depositor or the Seller may from time to time request. Without limiting
the generality of the foregoing, the Trustee shall, at the request of the
Depositor or the Seller, transmit promptly to the Depositor and the Seller
copies of all accountings of receipts in respect of the Mortgage Loans furnished
to it by the related Servicer or the Master Servicer and shall notify the
Seller, the Master Servicer and the applicable Servicer if any Monthly
Remittance Amount has not been received by the Trustee when due.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION
OF MORTGAGE LOANS
Section 8.01 Servicers and Subservicers. (a) Acting directly or through
one or more subservicers as provided in Section 8.03, each Servicer, as
servicer, shall service and administer the Mortgage Loans identified on the
Schedule of Mortgage Loans as being serviced by it as described below and with
reasonable care, and using that degree of skill and attention that such Servicer
exercises with respect to comparable mortgage loans that it services for itself
or others, and shall have full power and authority, acting alone, to do or cause
to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. In performing such
servicing functions such Servicer shall (i) take into account the mortgagor
non-conforming credit quality of the Mortgage Loans, (ii) follow the policies
and procedures that it would apply to similar loans held for its own account,
unless such policies and procedures are not generally in accordance with
standard industry practices, in which case the Servicer shall service the loans
generally in accordance with standard industry practices applicable to servicing
similar loans, (iii) comply with all applicable laws and follow collection
practices with respect to the related Mortgage Loans that are in all material
respects legal, proper and prudent, and (iv) subject to its obligation to comply
with clauses (i), (ii) and (iii) will not materially change its collection and
servicing practices that are in existence as of the Startup Day without the
consent of the Seller (such consent not to be unreasonably withheld).
(b) The duties of each Servicer shall include the collecting and
posting of all payments, responding to inquiries of Mortgagors or by federal,
state or local government authorities with respect to the Mortgage Loans,
investigating delinquencies, reporting tax information to Mortgagors in
accordance with its customary practices and accounting for collections,
furnishing monthly statements to the Trustee, the Master Servicer and the Seller
with respect to remittances on the Mortgage Loans, advising the Trustee, the
Master Servicer and the Seller of the amount of Compensating Interest and
Delinquency Advances due as of any Monthly Remittance Date with respect to the
Mortgage Loans serviced by it and funding such Compensating Interest and
Delinquency Advances, to the extent set forth in this Agreement. Each Servicer
shall reasonably cooperate with the Trustee and the Master Servicer. Each
Servicer and the Master Servicer shall furnish upon reasonable request to the
Trustee with reasonable promptness information in its possession as may be
necessary or appropriate to enable the Trustee to perform its tax reporting
duties hereunder.
(c) The Seller and the Depositor intend that the Upper-Tier REMIC and
the Lower-Tier REMIC shall each constitute and that the affairs of Upper-Tier
REMIC and the Lower-Tier REMIC shall each be conducted so as to qualify it as a
REMIC. In furtherance of such intention, each Servicer covenants and agrees that
it shall not knowingly or intentionally take any action or omit to take any
action that would cause the termination of the REMIC status of either the
Upper-Tier REMIC or the Lower-Tier REMIC or that would subject either the
Upper-Tier REMIC or the Lower-Tier REMIC to tax.
(d) Each Servicer may, and is hereby authorized to, perform any of its
servicing responsibilities with respect to all or certain of the Mortgage Loans
through a subservicer as it may from time to time designate in accordance with
Section 8.03 but no such designation of a subservicer shall serve to release
such Servicer from any of its obligations under this Agreement. Such subservicer
shall have all the rights and powers of the relevant Servicer with respect to
such Mortgage Loans under this Agreement.
(e) Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, each Servicer in its own name or in the name of a
subservicer is hereby authorized and empowered and this subsection shall
constitute a power of attorney to carry out its servicing and administrative
duties hereunder, on behalf of itself, the Owners and the Trust or any of them;
to institute foreclosure proceedings or obtain a deed in lieu of foreclosure so
as to effect ownership of any Property on behalf of the Trust and to hold title
to any Property upon such foreclosure or deed in lieu of foreclosure on behalf
of the Trust; provided,
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however, that Section 8.14(a) and (c) shall constitute a power of attorney from
the Trustee to each Servicer with respect to the matters described therein and
in accordance with the terms thereof. Subject to Sections 8.13 and 8.14, the
Trustee shall furnish any Servicer or any Subservicer with any additional powers
of attorney and other documents as such Servicer shall reasonably request to
enable such Servicer or any Subservicer to carry out its respective servicing
and administrative duties hereunder.
(f) Each Servicer shall give prompt notice to the Trustee and the
Seller of any action, of which a responsible officer of such Servicer has actual
knowledge, seeking to (i) assert a claim against the Trust or (ii) assert
control over the Trust or any portion of the Trust Estate.
(g) Servicing Advances incurred by any Servicer in connection with the
servicing of the Mortgage Loans (including any penalties in connection with the
payment of any taxes and assessments or other charges) on any Property shall be
recoverable by such Servicer to the extent described in Section 8.09 and in
Section 7.03(j) hereof.
Section 8.02 Collection of Certain Mortgage Loan Payments. (a) Each
Servicer shall, to the extent such procedures shall be consistent with this
Agreement and the terms and provisions of any applicable Insurance Policies,
follow such collection procedures as it follows from time to time with respect
to mortgage loans in its servicing portfolio that are comparable to the Mortgage
Loans; provided that such Servicer shall always at least follow collection
procedures that are consistent with Section 8.01(a) hereof. Consistent with the
foregoing, each Servicer may in its discretion (i) waive any assumption fees,
late payment charges, charges for checks returned for insufficient funds or
other fees which may be collected in the ordinary course of servicing the
Mortgage Loans, (ii) if a Mortgagor is in default or about to be in default
because of a Mortgagor's financial condition, arrange with the Mortgagor a
schedule for the payment of delinquent payments due on the related Mortgage Loan
or (iii) modify payments of monthly principal and interest on any Mortgage Loan
becoming subject to the terms of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended, in accordance with such Servicer's general policies with
respect to comparable mortgage loans subject to such Act. No Servicer shall be
required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Note or otherwise or against any public or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law. Consistent with the terms of this Agreement, a Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor; provided, however, that (unless the Mortgagor is in
default with respect to the Mortgage Loan, or such default is, in the judgment
of such Servicer, imminent and such Servicer has the consent of the Seller) such
Servicer may not permit any modification with respect to any Mortgage Loan that
would change the Coupon Rate (except for any change made pursuant to the
adjustment provisions of a Note evidencing an adjustable rate Mortgage Loan),
forgive the payment of any principal or interest or prepayment penalties (unless
the Servicer with the written consent of the Seller believes that forgiving such
prepayment penalties will result in a financial benefit to the Trust), change
the outstanding principal amount, require any future advances, provide for the
substitution or release of any material portion of the collateral or extend the
final maturity date on such Mortgage Loan; provided further that no such
indulgence shall affect the Servicer's obligation to make Delinquency Advances
pursuant to Section 8.09.
(b) Each Servicer shall deposit into the related Principal and Interest
Account in accordance with Section 8.08(a) all Prepaid Installments received by
it, and shall apply such Prepaid Installments as directed by such Mortgagor and
as set forth in the related Note.
Section 8.03 Subservicing Agreements Between Servicer and Subservicer.
Each Servicer may enter into subservicing agreements for any servicing and
administration of Mortgage Loans with any institution which is acceptable to the
Owners of a majority of the Percentage Interests of the Class R Certificates, as
indicated in writing, and which represents and warrants that it is in compliance
with the laws
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of each state necessary to enable it to perform its obligations under such
Subservicing Agreement. For this purpose, subservicing shall not be deemed to
include the use of a tax service, or services for reconveyance, insurance or
brokering REO Property. Each Servicer shall give prior notice to the Seller, the
Master Servicer and the Trustee of the appointment of any Subservicer and shall
furnish to the Seller a copy of such Subservicing Agreement. For purposes of
this Agreement, the relevant Servicer shall be deemed to have received payments
on Mortgage Loans when any Subservicer has received such payments. Any such
Subservicing Agreement shall be consistent with and not violate the provisions
of this Agreement. Each Subservicing Agreement shall provide that a successor
Servicer shall have the option to terminate such agreement without payment of
any fees if the predecessor Servicer is terminated or resigns.
Section 8.04 Successor Subservicer. Each Servicer may terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and either itself directly service the related Mortgage
Loans or enter into a Subservicing Agreement with a successor Subservicer that
qualifies under Section 8.03.
Section 8.05 Liability of Servicer. The Servicers shall not be relieved
of their respective obligations under this Agreement notwithstanding any
Subservicing Agreement or any of the provisions of this Agreement relating to
agreements or arrangements between such Servicer and a Subservicer or otherwise,
and such Servicer shall be obligated to the same extent and under the same terms
and conditions as if it alone were servicing and administering the Mortgage
Loans as such terms and conditions may be limited pursuant to the terms of this
Agreement. Each Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of such Servicer by such Subservicer and nothing
contained in such Subservicing Agreement shall be deemed to limit or modify this
Agreement. The Trust shall not indemnify any Servicer for any losses due to any
Subservicer's negligence.
Section 8.06 No Contractual Relationship Between Subservicer and the
Trustee or the Owners. Any Subservicing Agreement and any other transactions or
services relating to the Mortgage Loans involving a Subservicer shall be deemed
to be between the Subservicer and the related Servicer alone and the Trustee and
the Owners shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Subservicer except as set
forth in Section 8.07 hereof or in the related Subservicing Agreement.
Section 8.07 Assumption or Termination of Subservicing Agreement by
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of each Servicer hereunder by
the Trustee pursuant to Section 8.20, it is understood and agreed that such
Servicer's rights and obligations under any Subservicing Agreement then in force
between such Servicer and a Subservicer may be assumed or terminated by the
Trustee at its option. Each Servicer shall, upon request of the Trustee, but at
the expense of such Servicer, deliver to the assuming party documents and
records relating to each Subservicing Agreement and an accounting of amounts
collected and held by such Servicer and otherwise use its best reasonable
efforts to effect the orderly and efficient transfer of the Subservicing
Agreement to the assuming party.
Section 8.08 Principal and Interest Accounts; Escrow Accounts. (a) Each
Servicer shall establish in its name on behalf of the Trustee for the benefit of
the Owners of the Certificates and maintain or cause to be maintained at a
Designated Depository Institution a Principal and Interest Account to be held as
a trust account. The Principal and Interest Accounts shall be identified on the
records of the Designated Depository Institution as follows: [Name of Servicer]
on behalf of ______________________________, as Trustee under the Pooling and
Servicing Agreement relating to the AMRESCO Residential Securities Corporation
Mortgage Loan Trust 199_-_ dated as of ____________ __, 1998. If the institution
at any time holding a Principal and Interest Account ceases to be eligible as a
Designated Depository Institution hereunder, then the related Servicer shall,
within 30 days, be required to name a successor institution meeting the
requirements for a Designated Depository Institution hereunder. If such party
fails to name such a successor
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institution, then the Trustee shall cause such Account to be held as a trust
account with a qualifying Designated Depository Institution. The related
Servicer shall notify the Trustee, the Seller and the Depositor if there is a
change in the name, account number or institution holding a Principal and
Interest Account. Subject to Subsection (c) below, each Servicer shall deposit
all receipts related to the Mortgage Loans into the related Principal and
Interest Accounts on a daily basis (but no later than the second Business Day
after receipt).
(b) All funds in the Principal and Interest Accounts may only be held
(i) uninvested, up to the limits insured by the FDIC or (ii) invested in
Eligible Investments as selected by the related Servicer. The Principal and
Interest Accounts shall be held in trust in the name of the Trustee for the
benefit of the Owners of the Certificates (other than the earnings thereon which
shall be retained by the related Servicer). Any investments of funds in the
Principal and Interest Account shall mature or be withdrawable at par on or
prior to the immediately succeeding Monthly Remittance Date. Any investment
earnings on funds held in a Principal and Interest Account shall be for the
account of the related Servicer and may only be withdrawn from the Principal and
Interest Account by such Servicer immediately following the remittance of the
Monthly Remittance Amount (and the Monthly Excess Interest Amount included
therein) by such Servicer. Any investment losses on funds held in the Principal
and Interest Account shall be for the account of such Servicer and promptly upon
the realization of such loss shall be contributed by such Servicer to the
related Principal and Interest Account. Any references herein to amounts on
deposit in the related Principal and Interest Account shall refer to amounts net
of such investment earnings.
(c) Subject to Section 8.09, each Servicer shall deposit on a daily
basis (except as described below), and in any case not later than two Business
Days following receipt, to the related Principal and Interest Account all
scheduled principal and interest payments on the Mortgage Loans serviced by it
due after the Cut-Off Date or Subsequent Cut-Off Date, as the case may be, and
all unscheduled principal and interest collections received after the Cut-Off
Date or Subsequent Cut-Off Date, as the case may be, including any Prepayments
and Net Liquidation Proceeds, all Loan Purchase Prices and Substitution Amounts
received by such Servicer with respect to the Mortgage Loans, other recoveries
or amounts related to the Mortgage Loans received by such Servicer after the
Cut-Off Date or Subsequent Cut-Off Date, as the case may be, Compensating
Interest (which shall be deposited into the Certificate Account on or prior to
each Monthly Remittance Date) and Delinquency Advances (which shall be deposited
no later than the related Monthly Remittance Date) but net of (i) the related
Servicing Fee with respect to each Mortgage Loan and other servicing
compensation to such Servicer as permitted by Section 8.15 hereof, (ii)
principal retained by the Depositor (including Prepayments) and due on the
related Mortgage Loans on or prior to the Cut-Off Date or Subsequent Cut-Off
Date, as the case may be, (iii) interest retained by the Depositor and accruing
on the related Mortgage Loans on or prior to the Cut-Off Date or Subsequent
Cut-Off Date, as the case may be, and (iv) reimbursements for unreimbursed and
nonrecoverable Delinquency Advances and Servicing Advances pursuant to Section
8.09.
(d) Each Servicer may each make withdrawals from the related Principal
and Interest Account only for the following purposes:
(A) to effect the timely remittance to the Trustee of the
Monthly Remittance Amount due on each Monthly
Remittance Date and to effect the timely remittance
to the Trustee on each Monthly Remittance Date of any
Compensating Interest;
(B) to reimburse itself pursuant to Section 8.09 hereof
for unreimbursed Delinquency Advances and Servicing
Advances and unrecovered Delinquency Advances and
Servicing Advances determined by it to be
nonrecoverable;
(C) to withdraw investment earnings on amounts on deposit
in its Principal and Interest Account;
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(D) to withdraw amounts that have been deposited to the
related Principal and Interest Account in error;
(E) to reimburse itself pursuant to Section 8.25 and
Section 8.29(f); and
(F) to clear and terminate the related Principal and
Interest Accounts following the termination of the
Trust Estate pursuant to Article IX hereof.
(e) On each Monthly Remittance Date, each Servicer shall remit to the
Trustee by wire transfer in immediately available funds from the related
Principal and Interest Account for deposit to the Certificate Account, the
portion of the Monthly Remittance Amount calculated by the Master Servicer
pursuant to Section 8.29(f) hereof remaining after the withdrawals permitted by
clauses (B)-(E) of Section 8.08(d) related to the Mortgage Loans serviced by
such Servicer for such Monthly Remittance Date.
(f) Each Servicer shall establish and maintain one or more custodial
accounts (each, an "Escrow Account") and deposit and retain therein all
collections from the Mortgagors, if any, received with respect to the Mortgage
Loans, or advances by such Servicer, for the payment of taxes, assessments,
hazard insurance premiums and primary mortgage insurance policy premiums or
comparable items for the account of the Mortgagors. Nothing herein shall require
any Servicer to compel a Mortgagor to establish an Escrow Account in violation
of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums or primary mortgage insurance policy premiums, condominium or PUD
association dues, or comparable items, to reimburse such Servicer, to refund to
any Mortgagors any sums as may be determined to be overages, to pay interest, if
required, to Mortgagors on balances in the Escrow Account or to clear and
terminate the Escrow Account at the termination of this Agreement. As part of
its servicing duties, such Servicer shall be required to pay to the Mortgagors
interest on funds in the Escrow Account, to the extent required by law.
Each Servicer shall advance the payments (to be treated as Servicing
Advances) referred to in the preceding paragraph that are not timely paid by the
Mortgagors, including tax penalties, if any; provided, however, that such
Servicer shall be required to so advance only to the extent that such advances,
in the good faith business judgment of such Servicer, will be recoverable by
such Servicer out of Insurance Proceeds, Liquidation Proceeds or otherwise from
the related Mortgage Loan. Notwithstanding the previous sentence, a Servicer
shall be entitled to be reimbursed as provided in Section 8.09(b) hereof with
respect to any Servicing Advances deemed to be nonrecoverable.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) Each Servicer is required, not later than each Monthly Remittance
Date, to deposit into the related Principal and Interest Account an amount equal
to the sum of the interest (net of the Servicing Fee) and scheduled principal
due (except any Balloon Payment), but not collected during the related
Remittance Period, with respect to those Delinquent Mortgage Loans that it
serviced during such Remittance Period but only if, in its good faith business
judgment, such Servicer reasonably believes that such amount will ultimately be
recovered from the related Mortgage Loan. With respect to each Balloon Loan, the
related Servicer shall be required to advance an amount of principal and
interest on an assumed schedule based on the original principal amortization for
the related Balloon Loan (but only if, in its good faith business judgment, such
Servicer reasonably believes that such amount will ultimately be recovered from
the related Mortgage Loan). Any determination of nonrecoverability shall be
explained in a notice provided by such Servicer to the Trustee, the Master
Servicer and the Seller. Such amounts are "Delinquency Advances". Each Servicer
shall be permitted to fund its payment of Delinquency Advances from its own
funds or from funds on deposit in the related Principal and Interest Account
that are not required to be distributed on the
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related Payment Date. To the extent a Servicer uses funds not required for
distribution on a Payment Date to make Delinquency Advances with respect to such
Payment Date, it shall deposit into the related Principal and Interest Account
such amount prior to the next succeeding Monthly Remittance Date. Each Servicer
shall be entitled to reimbursement for Delinquency Advances from late
collections, Liquidation Proceeds or otherwise with respect to collections on
the Mortgage Loan (including Balloon Loans) with respect to which such
Delinquency Advance was made.
Notwithstanding the foregoing, in the event that a Servicer determines
that the aggregate unreimbursed Delinquency Advances exceed the expected
Liquidation Proceeds on a Mortgage Loan, such Servicer shall not be required to
make any future Delinquency Advances with respect to that Mortgage Loan, and
shall be entitled to reimbursement for such aggregate unreimbursed Delinquency
Advances from amounts in the related Principal and Interest Account. Such
Servicer shall give written notice of such determination of nonrecoverability to
the Trustee, the Master Servicer and the Seller, and the Trustee shall promptly
furnish a copy of such notice to the Owner of a majority of the Percentage
Interests of the Class R Certificates; provided, that such Servicer shall be
entitled to recover any unreimbursed Delinquency Advances from the aforesaid
Liquidation Proceeds prior to the payment of the Liquidation Proceeds to any
other party to this Agreement.
(b) Each Servicer will pay all customary, reasonable and necessary
"out-of-pocket" costs and expenses incurred in the performance of its servicing
obligations, including, but not limited to, the cost of (i) Preservation
Expenses, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of REO Property, (iv) the escrow
expenditures required pursuant to Section 8.08(f) hereof (but such Servicer is
only required to pay such costs and expenses to the extent such Servicer
reasonably believes that such amounts will ultimately be recovered from the
related Mortgage Loan) and (v) fees and expenses for opinions of counsel
pursuant to Section 8.13. Each such amount so paid will constitute a "Servicing
Advance". Each Servicer may recover Servicing Advances (x) from the Mortgagors
to the extent permitted by the Mortgage Loans, (y) from Liquidation Proceeds
realized upon the liquidation of the related Mortgage Loan, and (z) as provided
in Section 7.03(j) hereof. Except as provided in the previous sentence, and in
Sections 7.03(j) and 8.13, in no case may a Servicer recover Servicing Advances
from principal and interest payments on any Mortgage Loan or from any amounts
relating to any other Mortgage Loan.
Section 8.10 Compensating Interest; Purchase of Mortgage Loans. (a) On
or prior to each Monthly Remittance Date and with respect to Mortgage Loans
serviced by it, each Servicer shall deposit into the related Principal and
Interest Account with respect to any full Prepayment made by the Mortgagor
during the preceding Remittance Period, an amount equal to the excess, if any,
of (x) 30 days' interest at the Mortgage Loan's Coupon Rate (less the Servicing
Fee) on the Loan Balance of such Mortgage Loan as of the first day of the
related Remittance Period over (y) to the extent not previously advanced, the
interest paid by the Mortgagor with respect to the Mortgage Loan for the related
Remittance Period (any such amount, "Compensating Interest"), which amount shall
be included in the Monthly Remittance Amount to be made available to the Trustee
on each Monthly Remittance Date. In respect of any Payment Date, each Servicer's
obligation to deposit Compensating Interest into the Principal and Interest
Account shall not exceed the amount of the Servicing Fee payable to such
Servicer on such Payment Date in respect of all Mortgage Loans serviced by such
Servicer.
(b) Each Servicer with respect to Mortgage Loans serviced by it, may,
but is not obligated to, purchase for its own account (or, during the two year
period beginning on the Startup Day, substitute a Qualified Replacement Mortgage
for) any 90+ Day Delinquent Loan or any Mortgage Loan as to which enforcement
proceedings have been brought by the related Servicer pursuant to Section 8.13.
Any such Mortgage Loan so purchased shall be purchased by such Servicer on a
Monthly Remittance Date at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be deposited in the related Principal and
Interest Account.
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Section 8.11 Maintenance of Insurance. (a) Each Servicer shall cause to
be maintained with respect to each Mortgage Loan serviced by it a hazard
insurance policy with a generally acceptable carrier that provides for fire and
extended coverage, and which provides for a recovery by such Servicer on behalf
of the Trust of insurance proceeds relating to such Mortgage Loan in an amount
not less than the least of (i) the outstanding principal balance of the Mortgage
Loan, (ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the full insurable value of the premises.
(b) If the Mortgage Loan relates to a Property which is located in an
area identified in the Federal Register by the Federal Emergency Management
Agency as having special flood hazards, as identified to the related Servicer by
the Originator in the related Mortgage Loan Schedule, and flood insurance has
been made available, the related Servicer will cause to be maintained with
respect thereto a flood insurance policy in a form meeting the requirements of
the current guidelines of the Federal Insurance Administration with a generally
acceptable carrier in an amount representing coverage, and which provides for a
recovery by such Servicer on behalf of the Trust of insurance proceeds relating
to such Mortgage Loan of not less than the least of (i) the outstanding
principal balance of the Mortgage Loan, (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973.
(c) In the event that a Servicer shall obtain and maintain a blanket
policy insuring against fire, flood and hazards of extended coverage on all the
Mortgage Loans, then, to the extent such policy names such Servicer as loss
payee and provides coverage in an amount equal to the aggregate unpaid principal
balance on the Mortgage Loans without co-insurance and otherwise complies with
the requirements of this Section 8.11, such Servicer shall be deemed
conclusively to have satisfied its obligations with respect to fire and hazard
insurance coverage under this Section 8.11, it being understood and agreed that
such blanket policy may contain a deductible clause, in which case such Servicer
shall, in the event that there shall not have been maintained on the related
Property a policy complying with the preceding paragraphs of this Section 8.11,
and there shall have been a loss which would have been covered by such policy,
deposit in the related Principal and Interest Account from such Servicer's own
funds the difference, if any, between the amount that would have been payable
under a policy complying with the preceding paragraphs of this Section 8.11 and
the amount paid under such blanket policy. Upon the request of the Trustee or
the Master Servicer, such Servicer shall cause to be delivered an Officer's
Certificate to the Trustee and the Master Servicer to the effect that the
Servicer maintains such policy.
(d) Each Servicer also shall maintain on related REO Property, fire and
hazard insurance with extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements which are a
part of such property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property, liability insurance and, to
the extent required and available under the National Flood Insurance Act of 1968
and the Flood Disaster Protection Act of 1973, as amended, flood insurance in an
amount as provided above.
(e) If a Servicer shall fail to maintain or cause to be maintained any
insurance required by this Section 8.11, and there shall have been a loss which
would have been covered by such policy, the Servicer shall deposit in the
related Principal and Interest Account from the Servicer's own funds the amount,
if any, that would have been payable under a policy complying with the preceding
paragraphs of this Section 8.11.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements. When a Property has been or is about to be conveyed by the
Mortgagor, the related Servicer shall, to the extent a responsible officer
thereof has actual knowledge of such conveyance or prospective conveyance,
exercise the rights of the Trust to accelerate the maturity of the related
Mortgage Loan under any "due-on-sale" clause contained in the related Mortgage
or Note; provided, however, that such Servicer shall not exercise any such right
if the "due-on-sale" clause, in the reasonable belief of such Servicer, is not
enforceable under applicable law or if such Servicer reasonably believes in good
faith it is not in the best interests of the Trust. In such event,
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such Servicer is authorized to enter into an assumption and modification
agreement with the Person to whom such Property has been or is about to be
conveyed, pursuant to which such Person becomes liable under the Note and,
unless prohibited by applicable law or the Mortgage Documents, the Mortgagor
remains liable thereon. If the foregoing is not permitted under applicable law,
such Servicer is authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such Person is substituted as Mortgagor and becomes liable under
the Note; provided, however, that to the extent that any such substitution of
liability agreement would not otherwise have been delivered by such Servicer in
its usual procedures for mortgage loans held in its own portfolio, such Servicer
shall prior to executing and delivering such agreement, obtain the prior written
consent of the Seller. The Trustee shall execute any agreements required to
effectuate the foregoing. The Mortgage Loan, as assumed, shall conform in all
respects to the requirements, representations and warranties of this Agreement.
The related Servicer of such Mortgage Loan shall notify the Trustee and the
Master Servicer that any such assumption or substitution agreement has been
completed by forwarding to the Trustee and the Master Servicer the original copy
of such assumption or substitution agreement, which copy shall be added by the
Trustee to the related File and which shall, for all purposes, be considered a
part of such File to the same extent as all other documents and instruments
constituting a part thereof. Each Servicer shall be responsible for recording
any such assumption or substitution agreements relating to Mortgage Loans
serviced by it at the expense of the related Servicer. In connection with any
such assumption or substitution agreement, no material term of the Mortgage
Loan, including the required monthly payment on the related Mortgage Loan shall
be changed but all terms thereof shall remain as in effect as immediately prior
to the assumption or substitution, the stated maturity or outstanding principal
amount of such Mortgage Loan shall not be changed nor shall any required monthly
payments of principal or interest be deferred or forgiven. Any fee collected by
any Servicer for consenting to any such conveyance or entering into an
assumption or substitution agreement shall be retained by or paid to such
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, no Servicer shall be deemed to be in default, breach or any other
violation of its obligations hereunder by reason of any assumption of a Mortgage
Loan by operation of law or any assumption which such Servicer may be restricted
by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Mortgage Loans. (a) Each
Servicer, with respect to Mortgage Loans serviced by it, shall foreclose upon or
otherwise comparably convert the ownership on behalf of the Trust of Properties
relating to defaulted Mortgage Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the related Servicer
has not purchased pursuant to Section 8.10(b). In connection with such
foreclosure or other conversion, the Servicer of such defaulted Mortgage Loans
shall exercise such of the rights and powers vested in it hereunder, and use the
same degree of care and skill in its exercise or use as prudent mortgage lenders
would exercise or use under the circumstances in the conduct of their own
affairs, including, but not limited to, advancing funds deemed by such Servicer
in its good faith business judgment to be recoverable from the related Mortgage
Loan for the payment of taxes, amounts due with respect to senior liens and
insurance premiums. Any amounts so advanced shall constitute "Servicing
Advances" within the meaning of Section 8.09(b) hereof. Each Servicer shall sell
any REO Property managed by it within 35 months of its acquisition by the Trust,
unless such Servicer obtains for the Trustee an Opinion of Counsel (the cost of
which shall be advanced by the related Servicer as a Servicing Advance)
experienced in federal income tax matters and reasonably acceptable to the
Depositor, the Master Servicer and the Trustee, addressed to the Trustee and
such Servicer, to the effect that the holding by the Trust of such REO Property
for any greater period will not result in the imposition of taxes on "Prohibited
Transactions" of the Trust as defined in Section 860F of the Code or cause the
Trust or any REMIC therein to fail to qualify as a REMIC under the REMIC
Provisions at any time that any Certificates are outstanding, or the related
Servicer produces evidence that it has properly requested from the applicable
tax authorities at least 60 days before the day on which the three year grace
period would otherwise expire, an extension of the three year grace period, in
which case such
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Servicer shall sell any REO Property by the end of any extended period specified
in any such opinion or extension.
Notwithstanding the generality of the foregoing provisions, each
Servicer shall manage, conserve, protect and operate each REO Property managed
by it solely for the purpose of its prompt disposition and sale in a manner
which does not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code or result in the
receipt by the Trust of any "income from non- permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions. Pursuant to
its efforts to sell such REO Property, the related Servicer shall either itself
or through an agent selected by such Servicer protect and conserve such REO
Property in the same manner and to such extent as is customary in the locality
where such REO Property is located and may, incident to its conservation and
protection of the interests of the Owners and after consultation with the holder
of a majority in interest of the Class R Certificates, rent the same, or any
part thereof, as such Servicer deems to be in the best interest of the Owners
for the period prior to the sale of such REO Property.
Notwithstanding anything to the contrary contained herein, in
connection with a foreclosure or acceptance of a deed in lieu of foreclosure, or
exercising control over the Mortgaged Property so that the Trust would be
considered a mortgagee-in-possession, owner or operator of the Mortgaged
Property under the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended (42 U.S.C. ss.9601 et seq.) or a comparable
law, in the event any responsible officer of a Servicer has actual knowledge
that a Property is in any way affected by hazardous or toxic substances or
wastes and determines that it may be reasonable to convert such Property
ownership to the Trust, or the holder of a majority in interest of the Class R
Certificates otherwise requests in writing an environmental inspection to be
conducted, such Servicer shall cause an environmental inspection or review of
such Property to be conducted by a qualified inspector and shall be reimbursed
for the amount of such environmental inspection in the manner described herein
for reimbursement of Servicing Advances in the same manner as set forth in the
immediately following paragraph. Upon completion of the inspection, such
Servicer shall promptly provide the Owner of the majority of the Class R
Certificates, the Master Servicer and the Trustee with a written report of the
environmental inspection. In the absence of such determination or a written
request from the Owner of the majority of the Class R Certificates for an
environmental inspection, neither the related Servicer nor the Trustee shall be
liable for any liability, cost or expense incurred by the Trust due to the
decision of such Servicer not to cause an environmental inspection of a
Property.
After reviewing the environmental inspection report, the Owner of the
majority of the Class R Certificates shall determine how the related Servicer
shall proceed with respect to the Property and shall notify such Servicer within
15 Business Days of receipt of the inspection report. In the event the
environmental inspection report indicates that the Property is in any way
affected by hazardous or toxic substances or wastes such Servicer shall only
foreclose or comparably convert such Property if the Owner of the majority of
the Class R Certificates directs such Servicer to proceed with foreclosure or
acceptance of a deed-in-lieu of foreclosure. In the event the Owner of the
majority of the Class R Certificates requires such Servicer to foreclose or
accept a deed-in-lieu of foreclosure pursuant to this Section 8.13(a),(i) such
Servicer (or the Trustee and any other successor Servicer) shall be reimbursed
for any related environmental clean up costs, as applicable, from the related
Liquidation Proceeds, or if the Liquidation Proceeds are insufficient to fully
reimburse such Servicer (or the Trustee and any other successor Servicer), such
Servicer (or the Trustee and any other successor Servicer) shall be entitled to
be reimbursed from amounts in the related Principal and Interest Account, and
(ii) such Class R Owner hereby indemnifies the Trust, the Trustee, the Master
Servicer and such Servicer with respect to any costs, liabilities and expenses
incurred by any such party in connection with any such hazardous or toxic
substances or wastes with respect to such foreclosure or comparable conversion.
In the event the Owner of the majority of the Class R Certificates directs such
Servicer not to proceed with foreclosure or acceptance of a deed-in-lieu of
foreclosure, such Servicer (or the Trustee and any other successor Servicer)
shall be reimbursed for all Servicing Advances
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made with respect to the related Property from such Principal and Interest
Account pursuant to Section 8.08(d)(B) hereof.
(b) Each Servicer shall determine, with respect to each defaulted
Mortgage Loan serviced by it, when it has recovered, whether through trustee's
sale, foreclosure sale or otherwise, all amounts it expects to recover from or
on account of such defaulted Mortgage Loan (exclusive of any possibility of a
deficiency judgment), whereupon such Mortgage Loan shall become a "Liquidated
Loan".
Upon such a determination, the related Servicer shall prepare and
submit to the Seller, the Master Servicer and the Trustee a Liquidation Report
in substantially the form of Exhibit K hereto.
Section 8.14 Trustee and Custodian to Cooperate; Release of Files.
(a)(i) Upon the payment in full of any Mortgage Loan (including the repurchase
of any Mortgage Loan or any liquidation of such Mortgage Loan through
foreclosure or otherwise) or the receipt by the related Servicer of a
notification that payment in full will be escrowed in a manner customary for
such purposes, such Servicer shall deliver to the Custodian, on behalf of the
Trustee, a Servicer's Trust Receipt in the form of Exhibit H hereto. Upon
receipt of such Servicer's Trust Receipt, the Custodian, on behalf of the
Trustee shall promptly release the related File, in trust to (i) such Servicer,
(ii) an escrow agent or (iii) any employee, agent or attorney of the Trustee, in
each case pending its release by such Servicer, such escrow agent or such
employee, agent or attorney of the Trustee, as the case may be. Upon any such
payment in full or the receipt of such notification that such funds have been
placed in escrow, such Servicer is authorized to give, as attorney-in-fact for
the Trustee and the mortgagee under the Mortgage which secured the Note, an
instrument of satisfaction (or assignment of Mortgage without recourse)
regarding the Property relating to such Mortgage, which instrument of
satisfaction or assignment, as the case may be, shall be delivered to the Person
or Persons entitled thereto against receipt therefor of payment in full, it
being understood and agreed that no expense incurred in connection with such
instrument of satisfaction or assignment, as the case may be, shall be
chargeable to the related Principal and Interest Account. In lieu of executing
any such satisfaction or assignment, as the case may be, such Servicer may
prepare and submit to the Trustee a satisfaction (or assignment without
recourse, if requested by the Person or Persons entitled thereto) in form for
execution by the Trustee with all requisite information completed by such
Servicer; in such event, the Trustee shall execute and acknowledge such
satisfaction or assignment, as the case may be, and deliver the same with the
related File, as aforesaid.
(ii) Each Servicer's Trust Receipt may be delivered to the
Custodian, on behalf of the Trustee, (A) via mail or courier, (B) via facsimile
or (C) by such other means, including, without limitation, electronic or
computer readable medium, as the Servicer and the Custodian, on behalf of the
Trustee, shall mutually agree. The Custodian, on behalf of the Trustee, shall
promptly release the related File(s) within five (5) Business Days of receipt of
a properly completed Servicer's Trust Receipt pursuant to clause (A), (B) or (C)
above, which shall be authorization to the Custodian, on behalf of the Trustee,
to release such Files, provided the Custodian, on behalf of the Trustee, has
determined that such Servicer's Trust Receipt has been executed, with respect to
clause (A) or (B) above, or approved, with respect to clause (C) above, by an
authorized Servicing Officer of the Servicer, and so long as the Trustee
complies with its duties and obligations under this Agreement. If the Custodian,
on behalf of the Trustee, is unable to release the Files within the time frames
previously specified, the Custodian, on behalf of the Trustee, shall immediately
notify the Servicer indicating the reason for such delay, but in no event shall
such notification be later than five Business Days after receipt of a Servicer's
Trust Receipt.
On each day that the Servicer remits to the Custodian, on behalf of the
Trustee, Servicer's Trust Receipts pursuant to clauses (B) or (C) above, the
Servicer shall also submit to the Custodian, on behalf of the Trustee, a summary
of the total amount of such Servicer's Trust Receipts requested on such day by
the same method as described in such clauses (B) and (C) above.
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(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 Custodian, on behalf of the Trustee shall (except in the case of the
payment or liquidation pursuant to which the related File is released to an
escrow agent or an employee, agent or attorney of the Trustee), upon request of
such Servicer and delivery to the Custodian, on behalf of the Trustee, of a
Servicer's Trust Receipt substantially in the form of Exhibit H hereto, release
the related File to such Servicer and shall execute such documents as shall be
necessary to the prosecution of any such proceedings, including, without
limitation, an assignment without recourse of the related Mortgage to such
Servicer. The Custodian, on behalf of the Trustee, shall complete in the name of
the Trustee any endorsement in blank on any Note prior to releasing such Note to
such Servicer. Such receipt shall obligate such Servicer to return the File to
the Custodian, on behalf of the Trustee, when the need therefor by such Servicer
no longer exists unless the Mortgage Loan shall be liquidated in which case,
upon receipt of the liquidation information, in physical or electronic form,
such Servicer's Trust Receipt shall be released by the Custodian, on behalf of
the Trustee, to such Servicer.
(c) Each Servicer shall have the right to approve applications of
Mortgagors for consent to (i) partial releases of Mortgages, (ii) alterations
and (iii) removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by any Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Originator certifies to such Servicer that the Loan-to-Value Ratio and the
Mortgagor's debt-to-income ratio after any release does not exceed the maximum
Loan-to-Value Ratio and debt-to-income ratio specified as the then-current
maximum levels under the related Originator's underwriting guidelines for a
similar credit grade borrower; and (z) the lien priority of the related Mortgage
is not adversely affected. Upon receipt by the Trustee and the Master Servicer
of an Officer's Certificate executed on behalf of a Servicer setting forth the
action proposed to be taken in respect of a particular Mortgage Loan and
certifying that the criteria set forth in the immediately preceding sentence
have been satisfied, the Trustee shall execute and deliver to such Servicer the
consent or partial release so requested by such Servicer. A proposed form of
consent or partial release, as the case may be, shall accompany any Officer's
Certificate delivered by such Servicer pursuant to this paragraph.
(d) Costs associated with preparing assignments, satisfactions and
releases described in this Section 8.14 shall not be an expense of the Trust or
the Trustee, but rather shall be borne directly by the related Servicer;
provided, however, that the Custodian shall be liable for the cost associated
with the shipping of documents from the Custodian to the related Servicer
pursuant to this Section 8.14 and for any penalty solely associated with late
reconveyance that results from the Custodian's failure to perform its duties
hereunder.
Section 8.15 Servicing Compensation. As compensation for their
activities hereunder, each Servicer shall be entitled to the Servicing Fee for
each Mortgage Loan that it services. Such Servicing Fee shall be payable on a
monthly basis out of interest payments on the related Mortgage Loans and shall
equal one-twelfth of the related Servicing Fee Rate multiplied by the
outstanding principal amount of such Mortgage Loan as of the prior Monthly
Remittance Date. Subject to the related Servicing Fee Letter, additional
servicing compensation in the form of release or satisfaction fees, bad check
charges, assumption fees, late payment charges, any other servicing-related
fees, and similar items may, to the extent collected from Mortgagors, be
retained by the related Servicer.
Section 8.16 Annual Statement as to Compliance. (a) Each Servicer, at
its own expense, will deliver to the Trustee, the Master Servicer, the Seller,
the Depositor and the Rating Agencies on or before April 15 of each year,
commencing in _____, an Officer's Certificate stating, as to each signer
thereof, that (i) a review of the activities of such Servicer during such
preceding calendar year and of performance under this Agreement has been made
under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, such Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such
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default known to such officer and the nature and status thereof including the
steps being taken by such Servicer to remedy such defaults.
(b) Each Servicer shall deliver to the Trustee, the Master Servicer,
the Seller, the Depositor and the Rating Agencies promptly after a responsible
officer of the Servicer obtains actual knowledge thereof but in no event later
than five Business Days thereafter, written notice by means of an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, such officer knows would become an Event of Servicing Termination.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
(a) On or before April 15 of each year, commencing in _____, each Servicer shall
cause to be delivered to the Trustee, the Master Servicer and the Rating
Agencies a letter or letters of a firm of independent, nationally- recognized
certified public accountants stating that such firm has, with respect to such
Servicer's overall servicing operations examined such operations in accordance
with the requirements of the Uniform Single Attestation Program for Mortgage
Bankers, and stating such firm's conclusions relating thereto.
(b) Each Servicer will deliver to the Seller as soon as available and
in any event within 45 days after the end of each of the first three fiscal
quarterly periods of each fiscal year of such Servicer, an unaudited
consolidated statement of operations and retained earnings and consolidated
statements of changes in financial position of such Servicer for such period and
each Servicer will deliver to the Seller as soon as available and in any event
within 90 days after the end of each fiscal year of such Servicer, audited
consolidated statements of income, retained earnings and changes in financial
position of such Servicer for the preceding fiscal year.
Section 8.18 Access to Certain Documentation and Information Regarding
the Mortgage Loans. Each Servicer shall provide to the Trustee, the Master
Servicer, the Seller, the FDIC and the supervisory agents and examiners of each
of the foregoing access to the documentation and electronic data regarding the
Mortgage Loans not in the possession of the Trustee, such access being afforded
without charge but only upon prior written reasonable request and during normal
business hours at the offices of such Servicer designated by it.
Upon any change in the format of the computer tape by any Servicer in
respect of the Mortgage Loans, such Servicer shall deliver a copy of such
computer tape to the Trustee and Master Servicer. In addition, each Servicer
shall provide a copy of such computer tape to the Trustee or the Master Servicer
at such other times as the Trustee or the Master Servicer may reasonably request
upon reasonable notice to such Servicer and upon payment of all reasonable
expenses associated with such request by the Trustee or the Master Servicer.
Nothing contained herein shall limit the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information relating to the
Mortgage Loans or Mortgagors.
Section 8.19 Assignment of Agreement. No Servicer may assign its
obligations under this Agreement (except pursuant to Section 8.27 hereof), in
whole or in part, unless it shall have first obtained the prior written consent
of the Seller, the Master Servicer and the Trustee, which such consent shall not
be unreasonably withheld; provided, however, that any assignee must meet the
eligibility requirements set forth in Section 8.21(f) hereof for a successor
Servicer. Notice of any such assignment shall be given by such Servicer to the
Trustee and the Rating Agencies.
Section 8.20 Events of Servicing Termination. (a) The Trustee (acting
upon the request of the Owners of the majority of the Percentage Interests of
the Offered Certificates then Outstanding as a whole and not on a Class by Class
basis) or the Seller may immediately remove the related Servicer (including any
successor entity serving as the Servicer) upon the occurrence of any of the
following events and the expiration of the related cure period (provided, that
the occurrence of any such events with respect to one Servicer shall be cause to
remove only such Servicer):
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(i) Such Servicer shall fail to deliver to the Trustee any
proceeds or required payment (including any Delinquency Advance or
Compensating Interest payment), which failure continues unremedied for
two Business Days following written notice to an Authorized Officer of
such Servicer from the Trustee or from any Owner;
(ii) Such Servicer shall (I) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (II) admit in writing
its inability to pay its debts generally as they become due, (III) make
a general assignment for the benefit of creditors, (IV) be adjudicated
a bankrupt or insolvent, (V) commence a voluntary case under the
federal bankruptcy laws of the United States of America or file a
voluntary petition or answer seeking reorganization, an arrangement
with creditors or an order for relief or seeking to take advantage of
any insolvency law or file an answer admitting the material allegations
of a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding or (VI) take corporate action for the purpose of
effecting any of the foregoing;
(iii) If without the application, approval or consent of such
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of such
Servicer an order for relief or an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator, custodian or similar entity with
respect to such Servicer or of all or any substantial part of its
assets, or other like relief in respect thereof under any bankruptcy or
insolvency law, and, if such proceeding is being contested by such
Servicer in good faith, the same shall (A) result in the entry of an
order for relief or any such adjudication or appointment or (B)
continue undismissed or pending and unstayed for any period of sixty
(60) consecutive days;
(iv) Such Servicer shall fail to perform any one or more of
its obligations hereunder (other than those specified in item (i)
above) and shall continue in default thereof for a period of forty-five
(45) days after the earlier of (x) notice by the Trustee of said
failure or (y) actual knowledge of a responsible officer of such
Servicer;
(v) The failure of such Servicer to satisfy the Servicer
Termination Test.
The Trustee shall determine on each Payment Date whether the Servicer
Termination Test is satisfied for the Collection Period. Upon the Trustee's
determination that the Servicer Termination Test is not satisfied, or that a
payment of Compensating Interest, a Monthly Remittance Amount for the related
Group, or a required Delinquency Advance has not been made by the relevant
Servicer, the Trustee shall so notify in writing an Authorized Officer of such
Servicer, the Master Servicer and the Seller as soon as is reasonably practical.
(b) Any party exercising any termination rights under subsection (a)
above shall give notice in writing to the relevant Servicer (and a copy to the
Trustee and the Master Servicer) of the termination of all the rights and
obligations of such Servicer under this Agreement. The Trustee shall mail a copy
of any notice given by it hereunder to the Depositor, the Seller, the Owners and
Rating Agencies. On or after the receipt by such Servicer of such written
notice, all authority and power of such Servicer under this Agreement, whether
with respect to the Certificates or the Mortgage Loans or otherwise, shall
without further action pass to and be vested in the Trustee or such successor
Servicer as may be appointed hereunder, and, without limitation, the Trustee is
hereby authorized and empowered (which authority and power are coupled with an
interest and are irrevocable) to execute and deliver, on behalf of the
predecessor Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such notice or termination, whether to
complete the transfer and endorsement of the Mortgage Loans and related
documents or otherwise. The predecessor
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Servicer shall cooperate with the successor Servicer or the Trustee in effecting
the termination of the responsibilities and rights of the predecessor Servicer
under this Agreement including the transfer to the successor Servicer or to the
Trustee for administration by it of all cash accounts that shall at the time be
held by the predecessor Servicer for deposit or shall thereafter be received
with respect to a Mortgage Loan. All reasonable costs and expenses incurred in
connection with delivering the Files to the successor Servicer or the Trustee
shall be paid by the predecessor Servicer.
(c) If any event described in subsection (a)(vi) above occurs and is
continuing, during a 30 day period following receipt of notice, the Trustee, the
Master Servicer, the affected Servicer and the Seller shall cooperate with each
other to determine if the occurrence of such event is likely to have a material
adverse effect on such Servicer's ability to perform its obligations under this
Agreement. If the Seller, in its reasonable discretion, concludes that the event
is not likely to have a material adverse effect on such Servicer's ability to
perform hereunder, then such Servicer shall be given a period of 90 days from
the date of such determination by Seller to cure such default. If the Seller, in
its reasonable discretion, concludes that the event is likely to have a material
adverse effect on such Servicer's ability to perform hereunder, then such
Servicer shall be given a period of 15 days from the date of such determination
by Seller to cure such default. The date of determination by Seller referenced
in the preceding two sentences of this Section 8.20(c) shall be deemed to be the
date upon which a written notice is mailed to the affected Servicer, first class
postage prepaid, at the address of the affected Servicer set forth in Section
11.20 hereof. If the event is not cured by the end of the applicable period, no
further extension of the cure period is required, and such Servicer may be
terminated as provided in this Section 8.20.
(d) The Seller, the Master Servicer and the Trustee agree to use their
best efforts to inform each other of any materially adverse information
regarding each Servicer's servicing activities that comes to the attention of
such party from time to time.
Section 8.21 Resignation of a Servicer and Appointment of Successor.
(a) Upon any Servicer's receipt of notice of termination pursuant to Section
8.20 or such Servicer's resignation in accordance with the terms of this Section
8.21, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or in accordance with Section 8.20(c), if
applicable, or, if no such date is specified in a notice of termination, until
receipt of such notice and, in the case of resignation, until the earlier of (x)
the date 45 days from the delivery to the Seller, the Master Servicer and the
Trustee of written notice of such resignation (or written confirmation of such
notice) in accordance with the terms of this Agreement and (y) the date upon
which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying opinion of counsel. All
collections then being held by the predecessor Servicer prior to its removal and
any collections received by such Servicer after removal or resignation shall be
endorsed by it to the Trustee or the successor Servicer and remitted directly
and immediately to the Trustee or the successor Servicer. In the event of any
Servicer's resignation or termination hereunder, upon the appointment of a
successor Servicer pursuant to Section 8.21(f), the successor Servicer shall
accept its appointment by execution of a written assumption in form acceptable
to the Trustee, the Master Servicer and the Seller, with copies of such
assumption to the Trustee and the Rating Agencies, provided that as a condition
precedent to the appointment of a successor Servicer and the execution of the
related written assumption, such successor Servicer shall, if applicable, also
execute either (i) a written assumption or termination of any of the
Subservicing Agreements or (ii) appropriate amendments to each of any
Subservicing Agreements.
(b) No Servicer shall resign from the obligations and duties hereby
imposed on it, except (i) upon determination that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of such Servicer so causing such a conflict being of a type and nature carried
on by such Servicer at the date of this Agreement or (ii) upon prior written
consent of the Seller, the Master Servicer and the Trustee and confirmation from
the Rating Agencies that the Offered Certificates are not reduced. Any such
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determination referred to in clause (i) permitting the resignation of any
Servicer shall be evidenced by an Opinion of Counsel to such effect which shall
be delivered to the Trustee, the Master Servicer and the Seller.
(c) No removal or resignation of any Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed such Servicer's
responsibilities and obligations in accordance with this Section. The removal or
resignation of one Servicer hereunder, shall have no effect on the status of any
other Servicer hereunder.
(d) Upon removal or resignation of any Servicer, such Servicer also
shall, at such Servicer's cost, promptly deliver or cause to be delivered to the
successor Servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that such Servicer has maintained
for the Mortgage Loans, including all tax bills, assessment notices, insurance
premium notices and all other documents as well as all original documents then
in such Servicer's possession.
(e) Any collections received by any Servicer after removal or
resignation thereof shall be endorsed by it to the Trustee and remitted directly
and immediately to the Trustee or the successor Servicer.
(f) Upon removal or resignation of any Servicer, the Trustee, with the
cooperation of the Seller, (x) shall solicit bids for a successor Servicer as
described below and (y) pending the appointment of a successor Servicer as a
result of soliciting such bids, shall serve as Servicer of the Mortgage Loans
serviced by such predecessor Servicer. The Trustee shall, if it is unable to
obtain a qualifying bid and is prevented by law from acting as Servicer, (I)
appoint, or petition a court of competent jurisdiction to appoint, any housing
and home finance institution, bank or mortgage servicing institution which has
been designated as an approved servicer by FannieMae or FHLMC for first and
second mortgage loans and having equity of not less than $5,000,000 (or such
lower level as may be acceptable to the Owners of a majority of the Class R
Certificates) and is reasonably acceptable to the Seller and the Owners of the
Class R Certificates, as indicated in writing as the successor to such Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of such Servicer hereunder and (II) give notice thereof to the
Seller, the Master Servicer, the Owners and the Rating Agencies. The
compensation of any successor Servicer (including, without limitation, the
Trustee) so appointed shall be the amount agreed by such successor Servicer and
the Seller, such compensation not to exceed the Aggregate Servicing Fee Rate.
Any existing Servicer may bid to be a successor to any other Servicer. Any
reasonable out of pocket set-up costs or expenses incurred by the Trustee as
interim successor Servicer as specified in subclause (y) of this Section 8.21(f)
shall be at the expense of the Trust and shall be payable pursuant to Section
7.03(j).
(g) In the event that the Trustee is able to solicit bids as provided
above, the Trustee shall solicit, by public announcement, bids from housing and
home finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above (including the Trustee or any affiliate thereof).
Such public announcement shall specify that the successor Servicer shall be
entitled to the servicing compensation agreed upon between the Trustee, the
successor Servicer and the Seller; provided, however, that no such fee shall
exceed the related Servicing Fee. Within thirty days after any such public
announcement, the Trustee, with the cooperation of the Seller, shall negotiate
in good faith and effect the sale, transfer and assignment of the servicing
rights and responsibilities hereunder to the qualified party submitting the
highest satisfactory bid as to the price they will pay to obtain such servicing.
The Trustee upon receipt of the purchase price shall pay such purchase price to
the Servicer being so removed (except in the case of subsection (h) below, in
which case the Trustee shall pay such purchase price to the Seller), after
deducting from any sum received by the Trustee from the successor to such
Servicer in respect of such sale, transfer and assignment all costs and expenses
of any public announcement and of any sale, transfer and assignment of the
servicing rights and responsibilities reasonably incurred hereunder. After such
deductions, the remainder of such sum shall be paid by the Trustee to such
Servicer at the time of such sale.
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(h) The Trustee and the successor Servicer shall take such action
consistent with this Agreement as shall be necessary to effectuate any such
succession, including the notification to all Mortgagors of the transfer of
servicing if such notification is not done by such predecessor Servicer as
required by subsection (j) below. Each predecessor Servicer agrees to cooperate
with the Trustee and any successor Servicer in effecting the termination of such
Servicer's servicing responsibilities and rights hereunder and shall promptly
provide the Trustee or such successor Servicer, as applicable, all documents and
records reasonably requested by it to enable it to assume such Servicer's
functions hereunder and shall promptly also transfer to the Trustee or such
successor Servicer, as applicable, all amounts which then have been or should
have been deposited in the related Principal and Interest Account by such
Servicer, or which are thereafter received with respect to the Mortgage Loans.
Neither the Trustee nor any other successor Servicer shall be held liable by
reason of any failure to make, or any delay in making, any distribution
hereunder or any portion thereof caused by (i) the failure of the predecessor
Servicer to deliver, or any delay in delivery, cash, documents or records to it
or (ii) restrictions imposed by any regulatory authority having jurisdiction
over such Servicer.
(i) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall as soon as reasonably practicable pay all
Compensating Interest and, if applicable, Delinquency Advances which have
theretofore not been remitted to the extent required by this Agreement with
respect to the Mortgage Loans; provided, however, that if the Trustee is acting
as successor Servicer, the Trustee shall only be required to make such
Delinquency Advances if, in the Trustee's reasonable good faith judgment, such
Delinquency Advances will ultimately be recoverable from the related Mortgage
Loans. Any Delinquency Advances and Servicing Advances previously made by the
predecessor Servicer and accrued and unpaid Servicing Fees shall be recoverable
by it and paid to it by the successor Servicer to the extent such Delinquency
Advances, Servicing Advances and accrued and unpaid Servicing Fees would
otherwise have been recoverable had the predecessor Servicer not been
terminated.
(j) Any Servicer which is being removed or is resigning shall (x) give
notice to the Rating Agencies of the transfer of the servicing to the successor
Servicer and (y) provide a "goodbye" notice to each of the Mortgagors in its
Mortgage Loan Servicing Group.
(k) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer including,
but not limited to, the maintenance of the hazard insurance policy(ies), the
fidelity bond and an errors and omissions policy pursuant to Section 8.26 and
shall be entitled to such fees as may be agreed upon between the Seller and such
successor Servicer (such amount not to exceed the Aggregate Servicing Fee Rate),
and all of the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement; provided, that, unless otherwise agreed upon by
the Trustee and the Seller, if the Trustee shall be the successor Servicer, the
Trustee shall be entitled to fees calculated on the basis of the Aggregate
Servicing Fee Rate. The appointment of a successor Servicer (including the
Trustee) shall not affect any liability of the predecessor Servicer which may
have arisen under this Agreement prior to its termination as Servicer
(including, without limitation, any deductible under an insurance policy) nor
shall any successor Servicer (including the Trustee) be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer of any
of its representations or warranties contained herein or in any related document
or agreement.
(l) The Trustee and the Seller shall each give notice to the Rating
Agencies and the Owners or the Seller of the occurrence of any event specified
in Section 8.20 of which a Responsible Officer of the Trustee has actual
knowledge.
Section 8.22 Waiver of Past Events of Servicing Termination. Subject to
the rights of the Trustee (acting upon the request of the Owners of the majority
of the Percentage Interests of the Offered Certificates then Outstanding as a
whole and not on a Class by Class basis) and the Seller pursuant to Section 8.20
to
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terminate all of the rights and obligations of any Servicer under this Agreement
or the Owners of a majority of the Percentage Interests of the Class R
Certificates may, on behalf of all Owners of Certificates, waive any default by
such Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Servicing Termination arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon.
Section 8.23 Assumption or Termination of Subservicing Agreement By the
Trustee. In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of any Servicer hereunder by
the Trustee pursuant to Section 8.21, it is understood and agreed that such
Servicer's rights and obligations under any Subservicing Agreement then in force
between such Servicer and a Subservicer shall be assumed simultaneously by the
Trustee without act or deed on part of the Trustee; provided, however, the
Trustee in its sole discretion may terminate any Subservicer notwithstanding the
provisions of the related Subservicing Agreement.
Each Servicer shall, upon the reasonable request of the Trustee, but at
the expense of such Servicer, deliver to the assuming party documents and
records relating to each Subservicing Agreement and an accounting of amounts
collected and held by it and otherwise use its best reasonable efforts (through
the execution of any documents or otherwise) to effect the orderly and efficient
transfer of the Subservicing Agreements to the assuming party and shall
cooperate with the Trustee in any other manner reasonably requested by the
Trustee.
Section 8.24 Powers and Duties of the Trustee as Successor Servicer.
Following the termination of any Servicer hereunder and pending the appointment
of any other Person as successor Servicer, the Trustee is hereby empowered to
perform the duties of such Servicer hereunder; it being expressly understood,
however, by all parties hereto, and the Owners, that prior to any termination of
such Servicer pursuant to Section 8.21, such Servicer shall perform such duties.
Specifically, and not in limitation of the foregoing, the Trustee shall upon
termination or resignation of any Servicer, and pending the appointment of any
other Person as successor Servicer, have the power:
(i) to collect Mortgage payments;
(ii) to foreclose on Delinquent Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into
assumption and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to
Section 8.14 hereof;
(v) to enforce the Mortgage Loans; and
(vi) to make Servicing Advances and Delinquency Advances and
to pay Compensating Interest (and to be reimbursed therefor as provided
herein).
Section 8.25 Liability of the Servicers. None of the Servicers nor any
of their directors, officers, employees or agents shall be under any liability
on any Certificate or otherwise to the Seller, the Master Servicer, any other
Servicer, the Trustee or any Owner for any action taken or for refraining from
the taking of any action in good faith pursuant to this Agreement or for errors
in judgment except as required hereunder; provided, however, that this provision
shall not protect any Servicer, its directors, officers, employees or agents or
any such Person against any liability which would otherwise be imposed by reason
of negligent action, negligent failure to act, willful misconduct in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder. Each of the Servicers and any director, officer,
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employee or agent of the respective Servicers may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising hereunder. None of the Servicers shall be under
any obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties hereunder and which in its opinion may involve it in
any expense or liability; provided, however, that each Servicer may in its
discretion undertake any such action that it may deem necessary or desirable in
respect of this Agreement and the rights and duties of the parties hereto and
interests of the Trustee and the Owners hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust, and such Servicer shall be
entitled to be reimbursed therefor out of the Principal and Interest Account.
The Servicers and any director, officer, employee or agent of the respective
Servicers shall be indemnified by the Trust and held harmless against any loss,
liability or expense incurred in connection with any audit, controversy or
judicial proceeding relating to a governmental taxing authority or any legal
action relating to this Agreement or the Certificates, other than any loss,
liability or expense related to any specific Mortgage Loan or Mortgage Loans
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) and any loss, liability or expense incurred by
reason of negligent action, negligent failure to act, willful misconduct in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder.
Section 8.26 Inspections by Trustee and Seller; Errors and Omissions
Insurance. (a) At any reasonable time and from time to time (but unless there is
a valid reason to do so, not more than once every six months) upon prior written
and reasonable notice, the Trustee, the Master Servicer, the Seller or any
agents or thereof may inspect any Servicer's servicing operations and discuss
the servicing operations of such Servicer with a responsible officer designated
by the related Servicer. The reasonable costs and expenses incurred by such
Servicer or its agents or representatives in connection with any such
examinations or discussions shall be paid by such Servicer.
(b) Each Servicer shall maintain, at its own expense, a blanket
fidelity bond and an errors and omissions insurance policy, with broad coverage
with responsible companies that meet the requirements of FannieMae or FHLMC on
all officers, employees or other persons acting in any capacity with regard to
the Mortgage Loan to handle funds, money, documents and papers relating to the
Mortgage Loans it services. The fidelity bond and errors and omissions insurance
shall be in the form of Mortgage Banker's Blanket bond and shall protect and
insure such Servicer against losses, including forgery, theft, embezzlement,
fraud, errors and omissions and negligent acts of such persons. Such fidelity
bond shall also protect and insure such Servicer against losses in connection
with the failure to maintain any insurance policies required pursuant to this
Agreement and the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 8.26 requiring the fidelity bond and errors and omissions insurance
shall diminish or relieve the Servicer from its duties and obligations as set
forth in this Agreement. The minimum coverage under any such bond and insurance
policy shall be at least equal to the corresponding amounts required by
FannieMae in the FannieMae Servicing Guide or by FHLMC in the FHLMC Sellers' and
Servicers' Guide. Upon the written request of the Owners of a majority of the
Percentage Interests of the Class R Certificates to the Trustee and request by
the Trustee to the Servicer, a Servicer shall cause to be delivered to the
Trustee, who shall deliver to the Owners of the Class R Certificates an
Officer's Certificate as to the maintenance of the fidelity bond and insurance
policy that such fidelity bond and insurance policy are in full force and
effect.
Section 8.27 Merger, Conversion, Consolidation or Succession to
Business of Servicer. Any corporation into which any Servicer may be merged or
converted or with which it may be consolidated, or corporation resulting from
any merger, conversion or consolidation to which such Servicer shall be a party
or any corporation succeeding to all or substantially all of the business of
such Servicer shall be the successor of such Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto provided that such corporation meets the qualifications set forth
in Section 8.21(f).
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Section 8.28 Notices of Material Events. Upon any responsible officer
of the Servicer's actual knowledge thereof, such Servicer shall give prompt
notice to the Trustee, the Master Servicer, the Seller, and the Rating Agencies
of the occurrence of any of the following events:
(a) Any default or any fact or event which such officer knows results,
or which with notice or the passage of time, or both, would result in the
occurrence of a default by such Servicer under any Operative Document or would
constitute a material breach of a representation, warranty or covenant under any
Operative Document;
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against such Servicer of
which it has knowledge, in any federal, state or local court or before any
governmental body or agency or before any arbitration board or any such
proceedings threatened by any governmental agency, which, if adversely
determined, would have a material adverse effect upon any such Servicer's
ability to perform its obligations under any Operative Document;
(c) The commencement of any proceedings of which it has knowledge or
has received service of process by or against such Servicer under any applicable
bankruptcy, reorganization, liquidation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver, liquidator,
trustee or other similar official shall have been, or may be, appointed or
requested for such Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of such Servicer's business that such Servicer is to
cease and desist, or to undertake any practice, program, procedure or policy
employed by such Servicer in the conduct of the business of any of them, and
such cessation or undertaking will materially and adversely affect the conduct
of such Servicer's business or its ability to perform under the Operative
Documents or materially and adversely affect the financial affairs of such
Servicer.
Section 8.29 Servicer's Monthly Servicing Report; Aggregate Monthly
Servicing Report; Reconciliation; Cooperation Procedures. (a) Each Servicer with
respect to the Mortgage Loans serviced by it shall deliver to the Master
Servicer, and, upon request, to the Seller not later than the Servicing Report
Delivery Date, a Servicer's Monthly Servicing Report (in an electronic format
and hard copy format reasonably agreeable to both such Servicer and the Master
Servicer) containing all information necessary for the Master Servicer to make
such calculations and provide such reports as may be required under this
Agreement, including all loan level information necessary to determine the
following:
(i) (A) scheduled interest due (net of the Servicing Fee); (B)
Compensating Interest paid; (C) scheduled principal due; (D)
Prepayments; (E) Loan Balance of Mortgage Loans repurchased; (F)
Substitution Amounts; and (G) Net Liquidation Proceeds (related to
principal);
(ii) The Servicing Fee withheld by the related Servicer;
(iii) The principal and interest payments remitted by such
Servicer to its Principal and Interest Account(s);
(iv) The scheduled principal and interest payments on the
Mortgage Loans that were not made by the related Mortgagors as of the
last day of the related Remittance Period;
(v) The number and aggregate Loan Balances (computed in
accordance with the terms of the Mortgage Loans) and the percentage of
the total number of Mortgage Loans and of the Loan Balance which they
represent of Delinquent Mortgage Loans, if any, (1) 30 to 59 days, (2)
60 to 89 days and (3) 90 days or more, respectively, as of the last day
of the prior Collection Period;
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(vi) The number and aggregate Loan Balances of Mortgage Loans,
if any, in foreclosure and the number and unpaid principal balance of
any REO Properties as of the last day of the related Collection Period;
(vii) The loan numbers and Loan Balances (immediately prior to
being classified as Liquidated Mortgage Loans) of Liquidated Mortgage
Loans as of the last day of the related Collection Period;
(viii) Liquidation Proceeds received during the related
Remittance Period;
(ix) The amount of any Liquidation Expenses being deducted
from Liquidation Proceeds or otherwise being charged to the Principal
and Interest Account(s) with respect to such Monthly Remittance Date;
(x) Liquidation Expenses incurred during the related
Remittance Period which are not being deducted from Liquidation
Proceeds or otherwise being charged to the Principal and Interest
Account with respect to such Monthly Remittance Date;
(xi) Net Liquidation Proceeds as of the last day of the
related Remittance Period;
(xii) The scheduled principal balance of each Mortgage Loan as
of the first day of the related Remittance Period and the date through
which interest has been paid as of the last day of the related
Remittance Period;
(xiii) The number and aggregate Loan Balances and Loan
Purchase Prices of Mortgage Loans required to be repurchased by each
Originator as of the related Subsequent Cut-Off Date;
(xiv) The amount of any Delinquency Advances made by such
Servicer during the related Remittance Period and any unreimbursed
Delinquency Advances as of such Monthly Remittance Date;
(xv) The weighted average Coupon Rates of the Mortgage Loans;
(xvi) Any additional information reasonably requested by the
Trustee;
(xvii) The number and aggregate Loan Balances of Mortgage
Loans, if any, currently in bankruptcy proceedings as of the last day
of the related Remittance Period and any Preference Amounts to the
extent the related Servicer has knowledge thereof; and
(xviii) The amount of unreimbursed Servicing Advances.
In addition to the report described in this Section 8.29(a) to be provided by
such Servicer, information as the Master Servicer and such Servicer may agree
upon shall be provided by such Servicer to the Master Servicer or such other
party as may be requested by the Master Servicer or the Trustee by electronic
transmission or hard copy.
(b) Reserved.
(c) Each Servicer with respect to the Mortgage Loans in Group II agrees
that, in addition to the report described in Section 8.29(a) hereof, it shall
upon the reasonable request of the Master Servicer, prepare reports detailing
the Mortgage Loans serviced by it by index and in the aggregate.
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(d) The Depositor shall deliver or cause to be delivered to the Master
Servicer and the Trustee on the Startup Day in hard copy and on electronic tape
in a form acceptable to the Master Servicer and the Trustee (the "Tape")
detailing the information required to be set forth on the Schedules of Mortgage
Loans as of the close of business on the Cut-Off Date.
(e) The Master Servicer shall review the Servicer's Monthly Servicing
Reports against the information, as updated by the Master Servicer on the basis
of the current and all previous Servicer's Monthly Servicing Reports received by
the Master Servicer, and shall notify the related Servicer and the Seller of any
material inconsistencies between the Servicer's Monthly Servicing Report and
such information. The related Servicers shall cooperate with the Master Servicer
to rectify such inconsistencies.
(f) In addition to notifying the Servicers of inconsistencies between
the Servicer's Monthly Servicing Report and the Tape, at least three Business
Days prior to each Monthly Remittance Date, the Master Servicer shall notify the
Servicers of such Servicer's portion of the Monthly Remittance Amount to be
remitted on each Monthly Remittance Date broken out by interest and principal.
To the extent the Master Servicer and the Servicer have not rectified
inconsistencies prior to a Monthly Remittance Date and disagree as to the amount
to be remitted by such Servicer, the Servicer shall defer to the Master
Servicer's judgment; provided, however, if the Master Servicer's calculations
prove to be incorrect and the Servicer has overadvanced, the Servicer may
withdraw any such overadvanced amount from the Principal and Interest Account
pursuant to Section 8.08(d)(E).
(g) Not later than the Reporting Date, the Master Servicer, based on
the reconciled Servicer's Monthly Servicing Reports, shall provide to the
Trustee the Aggregate Monthly Servicing Report (which report shall be in a
format reasonably agreeable to the Master Servicer and the Trustee). The
Aggregate Monthly Servicing Report shall contain the information set out in
Section 8.29(a)(i)-(xviii), both individually for each Servicer and on an
aggregate basis.
(h) Within 45 days after each Remittance Period, each Servicer agrees
to provide the Master Servicer with a reconciliation of such Servicer's
Principal and Interest Account for such Remittance Period including a test of
the expected principal and interest balance.
(i) Subject to Section 7.09(c), the Master Servicer, the Seller, the
Servicers and the 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 to be obtained by any of them in
connection with their respective duties hereunder.
Section 8.30 Indemnification by the Servicer. Each Servicer agrees to
indemnify and hold the Trustee, the Master Servicer, the Seller and the
Depositor and their employees, officers, directors and agents harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Seller, the Master Servicer, the Depositor and the Trustee and their employees,
officers, directors and agents may sustain in any way caused by or arising
directly out of the negligent failure of such Servicer, or any Subservicer
appointed by it, to perform its duties and service the Mortgage Loans in
compliance with the terms of this Agreement and which, in the case of the
Seller, the Master Servicer or the Depositor, materially and adversely affects
such party. Each Servicer shall immediately notify the Trustee, the Master
Servicer, the Seller, the Depositor and the Rating Agencies if a claim is made
by a third party with respect to this Agreement, and the relevant Servicer may
assume (with the consent of the Trustee) the defense of any such claim and pay
all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Seller, the Master Servicer, the Trustee and the Depositor and their
employees, officers, directors and agents. The Trustee shall reimburse such
Servicer from amounts in the related Principal and Interest Account for all
amounts advanced by it pursuant to the preceding sentence except
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when the claim relates directly to the failure of such Servicer to service and
administer the Mortgage Loans in compliance with the terms of this Agreement.
Section 8.31 Servicing Standard. Each Servicer and the Master Servicer
shall perform its servicing functions with respect to the Mortgage Loans in the
best interests of and for the benefit of the Owners subject to the terms hereof.
Section 8.32 No Solicitation. Each Servicer agrees that it will not
take any action or permit or cause any action to be taken by any of its agents
and Affiliates, or by any independent contractors or independent mortgage
brokerage companies on such Servicer's behalf, to personally, by telephone or
mail, solicit the borrower or Mortgagor under any Mortgage Loan for any purpose
whatsoever, including to refinance a Mortgage Loan. Notwithstanding the
foregoing, it is understood and agreed that promotions undertaken by a Servicer
or any Affiliate thereof which are directed to the general public at large,
including, without limitation, mass mailing based on commercially acquired
mailing lists, newspaper, radio and television advertisements shall not
constitute solicitation under this paragraph, nor is a Servicer prohibited from
responding to unsolicited requests or inquiries made by a Mortgagor or an agent
of a Mortgagor; provided further, that the Servicer may solicit any Mortgagor
(i) for whom the Servicer has received a request for verification of mortgage
from an originator of mortgage loan products similar to the Mortgage Loans that
indicates that such Mortgagor intends to refinance his or her Mortgage Loan and
(ii) otherwise in accordance with the Seller's policy, if such policy is
delivered to the related Servicer in writing. It is understood and agreed that
all rights and benefits relating to the solicitation of any Mortgagors and the
attendant rights, title and interest in and to the list of Mortgagors and data
relating to their Mortgages shall be retained by Seller.
Section 8.33 Powers and Duties of the Master Servicer. (a) The Master
Servicer undertakes to perform such duties and only such duties as are
specifically set forth in this agreement.
(b) The Master Servicer shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any
Mortgage Loan pursuant to this Agreement or the eligibility of any Mortgage Loan
for purposes of this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Master Servicer from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
(i) The duties and obligations of the Master Servicer shall be
determined solely by the express provisions of this Agreement, the
Master Servicer shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Agreement,
no implied covenants or obligations shall be read into this Agreement
against the Master Servicer and, in absence of bad faith on the part of
the Master Servicer, the Master Servicer may conclusively rely, as to
the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Master Servicer and conforming to the requirements of this Agreement;
(ii) The Master Servicer shall not be liable for an error of
judgment made in good faith by an Authorized Officer or other officers
of the Master Servicer, unless it shall be proved that the Master
Servicer was negligent in ascertaining the pertinent facts; and
(iii) Subject to the other provisions of this Agreement and
without limiting the generality of this Section 8.33, the Master
Servicer shall have no duty (A) to see to any recording, filing or
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depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security
interest or to see to the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any
thereof, (B) to see to any insurance or (C) to see to the payment or
discharge of any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Trust Estate.
(d) The right of the Master Servicer to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Master
Servicer shall not be answerable for other than its negligence or willful
misconduct in the performance of such act, and the delivery hereunder to the
Master Servicer of any notice, document or report shall not give rise to an
affirmative obligation on the part of the Master Servicer to take any action
with respect thereto, except as otherwise expressly provided herein.
(e) The Master Servicer makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Master Servicer shall not be accountable for the use or
application by the Seller or the Depositor of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Servicers in respect of the Mortgage Loans or deposited in or withdrawn
from the Principal and Interest Account by the Servicer.
Section 8.34 Liability of the Master Servicer. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Master Servicer herein. Neither
the Master Servicer nor any of the directors, officers, employees or agents of
the Master Servicer shall be under any liability to the Seller, the Depositor,
the Servicers or any Owner for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement or for errors in
judgment except as required hereunder; provided, however, that this provision
shall not protect the Master Servicer, its directors, officers, employees or
agents or any such Person against any liability which would otherwise be imposed
by reason of negligent action, negligent failure to act, willful misconduct in
the performance of duties or by reason of reckless disregard of obligations and
duties hereunder. Except as expressly provided herein, the Master Servicer shall
not be liable for the performance of the Servicers. The Master Servicer and any
director, officer, employee or agent of the Master Servicer may rely and shall
be protected in acting or refraining from acting in good faith on any
certificate, notice or other document of any kind prima facie properly executed
and submitted by the Authorized Officer of any Person respecting any matters
arising hereunder.
Section 8.35 Master Servicer Not to Resign. (a) The Master Servicer
shall not resign from the obligations and duties hereby imposed on it under this
Agreement except upon a determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law.
(b) Notice of any such determination permitting the resignation of the
Master Servicer shall be communicated to the Trustee and the Servicers promptly
(and, if such communication is not in writing, shall be promptly confirmed in
writing), and any such determination shall be evidenced by an Opinion of Counsel
to such effect delivered to the Trustee.
(c) In the event that the Master Servicer is permitted to resign
pursuant to Section 8.35(b) hereof (or if the Master Servicer is otherwise
unable to continue as Master Servicer), the Trustee shall automatically become
Master Servicer hereunder.
Section 8.36 Indemnification by Master Servicer. The Master Servicer
hereby agrees to, and does hereby indemnify and hold harmless each Servicer and
the Trustee and each of its respective directors, officers, employees and
agents, and their respective successors and assigns, as applicable, from and
against any and all losses, liabilities, claims, charges, damages, fines,
penalties, judgments, actions, suits, costs and expenses of any kind or nature
(including reasonable attorneys' fees and expenses and reasonable fees and
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expenses of experts) imposed on, incurred by, or asserted against such Servicer
or the Trustee or any of its directors, officers, employees, agents, or any of
their respective successors or assigns, in any way related to or arising out of
the performance of the Master Servicer of its obligations under this Agreement.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates of
all amounts held by the Trustee and required to be paid to such Owners pursuant
to this Agreement upon the later to occur of (a) the final payment or other
liquidation (or any advance made with respect thereto) of the last Mortgage Loan
in the Trust Estate, (b) the disposition of all property acquired in respect of
any Mortgage Loan remaining in the Trust Estate and (c) at any time when a
Qualified Liquidation of both Mortgage Loan Groups included within the REMIC
Estate is effected as described below. To effect a termination of this Agreement
pursuant to clause (c), the Owners of all Certificates then Outstanding shall
(i) unanimously direct the Trustee on behalf of the Upper-Tier REMIC and the
Lower-Tier REMIC to adopt a plan of complete liquidation for each of the
Mortgage Loan Groups, as contemplated by Section 860F(a)(4) of the Code and (ii)
provide to the Trustee an opinion of counsel experienced in federal income tax
matters acceptable to the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Trustee either shall sell the
Mortgage Loans and distribute the proceeds of the liquidation of the Trust
Estate, or shall distribute equitably in kind all of the assets of the Trust
Estate to the remaining Owners of the Certificates each in accordance with such
plan, so that the liquidation or distribution of the Trust Estate, the
distribution of any proceeds of the liquidation and the termination of this
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation. In no event, however, will the Trust created by this
Agreement continue beyond the expiration of twenty-one (21) years from the death
of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
Ambassador of the United States to the Court of Saint James's, living on the
date hereof. The Trustee shall give written notice of termination of the
Agreement to each Owner in the manner set forth in Section 11.05.
Section 9.02 Auction Termination; Servicer Termination.
(a) Within 90 days of the Group I Auction Sale Bid Date and within 90
days of the Group II Auction Sale Bid Date, the Trustee will notify the
investment banking or whole-loan trading firm selected by the Owners of the
majority of the Class R Certificates (such investment bank or trading firm, the
"Advisor") who will solicit on behalf of the Trustee competitive bids for the
purchase of the Mortgage Loans then remaining in such Mortgage Loan Group for
fair market value (such bidders may include the Owners of the Class R
Certificates). Such solicitation shall be conducted substantially in the manner
described in Exhibit M hereto. In the event that satisfactory bids are received
as described below, the proceeds of the sale of such assets shall be deposited
into the Certificate Account. The Trustee will ask the Advisor to solicit, on
behalf of the Trustee, good-faith bids from no fewer than two prospective
purchasers that are considered at the time to be competitive participants in the
home equity market. The Advisor will consult with any securities brokerage
houses as then making a market in the Offered Certificates to obtain a
determination as to whether the fair market value of such assets has been
offered.
If the highest good-faith bid received by the Advisor from a
qualified bidder is, in the judgment of the Advisor, not less than the fair
market value of the Mortgage Loans in such Mortgage Loan Group and if such bid
would equal or exceed the amount set forth in the following sentence, the
Trustee, following consultation with and written direction from the Advisor,
will sell and assign the Mortgage Loans in such Mortgage Loan Group without
representation, warranty or recourse to such highest bidder and will redeem the
Offered Certificates related to such Mortgage Loan Group. For the Trustee to
consummate the sale, the bid must be at least equal to the Termination Price set
forth in Section 9.02(b) hereof. In addition, the bid must be in an amount
sufficient to pay the fees and expenses of the Trustee owing hereunder. If such
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conditions are not met, the Trustee will, following consultation with the
Advisor, decline to consummate such sale. In addition, the Trustee will decline
to consummate such sale unless it receives from the Advisor an opinion of
counsel addressed to it that such sale will not give rise either to any
"prohibited transaction" tax under Section 860F(a)(1) of the Code or to any tax
on contribution to either the Upper-Tier REMIC or the Lower-Tier REMIC after the
Startup Day under Section 860G(d)(1) of the Code. In the event such sale is not
consummated in accordance with the foregoing, the Trustee will not be under any
obligation to solicit any further bids or otherwise to negotiate any further
sale of the Mortgage Loans in such Mortgage Loan Group. In such event, however,
if requested by the Owners of the Class R Certificates the Trustee may solicit
bids from time to time in the future for the purchase of the Mortgage Loans in
such Mortgage Loan Group upon the same terms described above. The Trustee may
consult with the Advisor and the advice of the Advisor shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder.
(b) On any Monthly Remittance Date on or after the Group I Servicer
Clean-Up Call Date and on any Monthly Remittance Date on or after the Group II
Servicer Clean-Up Call Date, the Servicers servicing Mortgage Loans relating to
such Mortgage Loan Group simultaneously may determine to purchase and may cause
the purchase from the Trust of all (but not fewer than all) Mortgage Loans
serviced by the related Servicer with respect to such Mortgage Loan Group and
all property theretofore acquired in respect of any Mortgage Loan by
foreclosure, deed in lieu of foreclosure, or otherwise then remaining in such
Mortgage Loan Group, at a price (such price the "Termination Price") equal to
100% of the aggregate Loan Balances of the related Mortgage Loans (including any
REO Property) as of the day of purchase minus amounts remitted from the
Principal and Interest Account to the Certificate Account representing
collections of principal on the related Mortgage Loans during the current
Remittance Period, plus one month's interest on such amount computed at the
Termination Date Pass-Through Rate, plus in all cases all accrued and unpaid
Servicing Fees plus the aggregate amount of any unreimbursed Delinquency
Advances and Servicing Advances and Delinquency Advances which the Servicer has
theretofore failed to remit. In connection with such purchase, the related
Servicer shall remit to the Trustee all amounts then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase.
If on any such Monthly Remittance Date a Servicer does not elect to
purchase the Mortgage Loans it is servicing and one or more of the other
Servicers have so elected, the Servicer(s) having so elected may give the other
Servicer(s) notice (not less than ten days prior to the next succeeding Monthly
Remittance Date) that the electing Servicer(s) will purchase the other
Servicers' Mortgage Loans with respect to such Mortgage Loan Group on such
Monthly Remittance Date at the Termination Price. If the other Servicer(s) do
not agree in writing to purchase the Mortgage Loans they are servicing prior to
the fifth day preceding such Monthly Remittance Date, the electing Servicer(s)
may purchase all Mortgage Loans in such Mortgage Loan Group on such Monthly
Remittance Date.
(c) In the event that an auction sale has not occurred with respect to
both Mortgage Loan Groups and the Servicers fail to exercise their respective
options to purchase all of the Mortgage Loans in both Mortgage Loan Groups, the
Owners of the Class R Certificates are required to purchase all of the Mortgage
Loans in both Mortgage Loan Groups on the Monthly Remittance Date in __________
202_.
(d) In connection with any such purchase, such Owners of the Class R
Certificates or Servicers, as applicable, shall unanimously direct the Trustee
to adopt and the Trustee shall adopt, as to the Upper-Tier REMIC and Lower-Tier
REMIC, a plan of complete liquidation for all of the Mortgage Loan Groups as
contemplated by Section 860F(a)(4) of the Code and shall provide to the Trustee
an Opinion of Counsel experienced in federal income tax matters acceptable to
the Trustee to the effect that such purchase and liquidation constitutes, as to
either the Upper-Tier REMIC or the Lower-Tier REMIC, a Qualified Liquidation. In
addition, such Owners of the Class R Certificates or such Servicer shall provide
to the
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Trustee an Opinion of Counsel acceptable to the Trustee to the effect that such
purchase and liquidation does not constitute a preference payment pursuant to
the United States Bankruptcy Code.
(e) Promptly following any purchase or sale described in this Section
9.02, the Trustee will release the Files to the Owners of the Class R
Certificates or otherwise upon their order or to the related Servicer, if
applicable, in accordance with Section 8.14 hereof. Upon such release, the
servicing of the Mortgage Loans shall remain with the related Servicer, subject
to the servicing provisions provided for herein.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that either the Lower-Tier REMIC or the Upper-Tier REMIC
Estate does not and will no longer qualify as a REMIC pursuant to Section 860D
of the Code (the "Final Determination"), at any time on or after the date which
is 30 calendar days following such Final Determination the Owners of a majority
in Percentage Interests represented by the Offered Certificates then Outstanding
may direct the Trustee on behalf of the Trust to adopt a plan of complete
liquidation, as contemplated by Section 860F(a)(4) of the Code.
The Trustee shall notify the Servicers and the Owners of the Class R
Certificates of such election to liquidate or such determination to purchase, as
the case may be (the "Termination Notice"). The Owners of a majority of the
Class R Certificates may, within 60 days from the date of receipt of the
Termination Notice (the "Purchase Option Period"), at their option, purchase
from the Trust all (but not fewer than all) Mortgage Loans and all property
theretofore acquired by foreclosure, deed in lieu of foreclosure, or otherwise
in respect of any Mortgage Loan then remaining in the Trust Estate at a purchase
price equal to the Termination Price. If the Owners of a majority of the Class R
Certificates have not exercised the option described in the immediately
preceding paragraph, then upon the expiration of the Purchase Option Period the
Trustee shall sell the Mortgage Loans and reimburse the Servicer for
unreimbursed (including nonrecoverable) Delinquency Advances, Servicing Advances
and Servicing Fees and distribute the remaining proceeds of the liquidation of
the Trust Estate, each in accordance with the plan of complete liquidation, such
that, if so directed, the liquidation of the Trust Estate, the distribution of
the proceeds of the liquidation and the termination of this Agreement occur no
later than the close of the 60th day, or such later day as the Owners of the
Offered Certificates shall permit or direct in writing, after the expiration of
the Purchase Option Period. In connection with such purchase, the Servicer shall
remit to the Trustee all amounts then on deposit in the Principal and Interest
Account for deposit to the Certificate Account, which deposit shall be deemed to
have occurred immediately preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Class R Certificates then Outstanding may, at their option and upon delivery to
the Trustee of an Opinion of Counsel experienced in federal income tax matters
acceptable to the Trustee selected by such Owners of the Class R Certificates
which opinion shall be reasonably satisfactory in form and substance to the
Trustee and the Seller to the effect that the effect of the Final Determination
is to increase substantially the probability that the gross income of the Trust
will be subject to federal taxation, purchase from the Trust all (but not fewer
than all) Mortgage Loans and REO Properties at a purchase price equal to the
Termination Price.
(c) In connection with any purchase pursuant to this Section 9.03, the
Trustee shall adopt a plan of complete liquidation as contemplated by Section
860F(a)(4) of the Code and shall provide to the Trustee an Opinion of Counsel
experienced in federal income tax matters to the effect that such purchase
constitutes a Qualified Liquidation.
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Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
liquidation of the Trust Estate pursuant to this Article IX to the Certificate
Account for application as provided in Section 7.03 hereof; provided, however,
that any amounts representing unrecovered Delinquency Advances and Servicing
Advances which a Servicer determined to be nonrecoverable and unreimbursed
Delinquency Advances and Servicing Advances and Servicing Fees theretofore
funded by a Servicer from the Servicer's own funds shall be paid by the Trustee
to the Servicer from the proceeds of the Trust Estate.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B)
shall serve as the Trustee at all times under this Agreement, and (ii) in the
absence of bad faith on its part, may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished pursuant to and conforming to the
requirements of this Agreement; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be furnished
to the Trustee, shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(b) Notwithstanding the appointment of the Servicers hereunder, the
Trustee is hereby empowered to perform the duties of the Servicers it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee, and that all parties hereto agree that, prior to any
termination of the Servicers, the Servicers and, thereafter, the Trustee or any
other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicers, and pending the appointment of any other Person as successor
Servicer have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Mortgage Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Mortgage Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to
pay Compensating Interest (and to be reimbursed therefor as
provided herein).
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance
with the direction of the Owners of a majority in Percentage
Interest of the Certificates of the affected Class or Classes
relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee,
under this Agreement relating to such Certificates.
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(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicers under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicers in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) None of the Servicers, the Master Servicer, the Seller and the
Trustee knowingly shall take any action (other than any action expressly
required by this Agreement) that would cause the Class A-7 Certificates, the
Class A-8 Certificates or the Class M-1A Certificates to fail to qualify as
"mortgage related securities" within the meaning of the Securities Exchange Act
of 1934, as amended.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date amounts available for distribution
in accordance with the terms hereof (provided, however, that any such
failure which is due to circumstances beyond the control of the Trustee
shall not be a cause for removal hereunder); or
(2) the Trustee shall fail in the performance of, or breach,
any material covenant or agreement of the Trustee in this Agreement, or
if any representation or warranty of the Trustee made in this Agreement
or in any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after
there shall have been given, by registered or certified mail, to the
Trustee by the Seller or by the Owners of at least 25% of the aggregate
Percentage Interests in the Trust Estate represented by the Offered
Certificates then Outstanding, or, if there are no Offered Certificates
then Outstanding, by such Percentage Interests represented by the Class
R Certificates, a written notice specifying such failure or breach and
requiring it to be remedied; or
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(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing; or
(6) the Trustee shall fail to meet the eligibility
requirements set forth in Section 10.08 herein.
The Depositor shall give to the Rating Agencies notice of the
occurrence of any such event of which the Depositor is aware.
(b) If any event described in Paragraph (a) occurs and is continuing,
then and in every such case the Depositor and the Owners of a majority of the
Percentage Interests represented by the Offered Certificates then Outstanding or
if there are no Offered Certificates then Outstanding by a majority of the Class
R Certificates, may, whether or not the Trustee resigns pursuant to Section
10.09(b), immediately, concurrently with the giving of notice to the Trustee,
and without delaying the 30 days required for notice therein, appoint a
successor Trustee pursuant to the terms of Section 10.09.
(c) The Servicers shall not be liable for any costs relating to the
removal of the Trustee or the appointment of a new Trustee.
Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Depositor, the Seller, the
Servicers, the Master Servicer or the Owners of any Class of Certificates
mentioned herein shall, at the request of the Trustee, be in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting to take any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officer's Certificate;
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(d) the Trustee may consult with counsel, and the written advice of
such counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, note or other
paper or document, but the Trustee in its discretion may make such further
inquiry or investigation into such facts or matters as it may see fit;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodian;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within the
discretion or the rights or powers conferred upon it under this Agreement other
than as to validity and sufficiency of its authentication of the Certificates;
(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, each Servicer and the
Master Servicer is required to furnish to the Trustee from time to time certain
information and make various calculations which are relevant to the performance
of the Trustee's duties under the Agreement. The Trustee shall be entitled to
rely in good faith on any such information and calculations in the performance
of its duties hereunder, (i) unless and until an Authorized Officer of the
Trustee has actual knowledge, or is advised by any Owner of a Certificate or any
other party hereto (either in writing or orally with prompt written or
telecopies confirmation), that such information or calculations is or are
incorrect, or (ii) unless there is a manifest error in any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
(l) the Trustee shall not be charged with knowledge of any failure by
the Depositor, the Seller, the Master Servicer or any Servicer to comply with
any of its obligations hereunder or any breach of any representation or warranty
hereunder unless an Authorized Officer of the Trustee obtains actual knowledge
of such failure or breach or the Trustee receives written notice of such failure
or breach.
Section 10.04 Not Responsible for Recitals or Issuance of
Certificates.
The recitals and representations contained herein and in the
Certificates, except any such recitals and representations relating to the
Trustee, shall be taken as the statements of the Depositor and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representation as to the validity or sufficiency of this Agreement, of the
Certificates, or any Mortgage Loan or document related thereto other than as to
validity and sufficiency of its authentication of the Certificates. The Trustee
shall not be accountable for the use or application by the Depositor of any of
the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Seller, the Master Servicer
or the Servicer in respect of the Mortgage Loans or deposited into or withdrawn
from the Principal and
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Interest Account or the Certificate Account by the Depositor, the related
Servicer, the Master Servicer or the Seller, and shall have no responsibility
for filing any financing or continuation statement in any public office at any
time or otherwise to perfect or maintain the perfection of any security interest
or lien or to prepare or file any tax returns (except as provided in Section
11.16) or Securities and Exchange Commission filings for the Trust or to record
this Agreement. The Trustee shall not be required to take notice or be deemed to
have notice or knowledge of any default unless an Authorized Officer of the
Trustee shall have received written notice thereof or an Authorized Officer has
actual knowledge thereof. In the absence of receipt of such notice, the Trustee
may conclusively assume that no default has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledgee
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Seller and except to the extent of
income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity.
Section 10.07 Compensation and Reimbursement; No Lien for Fees.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 7.03(c)(i) and (d)(i) and Section
7.05 hereof. The Trustee shall have no lien on the Trust Estate for the payment
of such fees and expenses.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America and having a deposit rating of at least A2 by Moody's and, if rated by
Fitch, having a rating of at least A- from Fitch (or such lower rating as may be
acceptable to Fitch). If such Trustee publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation or association shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, it shall, upon the request of
the Seller resign immediately in the manner and with the effect hereinafter
specified in this Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Owners at their addresses appearing on the Register; provided, that the Trustee
may not resign
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solely for the failure to receive the Trustee Fee. A copy of such notice shall
be sent by the resigning Trustee to the Rating Agencies. Upon receiving notice
of resignation, the Depositor shall promptly appoint a successor trustee or
trustees by written instrument, in duplicate, executed on behalf of the Trust by
an Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor trustee or
trustees. If no successor trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee, or any Owner may, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and appropriate, appoint a successor trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor, the Depositor may remove the Trustee and appoint a successor trustee
by written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Offered Certificates or, if there are no Offered Certificates then
Outstanding, by a majority of the Class R Certificates, may at any time remove
the Trustee and appoint a successor trustee by delivering to the Trustee to be
removed, to the successor trustee so appointed, to the Depositor and to the
Servicer, copies of the record of the act taken by the Owners, as provided for
in Section 11.03.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Seller may remove the Trustee and appoint a successor
trustee by written instrument, in triplicate, signed by the Seller duly
authorized, one complete set of which instruments shall be delivered to the
Depositor, one complete set to the Trustee so removed and one complete set to
the successor Trustee so appointed.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Seller shall promptly appoint a successor trustee. If within one year after
such resignation, removal or incapability or the occurrence of such vacancy, a
successor trustee shall be appointed by act of the Seller or the Owners of a
majority of the Percentage Interests represented by the Offered Certificates
then Outstanding, the successor trustee so appointed shall forthwith upon its
acceptance of such appointment become the successor trustee and supersede the
successor trustee appointed by the Depositor. If no successor trustee shall have
been so appointed by the Depositor or the Owners and shall have accepted
appointment in the manner hereinafter provided, any Owner may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee.
(g) The Depositor shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the Rating
Agencies, the Master Servicer and the Servicers and to the Owners as their names
and addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust and to its predecessor
Trustee an instrument accepting such appointment hereunder and stating its
eligibility to serve as Trustee hereunder, and thereupon the resignation or
removal of the predecessor Trustee shall become effective and such successor
trustee, without any further act, deed or
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conveyance, shall become vested with all the rights, powers, trusts, duties and
obligations of its predecessor hereunder; but, on request of the Depositor or
the successor Trustee, such predecessor Trustee shall, upon payment of its
charges then unpaid, execute and deliver an instrument transferring to such
successor trustee all of the rights, powers and trusts of the Trustee so ceasing
to act, and shall duly assign, transfer and deliver to such successor trustee
all property and money held by such Trustee so ceasing to act hereunder. Upon
request of any such successor trustee, the Depositor on behalf of the Trust
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor trustee all such rights, powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register. The Depositor shall send a copy of such notice to the Rating Agencies.
If the Depositor fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor trustee shall cause such
notice to be mailed at the expense of the Trust.
No successor trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in subsection (a) above, the Tax
Matters Person shall timely file all reports required to be filed by the Trust
with any federal, state or local governmental authority having jurisdiction over
the Trust, including other reports that must be filed with the Owners. The
Trustee shall, upon request of the Tax Matters Person, collect any forms or
reports from the Owners determined by the Tax Matters Person to be required
under applicable federal, state and local tax laws.
(c) The Depositor covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a) and (b) above.
(d) Except as otherwise provided, the Tax Matters Person shall have the
responsibility for preparation of all returns, forms, reports and other
documents referred to in this Section and the Tax Matters Person's
responsibility shall be to execute such documents.
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Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Certificate Account, the Depositor, the Seller, the Master
Servicer, the Servicers or any Owner for any action taken or for refraining from
the taking of any action in good faith pursuant to this Agreement or for errors
in judgment; provided, however, that this provision shall not protect the
Trustee, its directors, officers, employees or agents or any such Person against
any liability which would otherwise be imposed by reason of negligent action,
negligent failure to act or willful misconduct in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. In
addition, the Depositor, the Master Servicer and the Seller covenant and agree
to indemnify the Trustee and its employees, officers, directors and agents in
its capacity as Trustee and not as successor Servicer (unless resulting from
failure of the related predecessor Servicer to perform in accordance with this
Agreement), from, and hold it harmless against, any and all losses, liabilities,
damages, claims or expenses (including legal fees and expenses) of whatsoever
kind arising out of or in connection with the performance of the Trustee's
duties hereunder other than those resulting from the negligence or bad faith of
the Trustee, and the Depositor shall pay all amounts not otherwise paid pursuant
to Sections 2.05 and 7.05 hereof. The Trustee and any director, officer,
employee or agent of the Trustee may rely and shall be protected in acting or
refraining from acting in good faith on any certificate, notice or other
document of any kind prima facie properly executed and submitted by the
Authorized Officer of any Person respecting any matters arising hereunder. The
provisions of this Section 10.13 shall survive the termination of this
Agreement, the resignation or removal of the Trustee hereunder and the payment
of the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-Trustee or co-Trustees, jointly with the Trustee, of all or
any part of the Trust Estate or separate Trustee or separate Trustees of any
part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Owners, such title to the Trust Estate, or
any part thereof, and, subject to the other provisions of this Section 10.14,
such powers, duties, obligations, rights and trusts as the Depositor and the
Trustee may consider necessary or desirable. If the Depositor shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, the Trustee alone shall have the power to make such appointment. No
co- Trustee or separate Trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 10.08 and no notice to Owner of
the appointment of any co-Trustee or separate Trustee shall be required under
Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate Trustee or
co-Trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to a Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Estate or any portion
thereof in any such jurisdiction) shall
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be exercised and performed singly by such separate Trustee or
co-Trustee, but solely at the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Seller and the Trustee acting jointly may at any
time accept the resignation of or remove any separate Trustee or
co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicers.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 10.15 Appointment of Custodians.
The Trustee may appoint one or more Custodians to hold all or a portion
of the Trustee's Files as agent for the Trustee, by entering into a Custodial
Agreement in the form of Exhibit L. Subject to this Article X, the Trustee
agrees to comply with the terms of each Custodial Agreement and to enforce the
terms and provisions thereof against the Custodian for the benefit of the Owners
of the Certificates.
Section 10.16 No Solicitation. The Trustee agrees that it will not take
any action or permit or cause any action to be taken by any of its agents and
Affiliates, or by any independent contractors or independent mortgage brokerage
companies on the Trustee's behalf, to personally, by telephone or mail, solicit
the borrower or Mortgagor under any Mortgage Loan for any purpose whatsoever,
including to refinance a Mortgage Loan. Notwithstanding the foregoing, it is
understood and agreed that promotions undertaken by the Trustee or any Affiliate
thereof which are directed to the general public at large, including, without
limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements shall not constitute solicitation
under this paragraph, nor is the Trustee prohibited from responding to
unsolicited requests or inquiries made by a Mortgagor or an agent of a
Mortgagor.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller or the
Owners to the Trustee to take any action under any provision of this Agreement,
the Depositor, the Seller or the Owners, as the case may be, shall furnish to
the Trustee a certificate stating that all conditions precedent, if any,
provided for in this Agreement relating to the proposed action have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Agreement relating to such particular application or request, no
additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless such Authorized Officer knows, or in the exercise of reasonable care
should know, that the opinion with respect to the matters upon which his
certificate or opinion is based is erroneous. Any such certificate or opinion of
an Authorized Officer of the Trustee or any Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, one or more Authorized Officers of the Depositor, the Seller
or the Servicers, stating that the information with respect to such factual
matters is in the possession of the Depositor, the Seller or such Servicer,
unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any Opinion of Counsel may also be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer of the Trustee, stating that
the information with respect to such matters is in the possession of the
Trustee, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Any Opinion of Counsel may be based on the written
opinion of other counsel, in which event such Opinion of Counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Depositor, the Seller, the Master Servicer and the Servicers shall be
sufficient for every purpose hereunder if made, given, furnished or filed in
writing to or with and received by the Trustee at the Corporate Trust Office.
Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if a Servicer
has been removed or resigned or the Trust is terminated, notice
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of any such events shall be made by overnight courier, registered mail or
telecopy followed by a telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any rating agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Monthly Remittance Date, any Payment
Date, any other date on which any distribution to any Owner is proposed to be
paid, or any date on which a notice is required to be sent to any Person
pursuant to the terms of this Agreement shall not be a Business Day, then
(notwithstanding any other provision of the Certificates or this Agreement)
payment or mailing need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made or mailed on
the nominal date of any such Monthly Remittance Date, such Payment Date, or such
other date for the payment of any distribution to any Owner or the mailing of
such notice, as the case may be, and no interest shall accrue for the period
from and after any such nominal date, provided such payment is made in full on
such next succeeding Business Day.
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Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of such courts, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that the related documents or the subject matter thereof may not be
litigated in or by such courts.
(c) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, the Seller, the Master Servicer or the Servicers or other
third-party beneficiary hereunder, as the case may be, to serve process in any
other manner permitted by law or to start legal proceedings relating to any of
the Mortgage Loans against any Mortgagor in the courts of any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
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Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller, the Master Servicer and the
Servicers may at any time and from time to time, and without notice to or the
consent of the Owners, amend this Agreement, subject to the provisions of
Section 11.16 and 11.17 and the consent of the Trustee to such amendment shall
not be unreasonably withheld, for the purpose of (i) curing any ambiguity,
typographical error, or mistake, correcting or supplementing any provision
hereof which may be inconsistent with any other provision hereof, or to add
provisions hereto which are not inconsistent with the provisions hereof; or (ii)
upon receipt of an Opinion of Counsel experienced in federal income tax matters
to the effect that no entity-level tax will be imposed on the Trust, any REMIC
therein or upon the transferor of a Class R Certificate as a result of the
ownership of any Class R Certificate by a Disqualified Organization, removing
the restriction on transfer set forth in Section 5.08(b) hereof; or (iii)
complying with the requirements of the Code and the regulations proposed or
promulgated thereunder including any amendments necessary to maintain REMIC
status for either the Upper-Tier REMIC or the Lower-Tier REMIC or (iv) for any
other purpose, provided that in the case of this clause (iv) such amendment will
not adversely affect in any material respect any Owners. Any such amendment
shall be deemed not to adversely affect in any material respect any Owner if
there is delivered to the Trustee written notification from each Rating Agency
that such amendment will not cause such Rating Agency to reduce its then current
rating assigned to any Class of the Certificates. This Agreement may also be
amended by the Trustee, the Depositor, the Seller, the Master Servicer and the
Servicers at any time and from time to time, with the prior written approval of
a majority of the Percentage Interest represented by each affected Class of
Certificates then Outstanding, for the purpose of adding any provisions or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Owners hereunder. Notwithstanding
anything to the contrary herein, no such amendment shall (a) change in any
manner the amount of, or change the timing of, payments which are required to be
distributed to any Owner without the consent of the Owner of such Certificate,
(b) reduce the aforesaid percentages of Percentage Interests which are required
to consent to any such amendments, without the consent of the Owners of all
Certificates of the Class or Classes affected then Outstanding, (c) adversely
affect the qualification of either the Upper-Tier REMIC or the Lower-Tier REMIC
or subject either the Upper-Tier REMIC or the Lower-Tier REMIC to tax, as
evidenced by an Opinion of Counsel satisfactory to the Trustee at the expense of
the party requesting such amendment.
(b) Promptly after the execution of any such amendment, the Trustee
shall furnish written notification of the substance of such amendment to each
Owner in the manner set forth in Section 11.05, and to the Rating Agencies.
(c) The Rating Agencies shall be provided with copies of any amendments
to this Agreement, together with copies of any opinions or other documents or
instruments executed in connection therewith.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Depositor may,
subject to the eligibility requirements for the Trustee set forth in Section
10.08 hereof, appoint one or more other Paying Agents or successor Paying
Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
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(a) allocate all sums received for distribution to the Owners
of Certificates of each Class for which it is acting as Paying Agent on
each Payment Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Servicers and the Owners by mailing notice
thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the Lower-Tier REMIC and the
Upper-Tier REMIC shall constitute, and that the affairs of the Lower-Tier REMIC
and the Upper-Tier REMIC shall be conducted so as to qualify each as a REMIC in
accordance with the REMIC Provisions. In furtherance of such intention,
______________________________ or such other person designated pursuant to
Section 11.18 hereof shall act as agent for the Trust and as Tax Matters Person
for the Trust and that in such capacity it shall: (i) prepare or cause to be
prepared and filed, in a timely manner, annual tax returns and any other tax
return required to be filed by the Upper-Tier REMIC and the Upper-Tier REMIC
established hereunder using a calendar year as the taxable year for the
Lower-Tier REMIC and the Upper-Tier REMIC established hereunder; (ii) in the
related first such tax return, make (or cause to be made) an election satisfying
the requirements of the REMIC Provisions, on behalf of the Lower-Tier REMIC and
the Upper-Tier REMIC for it to be treated as a REMIC; (iii) prepare and forward,
or cause to be prepared and forwarded, to the Owners all information, reports or
tax returns required with respect to the Lower-Tier REMIC and the Upper-Tier
REMIC as, when and in the form required to be provided to the Owners, and to the
Internal Revenue Service and any other relevant governmental taxing authority in
accordance with the REMIC Provisions and any other applicable federal, state or
local laws, including without limitation information reports relating to
"original issue discount" as defined in the Code based upon the prepayment
assumption and calculated by using the "Issue Price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; (iv) not
take any action or omit to take any action that would cause the termination of
the REMIC status of the Lower-Tier REMIC and the Upper-Tier REMIC, except as
provided under this Agreement; (v) represent the Trust, the Lower-Tier REMIC or
the Upper-Tier REMIC in any administrative or judicial proceedings relating to
an examination or audit by any governmental taxing authority, request an
administrative adjustment as to a taxable year of the Trust, the Lower-Tier
REMIC or the Upper-Tier REMIC, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust, the Lower-Tier REMIC or the Upper-Tier REMIC, and
otherwise act on behalf of the Trust, the Lower-Tier REMIC or the Upper-Tier
REMIC therein in relation to any tax matter involving the Trust or any REMIC
therein; (vi) comply with all statutory or regulatory requirements with regard
to its conduct of activities pursuant to the foregoing clauses of this Section
11.16, including, without limitation, providing all notices and other
information to the Internal Revenue Service and Owners of Class R Certificates
required of a "tax matters person" pursuant to subtitle F of the Code and
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the Treasury Regulations thereunder; (vii) upon receipt of reasonable
compensation, make available information necessary for the computation of any
tax imposed (A) on transferor of residual interests to certain Disqualified
Organizations or (B) on pass-through entities, any interest in which is held by
a Disqualified Organization; and (viii) acquire and hold the Tax Matters Person
Residual Interest. The obligations of ______________________________ or such
other designated Tax Matters Person pursuant to this Section 11.16 shall survive
the termination or discharge of this Agreement.
(b) The Seller, the Depositor, the Trustee, the Master Servicer and
each Servicer covenant and agree for the benefit of the Owners (i) to take no
action which would result in the termination of "REMIC" status for the
Lower-Tier REMIC or the Upper-Tier REMIC, (ii) not to engage in any "prohibited
transaction", as such term is defined in Section 860F(a)(2) of the Code, and
(iii) not to engage in any other action which may result in the imposition on
the Trust of any other taxes under the Code and the Seller in addition covenants
to cause each Servicer not to take or engage in any such action, to the extent
the Seller is aware of any such proposed action by the Servicer.
(c) Each of the Lower-Tier REMIC and the Upper-Tier REMIC shall, for
federal income tax purposes, maintain books on a calendar year basis and report
income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
(e) Neither the Depositor, the Seller nor the Trustee shall enter into
any arrangement by which the Trustee will receive a fee or other compensation
for services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
the Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an Opinion of Counsel experienced
in federal income tax matters acceptable to Trustee and the Seller to the effect
that such transaction does not result in a tax imposed on the Trust or cause a
termination of REMIC status for the Lower-Tier REMIC or the Upper-Tier REMIC;
provided, however, that such transaction is otherwise permitted under this
Agreement.
(g) The Trustee, each of the Servicers and Tax Matters Person each
agree to indemnify the Trust for any tax imposed on the Trust, the Lower-Tier or
the Upper-Tier REMIC as a result of their own negligence.
Section 11.17 Additional Limitation on Action and Imposition of
Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained for itself an Opinion of Counsel
experienced in federal income tax matters acceptable to the Trustee to the
effect that such transaction does not result in a tax imposed on the Trust, the
Lower-Tier REMIC or the Upper-Tier REMIC or cause a termination of REMIC status
for the Lower-Tier REMIC or the Upper-Tier REMIC, (i) sell any assets in the
Trust Estate (except as specifically provided in this Agreement), (ii) accept
any contribution of assets after the Startup Day in violation of the REMIC
Provisions or (iii) agree to any modification of this Agreement. To the extent
that sufficient amounts cannot be so retained to pay or provide for the payment
of such tax, the Trustee is hereby authorized to and shall segregate, into a
separate non-interest bearing account, the net income from any such Prohibited
Transactions of the Lower-Tier REMIC and the Upper-Tier REMIC and use such
income, to the extent necessary, to pay such tax; provided that, to the extent
that any such income is paid to the Internal Revenue Service, the Trustee shall
retain an equal amount from future amounts otherwise distributable to the Owners
of Class R Certificates and shall distribute such retained amounts to the Owners
of Offered Certificates to the extent they are fully reimbursed and then to the
Owners of the Class R Certificates. If any tax, including interest
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penalties or assessments, additional amounts or additions to tax, is imposed on
the Trust, such tax shall be charged against amounts otherwise distributable to
the owners of the Class R Certificates on a pro rata basis. The Trustee is
hereby authorized to and shall retain from amounts otherwise distributable to
the Owners of the Class R Certificates sufficient funds to pay or provide for
the payment of, and to actually pay, such tax as is legally owed by the Trust
(but such authorization shall not prevent the Trustee from contesting any such
tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the Lower-Tier REMIC or the
Upper-Tier REMIC for all purposes of the Code and such Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be taken,
such actions as are required to be performed or taken by the Tax Matters Person
under the Code. The Tax Matters Person for the Lower-Tier REMIC or the
Upper-Tier REMIC shall be _________________________________ as long as it owns a
Class R Certificate. If _____________________________ does not own a Class R
Certificate, the Tax Matters Person may be any other entity that owns a Class R
Certificate and accepts a designation hereunder as Tax Matters person by
delivering an affidavit in the form of Exhibit I. The Seller shall notify the
Trustee in writing of the name and address of another person who accepts a
designation as Tax Matters Person hereunder.
Section 11.19 Attorneys' Fees.
Any party successfully asserting a claim for a breach of this Agreement
against another party is entitled to receive all reasonable attorneys' fees
incurred by such party in asserting such claim.
Section 11.20 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: ________________________________
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Attn: __________________________
with a copy to: ________________
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________________________________
The Depositor: AMRESCO Residential Securities Corporation
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Attn: General Counsel
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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The Seller: AMRESCO Residential Capital Markets, Inc.
c/o AMRESCO Residential Credit Corporation
One Lakeshore Centre
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Attn: Capital Markets
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Master Servicer: AMRESCO Residential Capital Markets, Inc.
c/o AMRESCO Residential Credit Corporation
One Lakeshore Centre
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Attn: Investor Reporting
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Servicers: ________________________________
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END OF ARTICLE XI
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IN WITNESS WHEREOF, the Depositor, the Seller, the Master Servicer,
each Servicer and the Trustee have caused this Agreement to be duly executed by
their respective officers thereunto duly authorized, all as of the day and year
first above written.
AMRESCO RESIDENTIAL SECURITIES CORPORATION,
as Depositor
By: ____________________________________
Title: ____________________________________
AMRESCO RESIDENTIAL CAPITAL MARKETS, INC.,
as Seller and Master Servicer
By: ____________________________________
Title: ____________________________________
___________________________________________
By: ____________________________________
Title: ____________________________________
SCHEDULE I-A
SCHEDULE OF GROUP I MORTGAGE LOANS
[BY ORIGINATOR]
SCHEDULE I-B
SCHEDULE OF GROUP II MORTGAGE LOANS
SCHEDULE II
SCHEDULE OF CLASS S MORTGAGE LOANS