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CMC SECURITIES CORPORATION IV,
Seller,
NORTH AMERICAN MORTGAGE COMPANY,
Master Servicer/Loan Seller,
and
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1997
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Mortgage Pass-Through Certificates
Series 1997-NAMC 3
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TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS...........................................................................................1
Section 1.01. Defined Terms.............................................................................1
ARTICLE II - CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES ....................................................19
Section 2.01. Conveyance of Mortgage Loans.............................................................19
Section 2.02. Acceptance of any Trust Fund by the Trustee..............................................22
Section 2.03. Representations, Warranties and Covenants of the
Master Servicer and the Seller...............................................23
Section 2.04. Representations and Warranties of the Loan Seller........................................25
Section 2.05. Issuance of Certificates.................................................................36
ARTICLE III - ADMINISTRATION AND SERVICING OF THE TRUST FUND.....................................................36
Section 3.01. Master Servicer to Act as Master Servicer................................................36
Section 3.02. Sub-Servicing Agreements Between Master Servicer
and Sub-Servicers............................................................37
Section 3.03. Successor Sub-Servicers..................................................................38
Section 3.04. Liability of the Master Servicer.........................................................38
Section 3.05. No Contractual Relationship Between Sub-Servicers
and Trustee or Certificateholders............................................38
Section 3.06. Assumption or Termination of Sub-Servicing Agreements
by Trustee...................................................................39
Section 3.07. Collection of Certain Mortgage Loan Payments.............................................39
Section 3.08. Sub-Servicing Accounts...................................................................39
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts...........................................................40
Section 3.10. Custodial Account........................................................................40
Section 3.11. Permitted Withdrawals From the Custodial Account.........................................41
Section 3.12. Permitted Instruments....................................................................42
Section 3.13. Maintenance of Primary Hazard Insurance..................................................43
Section 3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements................................44
Section 3.15. Realization Upon Defaulted Mortgage Loans................................................45
Section 3.16. Trustee to Cooperate; Release of Mortgage Files..........................................45
Section 3.17. Servicing Compensation...................................................................47
Section 3.18. Maintenance of Certain Servicing Policies................................................47
Section 3.19. Annual Statement as to Compliance........................................................47
Section 3.20. Annual Independent Public Accountants' Servicing Statement...............................48
Section 3.21. Access to Certain Documentation..........................................................48
Section 3.22. Title, Conservation and Disposition of REO Property......................................49
Section 3.23. Additional Obligations of the Master Servicer............................................51
Section 3.24. Excess Proceeds Account..................................................................51
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TABLE OF CONTENTS
(Continued)
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Section 3.25. Maintenance of the Primary Mortgage Insurance Policies;
Collections Thereunder................................................................52
Section 3.26. Special Servicing........................................................................53
Section 3.27. Duties with respect to REMICs............................................................53
ARTICLE IV - PAYMENTS TO CERTIFICATEHOLDERS......................................................................54
Section 4.01. Certificate Account......................................................................54
Section 4.02. Statements to Certificateholders.........................................................58
Section 4.03. Reports; Advances by the Master Servicer.................................................59
Section 4.04. Information Reports to be Filed by the Master Servicer...................................61
Section 4.05. Compliance with Withholding Requirements.................................................61
Section 4.06. Reporting of Realized Losses.............................................................61
ARTICLE V - THE CERTIFICATES.....................................................................................61
Section 5.01. The Certificates.........................................................................61
Section 5.02. Registration of Transfer and Exchange of Certificates....................................62
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates........................................63
Section 5.04. Persons Deemed Owners....................................................................64
ARTICLE VI - LIABILITY...........................................................................................64
Section 6.01. Liability of the Seller, the Loan Seller and the Master Servicer.........................64
Section 6.02. Merger; Consolidation or Conversion of the Seller
or the Master Servicer.......................................................64
Section 6.03. Limitation on Liability of the Seller, the Master Servicer and Others....................65
Section 6.04. Limitation on Resignation of the Master Servicer.........................................65
ARTICLE VII - MASTER SERVICER DEFAULT............................................................................66
Section 7.01. Events of Default........................................................................66
Section 7.02. Trustee to Act; Appointment of Successor.................................................68
Section 7.03. Notification to Certificateholders.........................................................
Section 7.04. Waiver of Events of Default..............................................................69
ARTICLE VIII - CONCERNING THE TRUSTEE............................................................................69
Section 8.01. Duties of Trustee........................................................................69
Section 8.02. Certain Matters Affecting the Trustee....................................................70
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans....................................71
Section 8.04. Trustee May Own Certificates.............................................................72
Section 8.05. Master Servicer to Pay Trustee's Fees....................................................72
Section 8.06. Eligibility Requirements for Trustee.....................................................73
Section 8.07. Resignation and Removal of the Trustee...................................................73
Section 8.08. Successor Trustee........................................................................74
Section 8.09. Merger or Consolidation of Trustee.......................................................74
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TABLE OF CONTENTS
(Continued)
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Section 8.10. Appointment of Co-Trustee or Separate Trustee............................................75
ARTICLE IX - TERMINATION.........................................................................................76
Section 9.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans.........................76
Section 9.02. Additional Termination Requirements......................................................77
ARTICLE X - [RESERVED]...........................................................................................78
ARTICLE XI - MISCELLANEOUS PROVISIONS............................................................................78
Section 11.01. Amendment...............................................................................78
Section 11.03. Limitation on Rights of Certificateholders..............................................80
Section 11.04. Governing Law...........................................................................81
Section 11.05. Notices.................................................................................81
Section 11.06. Severability of Provisions..............................................................81
Section 11.07. Successors and Assigns; Third Party Beneficiary.........................................81
Section 11.08. Article and Section Headings............................................................81
Section 11.09. Notice to Rating Agencies and Certificateholder.........................................82
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EXHIBIT A - FORM OF CERTIFICATE
EXHIBIT B - FORM OF TRUSTEE INITIAL CERTIFICATION
EXHIBIT C - FORM OF TRUSTEE FINAL CERTIFICATION
EXHIBIT D-1 - FORM OF REQUEST FOR RELEASE
EXHIBIT D-2 - FORM OF REQUEST FOR RELEASE FOR MORTGAGE LOANS
PAID IN FULL
EXHIBIT E - FORM OF PURCHASER LETTER
EXHIBIT F - MORTGAGE LOAN SCHEDULE
EXHIBIT G - LOAN DATA REQUIREMENTS - MONTHLY DATA
EXHIBIT H - FORM OF SPECIAL SERVICING AND COLLATERAL FUND
AGREEMENT
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This Pooling and Servicing Agreement, dated and effective as of
September 1, 1997, among CMC Securities Corporation IV, as Seller (together
with its successors and assigns, the "Seller"), North American Mortgage
Company, as Master Servicer (in such capacity, the "Master Servicer"), and as
Loan Seller (in such capacity, the "Loan Seller") and The First National Bank
of Chicago, as Trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Seller intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple Series
(as defined herein), each of which shall evidence the entire beneficial
ownership interest in Loan Group (as defined herein) consisting of Mortgage
Loans (as defined herein).
I DEFINITIONS
1.01 Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in
this Article.
"Accepted Servicing Practices": With respect to any Mortgage Loan,
those mortgage servicing practices (including collection procedures) of prudent
mortgage banking institutions which service mortgage loans of the same type as
such Mortgage Loan, and which are in accordance with FNMA servicing practices
and procedures, for MBS pool mortgages, as defined in the FNMA Guides including
future updates.
"Advance": As to any Mortgage Loan, any Servicing Advance or any
advance made by the Master Servicer on any Distribution Date pursuant to
Section 4.03.
"Advance Reimbursement Amount": For any Distribution Date, the amount
of reimbursement owed to the Master Servicer for any Advances previously made
with respect to any Mortgage Loan or REO Property which remain unreimbursed in
whole or in part following the Cash Liquidation or REO Disposition of such
Mortgage Loan or REO Property, but excluding any such Advances that were made
with respect to delinquencies that ultimately constituted Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy Losses, or Extraordinary Losses.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof.
"Anniversary": Each anniversary of September 1, 1997.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws
of the jurisdiction wherein the related Mortgaged Property is located to
reflect of record the sale of the Mortgage.
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"Assignment and Assumption Agreements": The Assignment and Assumption
Agreements made pursuant to the Loan Sale Agreement (i) between DLJ Mortgage
Capital, Inc. and Capstead Capital Corporation, and (ii) between Capstead
Capital Corporation and the Seller
"Available Distribution Amount": With respect to any Distribution Date
and each Loan Group, for purposes of distributions on the related Series of
Certificates, an amount equal to (a) the sum of (i) the balance on deposit in
the Custodial Account relating to such Loan Group as of the close of business
on the related Determination Date and (ii) the aggregate amount of (x) any
Advances (other than Servicing Advances) made with respect to such Loan Group,
(y) all required transfers pursuant to Section 3.22, which relate to such Loan
Group and (z) all amounts required to be paid by the Master Servicer with
respect to such Loan Group pursuant to Sections 3.13 and 3.23 by deposits into
the Certificate Account on the immediately preceding Certificate Account
Deposit Date, reduced by (b) the sum, as of the close of business on the
related Determination Date, of (i) Monthly Payments with respect to such Loan
Group collected but due during a Due Period subsequent to the Due Period
relating to such Distribution Date, (ii) all interest or other income earned on
deposits relating to such Loan Group in the Custodial Account, (iii) any other
amounts reimbursable or payable to the Master Servicer or any Sub-Servicer
pursuant to Section 3.11, which relate to such Loan Group with respect to such
Distribution Date and (iv) any unscheduled payments with respect to such Loan
Group, including Insurance Proceeds, Liquidation Proceeds, Principal
Prepayments, REO Proceeds and the proceeds of Mortgage Loan purchases made
pursuant to Sections 2.02, 2.04 or 3.22, in each case received after the
Prepayment Period relating to such Distribution Date.
"Bankruptcy Amount": As of any date of determination, an amount, equal
to the excess if any, of (1) $100,000.00 (the initial "Bankruptcy Amount") over
(2) the aggregate amount of Bankruptcy Losses allocated solely to the
Subordinate Securities prior to such date in accordance with Section 7 of the
Series Supplement.
"Bankruptcy Code": The Bankruptcy Code of 1978, as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a Realized Loss
resulting from a Deficient Valuation or Debt Service Reduction.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in California, New York or Illinois (and such other
state or states in which a Custodial Account or a Certificate Account is at the
time located) or in the city in which the Corporate Trust Office of the Trustee
is located are authorized or obligated by law or executive order to close.
"Cash Liquidation": As to any defaulted Mortgage Loan other than a
Mortgage Loan as to which an REO Disposition occurred, the final receipt by or
on behalf of the Master Servicer of all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.
"Certificate": Each of the Certificates executed by the Seller and
authenticated by the Trustee evidencing a beneficial interest in the Trust Fund
for the Series indicated on such Certificate.
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"Certificate Account": The trust account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "The First
National Bank of Chicago, in trust for registered holders of Mortgage
Pass-Through Certificates, Series 1997-NAMC 3", and which account or accounts
must each be an Eligible Account.
"Certificate Account Deposit Date": With respect to any Distribution
Date, the Business Day immediately prior thereto.
"Certificate Distribution Amount": With respect to each Series, the
amounts to be distributed to the holders of the Certificates of such Series
pursuant to Section 4.01(c)(1) and (c)(2).
"Certificate Register": The register maintained pursuant to Section
5.02.
"Certificate Registrar": The Person appointed by the Trustee to be its
agents with respect to certain Certificate administration matters; provided,
however, that any such appointment will not relieve the Trustee from its
obligation to perform its duties hereunder.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent pursuant to this Agreement, any Certificate
registered in the name of the Seller or the Master Servicer or any affiliate
thereof shall be deemed not to be outstanding and the Fractional Undivided
Interest represented by such Certificate shall not be taken into account in
determining whether the requisite percentage of Fractional Undivided Interests
necessary to effect any such consent has been obtained, except as otherwise
provided in Section 11.01. The Trustee shall be entitled to rely upon a
certification of the Seller or the Master Servicer in determining if any
Certificates are registered in the name of a respective affiliate.
"Closing Date": September 30, 1997.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral Value": The appraised value of a Mortgaged Property based
upon the lesser of (i) the appraisal (as reviewed and approved by the Loan
Seller) made at the time of the origination of the related Mortgage Loan, or
(ii) the sales price of such Mortgaged Property at such time of origination.
With respect to a Mortgage Loan the proceeds of which were used to refinance an
existing mortgage loan, the appraised (as reviewed and approved by the Loan
Seller) value of the Mortgaged Property based upon the appraisal (as reviewed
and approved by the Loan Seller) obtained at the time of refinancing.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business related to
this Agreement shall be administered, which office at the date of the execution
of this Agreement is located at One First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: CMCSC IV/North American 1997-NAMC 3.
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"Curtailment": Any payment of principal on a Mortgage Loan, made by or
on behalf of the related Mortgagor, other than a Monthly Payment, a Prepaid
Monthly Payment or a Payoff, which is applied to reduce the stated Principal
Balance of the Mortgage Loan including the principal portion of repurchase
proceeds received with respect to any Mortgage Loan which was repurchased by
the Loan Seller pursuant to its repurchase obligation in Sections 2.02 and 2.04
hereof, Insurance Proceeds, and any other unscheduled payments of principal,
other than Payoffs or Liquidation Principal, which were received during the
preceding calendar month.
"Custodial Account": The custodial account or accounts created and
maintained pursuant to Section 3.10 in the name of a depository institution, as
custodian for the holders of the Certificates, for the holders of certain other
interests in mortgage loans serviced or sold by the Master Servicer and for the
Master Servicer, into which the amounts set forth in Section 3.10 shall be
deposited directly. Any such account or accounts shall be an Eligible Account.
"Cut-off Date": September 1, 1997.
"DCR": Duff & ▇▇▇▇▇▇ Credit Rating Co. or its successor in interest.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction constituting a Deficient Valuation or any reduction that results in a
permanent forgiveness of principal.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount
less than the then outstanding indebtedness under the Mortgage Loan, which
valuation results from a proceeding initiated by the Mortgagor under the
Bankruptcy Code.
"Determination Date": The 15th day (or if such 15th day is not a
Business Day, the Business Day immediately preceding such 15th day) of the
month of the related Distribution Date.
"Distribution Date": The second Business Day prior to the 25th day of
each month, commencing in October, 1997.
"Due Date": The first day of the month of the related Distribution
Date.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month of such
Distribution Date (or, with respect to the first Due Period, the day following
the Cut-off Date) and ending on the related Due Date.
"Eligible Account": An account maintained with a federal or state
chartered depository institution (i) the short-term obligations of which are
rated by each of the Rating Agencies in its highest rating at the time of any
deposit therein, or (ii) insured by the FDIC (to the limits established by such
Corporation), the uninsured deposits in which account are otherwise secured
such that, as evidenced by an Opinion of Counsel (obtained by the Person
requesting that the account be held pursuant to this clause (ii)) delivered to
the Trustee prior to the establishment of such account, the
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Certificateholders of the applicable Series will have a claim with respect to
the funds in such account and a perfected first priority security interest
against any collateral (which shall be limited to Permitted Instruments, each
of which shall mature not later than the Business Day immediately preceding the
Distribution Date next following the date of investment in such collateral or
the Distribution Date if such Permitted Instrument is an obligation of the
institution that maintains the applicable Certificate Account or Custodial
Account) securing such funds that is superior to claims of any other depositors
or general creditors of the depository institution with which such account is
maintained or (iii) a trust account or accounts maintained with a federal or
state chartered depository institution or trust company with trust powers
acting in its fiduciary capacity or (iv) an account or accounts of a depository
institution acceptable to the Rating Agencies (as evidenced in writing by the
Rating Agencies that use of any such account as a Custodial Account, an Excess
Proceeds Account or a Certificate Account will not have an adverse effect on
the then-current ratings assigned to the Securities then rated by the Rating
Agencies). Eligible Accounts may bear interest.
"Event of Default": One or more of the events described in Section
7.01.
"Excess Bankruptcy Loss": Any Bankruptcy Loss, or portion thereof,
which exceeds the then applicable Bankruptcy Amount.
"Excess Fraud Loss": Any Fraud Loss, or portion thereof, which exceeds
the then applicable Fraud Loss Amount.
"Excess Proceeds": With respect to each Mortgage Loan as to which an
REO Disposition has occurred, the proceeds that are specified as being "Excess
Proceeds" in Section 3.22.
"Excess Proceeds Account": The separate account or accounts created
and maintained pursuant to Section 3.24, which shall be entitled "The First
National Bank of Chicago, in trust for registered holders of Mortgage
Pass-Through Certificates, Series 1997-NAMC 3, Excess Proceeds Account," and
which account or accounts shall be an Eligible Account.
"Excess Special Hazard Loss": Any Special Hazard Loss, or portion
thereof, that exceeds the then applicable Special Hazard Amount.
"Extraordinary Events": Any of the following conditions with respect
to a Mortgaged Property or Mortgage Loan causing or resulting in a loss which
causes the liquidation of such Mortgage Loan:
(a) losses which are of a type that would be covered by
the fidelity bond and the errors and omissions
insurance policy required to be maintained pursuant to
Section 3.18, but are in excess of the coverage
maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled,
or remote or be in whole or in part caused by,
contributed to or
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aggravated by a peril covered by the definition of
the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war,
including action in hindering, combating or defending
against an actual, impending or expected attack
(1) by any government or sovereign power, de jure or de facto,
or by any authority maintaining or using military, naval or
air forces; or
(2) by military, naval or air forces; or
(3) by an agent of any such government, power, authority or
forces;
(d) any weapon of war employing atomic fission or
radioactive force whether in time of peace or war; or
(e) insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental
authority in hindering, combating or defending against
such an occurrence, seizure or destruction under
quarantine or customs regulations, confiscation by
order of any government or public authority; or risks
of contraband or illegal transportation or trade.
"Extraordinary Losses": Any loss incurred on a Mortgage Loan caused by
or resulting from an Extraordinary Event.
"FDIC": Federal Deposit Insurance Corporation or any successor.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor.
"FNMA": Federal National Mortgage Association or any successor.
"FNMA Guides": The FNMA Sellers' Guide and the FNMA Servicers' Guide
and all amendments or additions thereto.
"Fractional Undivided Interest": With respect to any Certificate of a
Series, the fractional undivided interest in any Trust Fund of such Series as
evidenced by such Certificate.
"Fraud Loss Amount": With respect to each Series and any date of
determination after the Cut-off Date an amount equal to: (i) prior to the first
Anniversary, an amount equal to 2.00% of the aggregate outstanding principal
balance of all of the Mortgage Loans in the Loan Group for such Series as of
the Cut-off Date minus the aggregate amount of Fraud Losses incurred on such
Mortgage Loans since the Cut-off Date, and (ii) from and including the first
Anniversary to but not including the fifth Anniversary, an amount equal to the
lesser of (a) the Fraud Loss Amount as of the most recent Anniversary and (b)
1.00% of the aggregate outstanding principal balance of all of
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such Mortgage Loans, as of the most recent Anniversary. On and after the fifth
Anniversary the Fraud Loss Amount with respect to the Mortgage Loans for each
Series shall be zero.
"Fraud Losses": Realized Losses on Mortgage Loans as to which there
was fraud in the origination of such Mortgage Loan.
"Funding Date": With respect to each Mortgage Loan, the date on which
funds were advanced by or on behalf of the Loan Seller and interest began to
accrue thereunder.
"Initial Certificate Principal Balance": With respect to each Series,
the Certificate Principal Balance of such Series as of the Cut-off Date as set
forth in the Preliminary Statement hereto.
"Indenture": The Indenture dated as of September 1, 1997 by and
between CMC Securities Corporation IV, as Issuer, and The First National Bank
of Chicago, as Indenture Trustee.
"Insurance Policy": With respect to any Mortgage Loan, any insurance
policy which is required to be maintained from time to time under this
Agreement in respect of such Mortgage Loan.
"Insurance Proceeds": Proceeds paid in respect of the Mortgage Loans
pursuant to any Primary Hazard Insurance Policy, any title insurance policy or
any other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not applied to the restoration of the related Mortgaged Property
or released to the Mortgagor in accordance with the procedures that the Master
Servicer would follow in servicing mortgage loans held for its own account.
"Interest Accrual Period": With respect to a Distribution Date in a
given calendar month, the immediately preceding calendar month.
"Late Collections": With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments or
as Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
"Liquidated Loan": A Mortgage Loan as to which the Master Servicer has
determined in accordance with its Accepted Servicing Practices that all amounts
which it expects to recover from or on account of such Mortgage Loan, whether
from Insurance Proceeds, Liquidation Proceeds, or otherwise have been
recovered.
"Liquidation Principal": The principal portion of Liquidation Proceeds
received with respect to each Mortgage Loan which became a Liquidated Loan (but
not in excess of the principal balance thereof) during the related Prepayment
Period for any Distribution Date.
"Liquidation Proceeds": Amounts (other than Insurance Proceeds)
received by the Master Servicer in connection with the taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation
or in connection with the liquidation of a defaulted Mortgage Loan through
trustee's sale, foreclosure sale or otherwise, other than amounts received in
respect of any REO Property.
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"Loan Group": With respect to each Series, the pool of Mortgage Loans
assigned to such Series as specified in the applicable Mortgage Loan Schedule.
The Loan Group with respect to Series 1997-NAMC 3-A shall be the Mortgage Loans
identified as Group 1 on the Mortgage Loan Schedule attached hereto as Exhibit
F, and the Loan Group with respect to Series 1997-NAMC 3-B shall be the
Mortgage Loans identified as Group 2 on such Mortgage Loan Schedule.
"Loan Sale Agreement": The Seller's Warranties and Servicing Agreement
dated as of September 1, 1997 between DLJ Mortgage Capital, Inc. and the Loan
Seller.
"Loan Seller": North American Mortgage Company, and its successors and
assigns.
"Loan-to-Value Ratio": With respect to any Mortgage Loan and as of any
date, the fraction, expressed as a percentage, the numerator of which is the
current principal balance of such Mortgage Loan at the date of determination
and the denominator of which is the Collateral Value of the related Mortgaged
Property.
"Lower REMIC": As defined in the Series Supplement.
"Master Servicer": North American Mortgage Company or any successor
master servicer appointed as herein provided.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is
payable by a Mortgagor under the related Mortgage Note as originally executed
(after adjustment, if any, for Principal Prepayments and for Deficient
Valuations occurring prior to such Due Date, and after any adjustment by reason
of any bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period).
"Mortgage": The mortgage, deed of trust or any other instrument
securing the Mortgage Loan.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan.
"Mortgage Loan": Each of the mortgage loans, transferred and assigned
to the Trustee pursuant to Section 2.01 or Section 2.03 and from time to time
held in the Trust Fund for a Series, the Mortgage Loans originally so
transferred, assigned and held being identified in the applicable Mortgage Loan
Schedule. As used herein, the term "Mortgage Loan" includes the related
Mortgage Note and Mortgage.
"Mortgage Loan Schedule": As of any date of determination and with
respect to each Series, the schedule of Mortgage Loans included in the Trust
Fund for such Series. The initial Mortgage Loan Schedules are attached hereto
as Exhibit F (and, for purposes of the Trustee's review of the Mortgage Files
pursuant to Section 2.02, such Mortgage Loan Schedules shall be in
computerreadable form as delivered to the Trustee). The Mortgage Loan Schedules
shall set forth the following information with respect to each Mortgage Loan
included in the related Loan Group:
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(i) the loan number and name of the Mortgagor;
(ii) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ and zip code of the
Mortgaged Property;
(iii) the Mortgage Rate set forth in the related Mortgage
Note;
(iv) the maturity date;
(v) the original principal balance;
(vi) the first payment date;
(vii) the type of Mortgaged Property;
(viii) the Monthly Payment in effect as of the Cut-off
Date;
(ix) the scheduled principal balance as of the Cut-off
Date;
(x) the unpaid actual principal balance as of the Cut-off
Date;
(xi) the occupancy status;
(xii) the purpose of the Mortgage Loan;
(xiii) the Collateral Value of the Mortgaged Property;
(xiv) the original term to maturity;
(xv) whether or not the Mortgage Loan provides for a
Principal Prepayment penalty;
(xvi) the paid-through date of the Mortgage Loan; and
(xvii) the number of units in the Mortgaged Property.
Each Mortgage Loan Schedule shall also set forth the total of the
amounts described under clause (ix) or (x) above for all of the Mortgage Loans
in the related Loan Group. Each Mortgage Loan Schedule may be in the form of
more than one schedule, collectively setting forth all of the information
required.
"Mortgage Note": The note or other evidence of the indebtedness of a
Mortgagor under a Mortgage Loan.
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"Mortgage Rate": With respect to any Mortgage Loan, the annual rate at
which interest accrues on such Mortgage Loan.
"Mortgaged Property": With respect to a Mortgage Loan, the underlying
real property (or leasehold estate of the Mortgagor, the term of which is equal
to or longer than the term of the Mortgage) securing repayment of a Mortgage
Note, consisting of a single parcel of real estate considered to be real estate
under the laws of the State in which such real property is located, which may
include condominium units and planned unit developments, improved by a
residential dwelling.
"Mortgagor": The obligor or obligors on a Mortgage Note.
"Net Mortgage Rate": As to each Mortgage Loan, a per annum rate of
interest equal to the Mortgage Rate as in effect from time to time minus the
Servicing Fee Rate.
"Nonrecoverable Advance": Any Advance previously made or proposed to
be made in respect of a Mortgage Loan which, in the good faith judgment of the
Master Servicer, will not or, in the case of a proposed Advance, would not be
ultimately recoverable from related Late Collections, Insurance Proceeds,
Liquidation Proceeds, REO Proceeds or amounts reimbursable to the Master
Servicer pursuant to Section 4.03(b). The determination by the Master Servicer
that it has made a Nonrecoverable Advance or that any proposed Advance would
constitute a Nonrecoverable Advance, shall be evidenced by an Officers'
Certificate delivered to the Seller and the Trustee.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, vice president or
assistant vice president and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the Loan
Seller, or of the Sub-Servicer and delivered to the Seller and Trustee.
"Opinion of Counsel": A written opinion of counsel, who may be counsel
for the Seller or the Master Servicer, reasonably acceptable to the Trustee;
except that any opinion of counsel relating to (a) the qualification of any
account required to be maintained pursuant to this Agreement as an Eligible
Account, (b) qualification of either the Upper REMIC or the Lower REMIC as a
REMIC, (c) compliance with the REMIC Provisions or (d) resignation of the
Master Servicer pursuant to Section 6.04 must be an opinion of counsel who (i)
is in fact independent of the Seller and the Master Servicer, (ii) does not
have any direct financial interest or any material indirect financial interest
in the Seller or the Master Servicer or in an affiliate of either and (iii) is
not connected with the Seller or the Master Servicer as an officer, employee,
director or person performing similar functions.
"Optional Termination Date": Any Distribution Date on which the
aggregate outstanding Stated Principal Balance of the Mortgage Loans is equal
to or less than 5 percent of the aggregate Stated Principal Balance of the
Mortgage Loans as of the Cutoff Date.
"OTS": Office of Thrift Supervision or any successor.
"Outstanding Mortgage Loan": As to any Due Date, a Mortgage Loan
(including an REO Property) which was not the subject of a Principal Prepayment
in full, Cash Liquidation or REO
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Disposition and which was not purchased prior to such Due Date pursuant to
Sections 2.02, 2.04 or 3.22.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to each Series and a Distribution
Date, the weighted average of the Net Mortgage Rates on the Mortgage Loans
included in the Loan Group relative to such Series on the related Due Date.
"Payoff": Any payment of principal on a Mortgage Loan equal to the
entire outstanding Principal Balance of such Mortgage Loan made by the
Mortgagor or through the application of Liquidation Proceeds, if received in
advance of the last scheduled Due Date for such Mortgage Loan together with
interest received thereon which interest, if such payment is made by the
Mortgagor, shall equal to accrued unpaid interest on the Mortgage Loan to the
date of such payment-in-full.
"Payoff Period": With respect to the first Distribution Date, the
period from the Cut-Off Date through October 14, 1997, inclusive; and with
respect to any Distribution Date thereafter, the period from the 15th day of
the prior month through the 14th day of the month of such Distribution Date,
inclusive.
"Permitted Encumbrances": With respect to any Mortgaged Property, any
of the following: (1) the lien of non-delinquent current real property taxes
and assessments not yet due and payable, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record
as of the date of recording which are acceptable to mortgage lending
institutions generally and either (A) which are referred to or otherwise
considered in the appraisal made for the originator of the Mortgage Loan, or
(B) which do not adversely affect the appraised value of the Mortgaged Property
as set forth in such appraisal, and (3) 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 Mortgaged Property.
"Permitted Instruments": Any one or more of the following:
(i) direct obligations of, or obligations, the timely
payment of which, are fully guaranteed as to principal
and interest by, the United States or any agency or
instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United
States;
(ii) repurchase obligations (the collateral for which is
held by a third party or the Trustee) with respect to
any security described in clause (i) above, provided
that the long-term
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unsecured obligations of the party agreeing to
repurchase such obligations are at the time rated by
each Rating Agency in one of its two highest long-term
rating categories;
(iii) Certificates of deposit, time deposits, demand
deposits and bankers' acceptances of any bank or trust
company incorporated under the laws of the United
States or any state thereof or the District of
Columbia, provided that the short- term commercial
paper of such bank or trust company at the date of
acquisition thereof has been rated by each Rating
Agency in its highest short-term rating;
(iv) money market funds organized under the Investment
Company Act of 1940 or common trust fund rated not
less than "AAAm" by Standard & Poor's, not less than
"Aaa" by ▇▇▇▇▇'▇ Investors Service, Inc. and not less
than "AAA" by DCR, if rated by DCR;
(v) commercial paper (having original maturities of not
more than nine months) of any corporation incorporated
under the laws of the United States or any state
thereof or the District of Columbia which on the date
of acquisition has been rated by each Rating Agency in
its highest short-term rating; and
(vi) any other obligation or security acceptable to the
Rating Agencies (as certified by a letter from each
Rating Agency to the Trustee) in respect of mortgage
pass-through certificates rated in one of its two
highest rating categories;
provided, that no such instrument shall be a Permitted Instrument if such
instrument evidences either (a) the right to receive interest only payments
with respect to the obligations underlying such instrument or (b) both
principal and interest payments derived from obligations underlying such
instrument where the principal and interest payments with respect to such
instrument provide a yield to maturity exceeding 120% of the yield to maturity
at par of such underlying obligation.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
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"Prepaid Monthly Payment": Any Monthly Payment received prior to its
scheduled Due Date, which is intended to be applied to a Mortgage Loan on its
scheduled Due Date and held in the related Custodial Account until the
Certificate Account Deposit Date.
"Prepayment Interest Shortfall": With respect to any Distribution
Date, for each Mortgage Loan that was the subject of a Curtailment or a Payoff
during the related Prepayment Period, an amount equal to the amount of interest
that would have accrued at the applicable Net Mortgage Rate on the principal
balance of such Mortgage Loan immediately prior to such prepayment (or in the
case of a Curtailment on the amount of such prepayment) during the period
commencing on the date of prepayment, or in the case of a Payoff in full the
date as of which the prepayment is applied, and ending on the last day of the
month of prepayment.
"Prepayment Period": With respect to a Distribution Date, with respect
to (i) Payoffs, the Payoff Period and (ii) Curtailments, the calendar month
preceding the month in which such Distribution Date occurs.
"Primary Hazard Insurance Policy": Each primary hazard insurance
policy required to be maintained pursuant to the first or the second paragraph
of Section 3.13.
"Primary Mortgage Insurance Policy": Each primary policy of mortgage
insurance represented to be in effect pursuant to Section 2.04(b)(A)(xxxi), or
any replacement policy therefor obtained by the Master Servicer pursuant to
Section 3.25.
"Principal Prepayment": Any payment of principal on a Mortgage Loan
which constitutes a Payoff or a Curtailment.
"Purchase Price": With respect to any Mortgage Loan (or REO Property)
required to be purchased pursuant to Section 2.02 or 2.04 or that the Master
Servicer is entitled to repurchase pursuant to Section 3.22, an amount equal to
the sum of (i) 100% of the Stated Principal Balance thereof, plus (ii) unpaid
accrued interest (or REO Imputed Interest) at the applicable Net Mortgage Rate
on the Stated Principal Balance thereof outstanding during each Due Period that
such interest was not paid or advanced, from the date through which interest
was last paid by the Mortgagor or advanced and distributed to
Certificateholders together with unpaid Servicing Fees from the date through
which interest was last paid by the Mortgagor, in each case to the first day of
the month in which such Purchase Price is to be distributed, plus (iii) the
aggregate of all Advances made in respect of such Mortgage Loan (or REO
Property) that were not previously reimbursed.
"Qualified Mortgage Insurer": A mortgage guaranty insurance company
qualified under the laws of the state in which the related Mortgaged Property
is located to transact a mortgage guaranty insurance business therein and to
write the insurance provided by primary mortgage insurance policies and
approved as an insurer by FNMA or FHLMC and whose obligations have a rating by
each Rating Agency not lower than the rating of the Certificates.
"Rating Agency": Standard & Poor's and DCR, however, if such agencies
and their successors are no longer in existence, "Rating Agency" shall be such
nationally recognized statistical rating agency, or other comparable Person,
designated by the Seller, notice of which designation
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shall be given to the Trustee and Master Servicer. References herein to the two
highest long term debt rating categories of a Rating Agency shall mean "AA" or
better in the case of Standard & Poor's and DCR and references herein to the
highest short-term debt rating of a Rating Agency shall mean "A-1" in the case
of Standard & Poor's and "D-1" in the case of DCR, and in the case of any other
Rating Agency such references shall mean the equivalent rating categories
without regard to any plus or minus.
"Realized Loss": With respect to each Mortgage Loan or REO Property as
to which a Cash Liquidation or REO Disposition has occurred, an amount (not
less than zero) equal to (i) the Stated Principal Balance of the Mortgage Loan
as of the date of Cash Liquidation or REO Disposition, plus (ii) interest (and
REO Imputed Interest, if any) at the Net Mortgage Rate from the Due Date as to
which interest was last paid or advanced to Certificateholders up to the last
day of the month in which the Cash Liquidation or REO Disposition occurred on
the Stated Principal Balance of such Mortgage Loan outstanding during each Due
Period that such interest was not paid or advanced, minus (iii) the proceeds,
if any, received during the month in which such Cash Liquidation or REO
Disposition occurred, to the extent applied as recoveries of interest at the
Net Mortgage Rate and to principal of the Mortgage Loan, net of the portion
thereof reimbursable to the Master Servicer or any Sub-Servicer with respect to
related Advances not previously reimbursed. With respect to each Mortgage Loan
which has become the subject of a Deficient Valuation, the difference between
the principal balance of the Mortgage Loan outstanding immediately prior to
such Deficient Valuation and the principal balance of the Mortgage Loan as
reduced by the Deficient Valuation. With respect to each Mortgage Loan which
has become the subject of a Debt Service Reduction, the amount of such Debt
Service Reduction.
"Record Date": With respect to a Distribution Date, the last Business
Day of the month immediately preceding the month of the such Distribution Date.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Loss": The failure of the Upper REMIC or Lower REMIC or any
portion thereof to qualify or to continue to qualify as a REMIC or the
imposition of a tax under the REMIC Provisions on any income of the Upper REMIC
or Lower REMIC.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and proposed, temporary and final regulations and published rulings, notices
and announcements promulgated thereunder, as the foregoing may be in effect
from time to time.
"Remittance Report": A report prepared by the Master Servicer
providing the information set forth in Section 4.03.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code, which income,
subject to the terms and conditions of that Section of the Code in its present
form, does not include:
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(i) except as provided in Section 856(d)(4) or (6) of the
Code, any amount received or accrued, directly or indirectly, with
respect to such REO Property, if the determination of such amount
depends in whole or in part on the income or profits derived by any
Person from such property (unless such amount is a fixed percentage or
percentages of receipts or sales and otherwise constitutes Rents from
Real Property);
(ii) any amount received or accrued, directly or indirectly,
from any Person if any Trust Fund owns directly or indirectly
(including by attribution) a 10 percent or greater interest in such
Person determined in accordance with Sections 856(d)(2)(B) and (d)(5)
of the Code;
(iii) any amount received or accrued, directly or indirectly,
with respect to such REO Property if any Person Directly Operates such
REO Property, other than by providing services that are not considered
to be rendered to the occupants of such REO Property within the
meaning of Treasury Regulation Section 1.512(b)-1(c)(5);
(iv) any amount charged for services that are not customarily
furnished in connection with the rental of property to tenants in
buildings of a similar class in the same geographic market as such REO
Property (whether or not such charges are separately stated); and
(v) rent attributable to personal property unless such
personal property is leased under, or in connection with, the lease of
such REO Property and, for any taxable year of any Trust Fund, such
rent is no greater than 15 percent of the total rent received or
accrued under, or in connection with, the lease.
"REO Acquisition": The acquisition by the Master Servicer on behalf of
the Trustee for the benefit of the Certificateholders of any REO Property
pursuant to Section 3.15.
"REO Disposition": The final receipt by or on behalf of the Master
Servicer of all Insurance Proceeds, Liquidation Proceeds, REO Proceeds and
other payments and recoveries (including proceeds of a final sale) which the
Master Servicer expects to be finally recoverable from the sale or other
disposition of the REO Property.
"REO Imputed Interest": As to any REO Property, for any period, an
amount equivalent to interest (at the Mortgage Rate that would have been
applicable to the related Mortgage Loan had it been outstanding) on the unpaid
principal balance of the Mortgage Loan as of the date of acquisition thereof
(as such balance is reduced pursuant to Section 3.15 by any income from the REO
Property treated as a recovery of principal).
"REO Proceeds": Proceeds, net of directly related expenses, received
in respect of any REO Property (including, without limitation, proceeds from
the rental of the related Mortgaged Property and of any REO Disposition), which
proceeds are required to be deposited into the Custodial Account as and when
received.
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"REO Property": A Mortgaged Property acquired by the Master Servicer
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Repurchase Price": An amount at least equal to the aggregate Security
Principal Balance of the Securities plus accrued interest on the Securities
through the end of the month preceding the month in which the Optional
Termination Date occurs.
"Request for Release": A release signed by a Servicing Officer, in the
form of Exhibits D-1 or D-2 attached hereto.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman
or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any Vice President, any assistant Vice President, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer, any assistant trust officer, the
controller and any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Rule 144A": Rule 144A under the Securities Act of 1933, as amended,
as in effect from time to time.
"Securities": As defined in the Series Supplement.
"Security Principal Balance": As defined in the Series Supplement.
"Seller": CMC Securities Corporation IV, a Delaware corporation, or
its successor in interest.
Series: A Series of Certificates (which may consist of a single
Certificate) evidencing a beneficial interest in the Trust Fund for such
Series. The Series is indicated on the face of a Certificate. The Series that
are the subject of this Agreement are Series 1997-NAMC 3-A and Series 1997-NAMC
3-B.
"Series Supplement": The Series 1997-NAMC 3 Supplement dated as of
September 1, 1997, by and between CMC Securities Corporation IV, as Issuer (in
such capacity, the "Issuer"), and The First National Bank of Chicago, as
Indenture Trustee, which Series Supplement supplements the Indenture.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in connection with a default, delinquency
or other unanticipated event by the Master Servicer in the performance of its
servicing obligations, including, but not limited to, the cost
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of (i) the preservation, restoration and protection of a Mortgaged Property,
(ii) any enforcement or judicial proceedings, including foreclosures, (iii) the
management and liquidation of any REO Property and (iv) compliance with the
obligations under the second paragraph of Section 3.01, Section 3.09 and
Section 3.25.
"Servicing Fee": As to each Mortgage Loan, an amount, payable out of
any payment of interest on the Mortgage Loan, equal to interest at the
applicable Servicing Fee Rate on the Stated Principal Balance of such Mortgage
Loan for the calendar month preceding the month in which the payment is due
(alternatively, in the event such payment of interest accompanies a Principal
Prepayment in full made by the Mortgagor, interest for the number of days
covered by such payment of interest computed on the basis of a 360 day year
consisting of twelve, 30 day months).
"Servicing Fee Rate": With respect to each Mortgage Loan, the per
annum rate of [0.26]%.
"Servicing Officer": Any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loans,
whose name appears on a list of servicing officers furnished to the Trustee by
the Master Servicer, as such list may from time to time be amended.
"Servicing Transfer": The transfer of servicing responsibilities to a
successor Master Servicer pursuant to Section 7.01 of this Agreement.
"Single Certificate": A Certificate of any Series evidencing an
initial Certificate Principal Balance equal to $1,000.
"Special Hazard Amount": On each anniversary of the Cut-off Date, the
Special Hazard Amount will be reduced, but not increased, to an amount equal to
the lesser of (1) the greatest of (a) the aggregate principal balance of the
Mortgage Loans located in the single California zip code area containing the
largest aggregate Stated Principal Balance of the Mortgage Loans, (b) 1% of the
aggregate Stated Principal Balance of the Mortgage Loans and (c) twice the
Stated Principal Balance of the largest single Mortgage Loan, in each case
calculated as of the Due Date in the immediately preceding month and (2) the
Special Hazard Amount as of the Cut-off Date (being the amount under (1) above
calculated as of the Cut-off Date) as reduced by the Special Hazard Losses
allocated to the Certificates since the Cut-off Date.
"Special Hazard Loss": Any Realized Loss suffered by a Mortgaged
Property on account of direct physical loss, but not including (i) any loss of
a type covered by a hazard insurance policy or a flood insurance policy
required to be maintained in respect to such Mortgaged Property pursuant to
Section 3.13 to the extent of the amount of such loss covered thereby, or (ii)
any Extraordinary Loss.
"Special Servicing Agreement": The special servicing and collateral
fund agreement substantially in the form of Exhibit H hereto entered into by
the Master Servicer in accordance with Section 3.26.
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"Standard & Poor's": Standard & Poor's Ratings Group, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or its successor in interest.
"Startup Day": The day designated as such pursuant to Article X
hereof.
"Stated Principal Balance": With respect to any Mortgage Loan or
related REO Property at any given time, (i) the principal balance of the
Mortgage Loan outstanding as of the Cut-off Date, after application of
principal payments due on or before such date, whether or not received, minus
(ii) the sum of (a) the principal portion of the Monthly Payments due with
respect to such Mortgage Loan or REO Property during each Due Period ending
prior to the most recent Distribution Date which were distributed or with
respect to which an Advance was distributed, and (b) all Principal Prepayments
with respect to such Mortgage Loan or REO Property, and all Insurance Proceeds,
Liquidation Proceeds and net income from a REO Property to the extent applied
by the Master Servicer as recoveries of principal in accordance with Section
3.15 with respect to such Mortgage Loan or REO Property, which were distributed
pursuant to Section 4.01 on any previous Distribution Date, and (c) any
Realized Loss with respect thereto allocated pursuant to Section 7 of the
Series Supplement for any previous Distribution Date.
"Sub-Servicer": Any Person with which the Master Servicer has entered
into a SubServicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02; provided, however, that the term
"Sub-Servicer" shall not include any agent on behalf of the Master Servicer
solely with respect to tax collections and provided further that
notwithstanding the employment of any such agent, nothing herein shall relieve
the Master Servicer from its obligations and liabilities to the
Certificateholders and the Trustee for servicing and administering the Mortgage
Loans.
"Sub-Servicer Remittance Date": The 18th day of each month, or if such
day is not a Business Day, the immediately preceding Business Day.
"Sub-Servicing Account": An account established by a Sub-Servicer
which meets the requirements set forth in Section 3.08 and is otherwise
acceptable to the Master Servicer.
"Sub-Servicing Agreement": The written contract between the Master
Servicer and a SubServicer and any successor Sub-Servicer relating to servicing
and administration of certain Mortgage Loans as provided in Section 3.02.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Certificate.
"Transferor": Any Person who is disposing by Transfer of any Ownership
Interest in a Certificate.
"Trust": The trust established pursuant to the terms of this
Agreement.
"Trust Fund": With respect to a Series, the pool of assets subject
hereto in which the Certificates of such Series represent a beneficial
interest, constituting the primary trust created
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hereby and to be administered hereunder with respect to such Series, consisting
of: (i) the Mortgage Loans in the related Loan Group (exclusive of payments of
principal and interest due on or before the Cut-off Date, if any) as from time
to time are subject to this Agreement and all payments under and proceeds of
such Mortgage Loans (exclusive of any prepayment fees and late payment charges
received on such Mortgage Loans), together with all documents included in the
related Mortgage File, subject to Section 2.01; (ii) such funds or assets as
from time to time are deposited in the Custodial Account, the Excess Proceeds
Account or the Certificate Account, each with respect to such Series; (iii) any
REO Property relating to a defaulted Mortgage Loan in the related Loan Group;
and (iv) the Primary Hazard Insurance Policies, if any, and all other Insurance
Policies with respect to the Mortgage Loans in the related Loan Group. The
Trust Fund relating to Series 1997-3-A shall be a Trust Fund that includes the
Mortgage Loans identified as Group 1 on Exhibit F hereto, and the Trust Fund
relating to Series 1997-3-B shall be a Trust Fund that includes the Mortgage
Loans identified as Group 2 on Exhibit F hereto. Reference to holders of
Certificates evidencing Fractional Undivided Interests aggregating not less
than a certain percentage of the Trust Fund of a particular Series means
holders of Certificates the aggregate Fractional Undivided Interests of such
Series of which, as indicated on the face thereof, is not less than such
percentage.
"Trustee": The First National Bank of Chicago, or its successor in
interest, or any successor trustee appointed as herein provided.
"Uninsured Cause": Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies or flood insurance policies
required to be maintained pursuant to Section 3.13.
"United States": As defined in Section 7701 of the Code or successor
provisions.
"Upper REMIC": As defined in the Series Supplement.
II CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
2.01 Conveyance of Mortgage Loans.
With respect to each Series, the Seller, as of the Closing Date, and
concurrently with the execution and delivery hereof, does hereby assign,
transfer, sell, set over and otherwise convey to the Trustee for the benefit of
the Certificateholders, without recourse, all the right, title and interest of
the Seller in and to the Loan Group related to such Series (exclusive of any
prepayment fees and late payment charges received thereon) and all other assets
included or to be included in any Trust Fund for each such Series. Such
assignment includes all principal and interest received by the Master Servicer
on or with respect to the applicable Mortgage Loans (other than payment of
principal and interest due on or before the Cut-off Date).
In connection with such transfer and assignment, the Seller shall
deliver (or cause to be delivered) to, and deposit (or cause to be deposited)
with the Trustee on or before the Closing Date, the following documents or
instruments:
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(i) the original Mortgage Note endorsed "Pay to the order
of The First National Bank of Chicago, as trustee,
without recourse," and signed in the name of the Loan
Seller by an authorized officer, with all intervening
endorsements showing a complete chain of title from
the originator to the Loan Seller. If the Mortgage
Loan was acquired by the Loan Seller in a merger, the
endorsement must be by "[Loan Seller], successor by
merger to the [name of predecessor]". If the Mortgage
Loan was acquired or originated by the Loan Seller
while doing business under another name, the
endorsement must be by "[Loan Seller] formerly known
as [previous name]";
(ii) the original Mortgage with evidence of recording
thereon, or a copy thereof certified by the public
recording office in which such Mortgage has been
recorded or, if the original Mortgage has not been
returned from the applicable public recording office,
a true certified copy, certified by the Loan Seller,
of the original Mortgage together with a certification
of the Loan Seller certifying that the original
Mortgage has been delivered for recording in the
appropriate public recording office of the
jurisdiction in which the Mortgaged Property is
located;
(iii) a duly executed original Assignment of the Mortgage
in recordable form to "The First National Bank of
Chicago, as trustee for the holders of CMC Securities
Corporation IV, Mortgage Pass-Through Certificates,"
Series 1997-NAMC 3;
(iv) originals of all recorded intervening Assignments of
Mortgage, or copies thereof, certified by the public
recording office in which such Assignments of Mortgage
have been recorded showing a complete chain of title
from the originator to the Loan Seller, with evidence
of recording thereon, or a copy thereof certified by
the public recording office in which such Assignment
of Mortgage has
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been recorded or, if the original Assignment of
Mortgage has not been returned from the applicable
public recording office, a true certified copy,
certified by the Loan Seller, of the original
Assignment of Mortgage together with a certification
certifying that the original Assignment of Mortgage
has been delivered for recording in the appropriate
public recording office of the jurisdiction in which
the Mortgaged Property is located;
(v) the original policy of title insurance, including
riders and endorsements thereto, or a certified copy
of such policy certified by the Loan Seller, or if the
policy has not yet been issued, a written commitment
or interim binder or preliminary report of title
issued by the title insurance or escrow company;
(vi) originals, or copies thereof certified by the public
recording office in which such documents have been
recorded, of each assumption, extension, modification,
written assurance or substitution agreements, if
applicable, or if the original of such document has
not been returned from the applicable public recording
office, a true certified copy, certified by the Loan
Seller, of such original document together with
certificate of Loan Seller certifying the original of
such document has been delivered for recording in the
appropriate recording office of the jurisdiction in
which the Mortgaged Property is located;
(vii) if the Mortgage Note or Mortgage or any other
material document or instrument relating to the
Mortgage Loan has been signed by a person on behalf of
the Mortgagor, the original power of attorney or other
instrument or a certified copy of such certified by
the Loan Seller, that authorized and empowered such
person to sign bearing evidence that such instrument
has been recorded, if so required in the appropriate
jurisdiction where the Mortgaged Property is located
(or, in lieu thereof, a duplicate or conformed copy of
such
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instrument, together with a certificate of receipt
from the recording office, certifying that such copy
represents a true and complete copy of the original
and that such original has been or is currently
submitted to be recorded in the appropriate
governmental recording office of the jurisdiction
where the Mortgaged Property is located), or if the
original power of attorney or other such instrument
has not been returned from the applicable public
recording office, a true certified copy, certified
by the Loan Seller, of the original power of
attorney or other instrument together with a
certification certifying that the original power of
attorney or other instrument has been delivered for
recording in the appropriate public recording office
of the jurisdiction in which the Mortgaged Property
is located; and
(viii) evidence of the original or certified to be true
copy, certified by the Loan Seller, of the Primary
Mortgage Insurance Policy, if required.
If the Seller cannot deliver the original recorded Mortgage Loan
Documents or the original policy of title insurance, including riders and
endorsements thereto, on the Closing Date, the Loan Seller will, promptly upon
receipt of notice thereof and in any case not later than 180 days from the
Closing Date, deliver such original documents, including original recorded
documents, to the Trustee (unless the Loan Seller is delayed in making such
delivery by reason of the fact that such documents shall not have been returned
by the appropriate recording office). If delivery is not completed within 180
days solely due to delays in making such delivery by reason of the fact that
such documents shall not have been returned by the appropriate recording
office, the Loan Seller is required to deliver such documents to the Trustee
within such time period as specified in an officer's certificate of the Loan
Seller. In the event that documents have not been received by the date
specified in such officer's certificate of the Loan Seller, a subsequent
officer's certificate is required to be delivered by the Loan Seller by such
date specified in the prior officer's certificate of the Loan Seller, stating a
revised date for receipt of documentation. The procedure shall be repeated
until the documents have been received and delivered. The Loan Seller shall
continue to use its best efforts to effect delivery within 270 days of the
Closing Date. Upon receipt of any such document from the Loan Seller, the
Seller shall promptly deliver such document to the Trustee.
The Loan Seller shall pay all initial recording fee for the
Assignments and any other fees in connection with the transfer of all original
documents to the Trustee. The Loan Seller shall prepare, in recordable form,
all Assignments necessary to assign the Mortgage Loans to the Trustee on behalf
of the Trust, and as promptly as practicable after the Closing Date, the Loan
Seller shall cause to be delivered to the appropriate public office for
recordation in the real property records the Assignment
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referred to in clause (iii) and to the extent necessary in clause (iv) of this
Section 2.01. While such Assignment to be recorded is being recorded, the
Trustee shall retain a photocopy of such Assignment. If any Assignment is lost
or returned unrecorded to the Trustee because of any defect therein, the Loan
Seller shall prepare a substitute Assignment or cure such defect, as the case
may be, and the Trustee shall cause such Assignment to be recorded in
accordance with this paragraph. If any Assignment is lost or returned
unrecorded because of any Trustee error, the Trustee shall cause such
Assignment to be recorded in accordance with this paragraph at its expense.
All original documents relating to the Mortgage Loans which are not
delivered to the Trustee are and shall be held by the Master Servicer in trust
for the benefit of the Trustee on behalf of the Certificateholders.
Except as may otherwise expressly be provided herein, neither the
Seller, the Loan Seller, the Master Servicer nor the Trustee shall (and the
Master Servicer shall ensure that no Sub-Servicer shall) assign, sell, dispose
of or transfer any interest in any Trust Fund or any portion thereof, or permit
any Trust Fund or any portion thereof to be subject to any lien, claim,
mortgage, security interest, pledge or other encumbrance of, any other Person.
It is intended that the conveyance of the Mortgage Loans in each Loan
Group by the Seller to the Trustee as provided in this Section be, and be
construed as, a sale of the Mortgage Loans by the Seller to the Trustee for the
benefit of the Certificateholders of the related Series. It is, further, not
intended that such conveyance be deemed a pledge of the Mortgage Loans by the
Seller to the Trustee to secure a debt or other obligation of the Seller.
However, in the event that any Mortgage Loans are held to be property of the
Seller, or if for any reason this Agreement is held or deemed to create a
security interest in any Mortgage Loans, then it is intended that, (a) this
Agreement shall also be deemed to be a security agreement within the meaning of
Articles 8 and 9 of the New York Uniform Commercial Code and the Uniform
Commercial Code of any other applicable jurisdiction; (b) the conveyance
provided for in this Section shall be deemed to be a grant by the Seller to the
Trustee, for the benefit of the Certificateholders of the related Series, of a
security interest in all of the Seller's right (including the power to convey
title thereto), title and interest, whether now owned or hereafter acquired, in
and to (A) such Mortgage Loans, including the related Mortgage Notes, the
related Mortgages, any related insurance policies and all other documents in
the related Mortgage Files, (B) all amounts payable to the holders of such
Mortgage Loans in accordance with the terms thereof and (C) all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including without limitation all amounts from
time to time held or invested in the related Certificate Account or the
Custodial Account, whether in the form of cash, instruments, securities or
other property; (c) the possession by the Trustee or its agent of the related
Mortgage Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" or possession by a purchaser or a person designated by
such secured party, for purposes of perfecting the security interest pursuant
to the New York Uniform Commercial Code and the Uniform Commercial Code of any
other applicable jurisdiction (including, without limitation, Sections 9-305,
8-313 or 8-321 thereof); and (d) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts
or confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Trustee for the purpose of perfecting such security interest
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under applicable law. The Seller and the Trustee shall, to the extent
consistent with this Agreement, take such actions as may be necessary to ensure
that, if this Agreement were deemed to create a security interest in any
Mortgage Loans, such security interest would be deemed to be a perfected
security interest of first priority, in favor of the Trustee for the
Certificateholders of the related Series, under applicable law and will be
maintained as such throughout the term of the Agreement.
2.02 Acceptance of any Trust Fund by the Trustee.
The Trustee acknowledges receipt (subject to any exceptions noted in
the Initial Certification described below) of the documents referred to in
Section 2.01 above and all other assets included in each Trust Fund and
declares that it holds and will hold such documents and the other documents
delivered to it constituting the Mortgage Files, and that it holds or will hold
such other assets included in each Trust Fund (to the extent delivered or
assigned to the Trustee), in trust for the exclusive use and benefit of all
present and future Certificateholders of the related Series.
The Trustee agrees, for the benefit of the Certificateholders, to
review each Mortgage File relating to a Mortgage Loan in the related Loan Group
on or before the Closing Date to ascertain that all documents required to be
delivered to it are in its possession, and the Trustee agrees to execute and
deliver to the Seller, the Loan Seller and the Master Servicer on the Closing
Date an Initial Certification in the form annexed hereto as Exhibit B to the
effect that, as to each Mortgage Loan listed in the applicable related Mortgage
Loan Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), (i) all documents required to be delivered to it pursuant to
this Agreement with respect to such Mortgage Loan are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
relate to such Mortgage Loan and (iii) based on its examination and only as to
the foregoing documents, the information set forth in items (i) - (vi), (xiv)
and (xv) of the definition of the "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. Neither the Trustee nor the Master
Servicer shall be under any duty to determine whether any Mortgage File should
include any of the documents specified in clause (vi) of Section 2.01. Neither
the Trustee nor the Master Servicer shall be under any duty or obligation to
inspect, review or examine said documents, instruments, securities or other
papers to determine that the same are genuine, enforceable or appropriate for
the represented purpose or that they have actually been recorded or that they
are other than what they purport to be on their face.
Within 90 days of the Closing Date the Trustee shall deliver to the
Seller, the Loan Seller and the Master Servicer Final Certifications in the
form annexed hereto as Exhibit C evidencing the completeness of the Mortgage
Files, with any applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and preparing the
certifications referred to above the Trustee finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect (but only after giving effect to any time period set forth in
Section 2.01), the Trustee shall promptly notify the Loan Seller, the Master
Servicer and the Seller. The Trustee shall promptly notify the Seller of such
defect and request that the Loan Seller cure any such defect within 60 days
from the date on which the Loan Seller was notified of such defect, and if the
Loan Seller does not cure such defect in all material respects during such
period, the Trustee shall request that the Loan Seller purchase such Mortgage
Loan from the Trust Fund on
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behalf of the Certificateholders of the applicable Series at the Purchase Price
within 90 days after the date on which the Loan Seller was notified of such
defect. It is understood and agreed that the obligation of the Loan Seller to
cure a material defect in, or purchase any Mortgage Loan as to which a material
defect in a constituent document exists shall constitute the sole remedy
respecting such defect available to Certificateholders of the applicable Series
or the Trustee on behalf of such Certificateholders. The Purchase Price for the
purchased Mortgage Loan shall be deposited or caused to be deposited upon
receipt by the Master Servicer in the Custodial Account with respect to the
applicable Series and, upon receipt by the Trustee of written notification of
such deposit signed by a Servicing Officer, the Trustee shall release or cause
to be released to the Loan Seller (or its designee) the related Mortgage File
and shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as the Loan Seller (or its designee) shall require
as necessary to vest in the Loan Seller (or its designee) ownership of any
Mortgage Loan released pursuant hereto and at such time the Trustee shall have
no further responsibility with respect to the related Mortgage File.
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Seller.
(a) The Master Servicer hereby represents and warrants to and
covenants with the Seller, the Loan Seller and the Trustee for the
benefit of Certificateholders that:
(i) The Master Servicer is, and throughout the term hereof
shall remain, a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware (except as otherwise permitted
pursuant to Section 6.02), the Master Servicer is, and
shall remain, in compliance with the laws of each
state in which any Mortgaged Property is located to
the extent necessary to perform its obligations under
this Agreement, and the Master Servicer is, and shall
remain, approved to sell mortgage loans to and service
mortgage loans for FNMA and FHLMC;
(ii) The execution and delivery of this Agreement by the
Master Servicer, and the performance and compliance
with the terms of this Agreement by the Master
Servicer, will not violate the Master Servicer's
charter 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 agreement or other instrument to
which it is a party or which is applicable to it or
any of its assets;
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(iii) The Master Servicer has the full power and authority
to enter into and consummate all transactions
contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this
Agreement, and has duly executed and delivered this
Agreement;
(iv) This Agreement, assuming due authorization, execution
and delivery by the Seller and the Trustee,
constitutes a valid, legal and binding obligation of
the Master Servicer, enforceable against the Master
Servicer in accordance with the terms hereof, subject
to (A) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting
the enforcement of creditors' rights generally, and
(B) general principles of equity, regardless of
whether such enforcement is considered in a proceeding
in equity or at law;
(v) The Master Servicer is not in violation of, and its
execution and delivery of this Agreement and its
performance and compliance with the terms of this
Agreement will not constitute a violation of, any law,
any order or decree of any court or arbiter, or any
order, regulation or demand of any federal, state or
local governmental or regulatory authority, which
violation is likely to affect materially and adversely
either the ability of the Master Servicer to perform
its obligations under this Agreement or the financial
condition of the Master Servicer;
(vi) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master
Servicer which would prohibit its entering into this
Agreement or performing its obligations under this
Agreement or is likely to affect materially and
adversely either the ability of the Master Servicer to
perform its obligations under this Agreement or the
financial condition of the Master Servicer;
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(vii) The Master Servicer will comply in all material
respects in the performance of this Agreement with all
reasonable rules and requirements of each insurer
under each Insurance Policy necessary to maintain
coverage thereunder;
(viii) The execution of this Agreement and the performance
of the Master Servicer's obligations hereunder do not
require any license, consent or approval of any state
or federal court, agency, regulatory authority or
other governmental body having jurisdiction over the
Master Servicer, other than such as have been
obtained; and
(ix) No written information, certificate of an officer,
statement furnished in writing or report delivered to
the Seller, any affiliate of the Seller or the Trustee
by the Master Servicer will, to the knowledge of the
Master Servicer, contain any untrue statement of a
material fact or omit a material fact necessary to
make the information, certificate, statement or report
not misleading.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.03(a) shall survive the execution and
delivery of this Agreement, and shall inure to the benefit of the Seller, the
Loan Seller, the Trustee and the Certificateholders. Upon discovery by the
Seller, the Trustee, the Loan Seller or the Master Servicer of a breach of any
of the foregoing representations, warranties and covenants that materially and
adversely affects the interests of the Seller or the Trustee, the party
discovering such breach shall give prompt written notice to the other parties.
(b) The Seller hereby represents and warrants to the Master
Servicer and the Trustee for the benefit of
Certificateholders of each Series that as of the Closing
Date, assuming that (i) the representation of the Loan
Seller set forth in Section 2.04(b)(xiii) hereof and (ii)
the representations and warranties made by DLJ Mortgage
Capital, Inc. and Capstead Capital Corporation pursuant to
the respective Assignment and Assumption Agreements are
both true and correct, then immediately prior to the
assignment of the Mortgage Loans in the related Loan Group
to the Trustee, the Seller had good and marketable title
to, and was the sole owner of, each Mortgage Loan free and
clear of any pledge, lien, encumbrance or security interest
(other than rights to servicing and related compensation)
and such
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assignment validly transfers ownership of the Mortgage
Loans to the Trustee free and clear of any pledge, lien,
encumbrance or security interest. It is understood and
agreed that the representations and warranties set forth in
this Section 2.03(b) shall survive delivery of the
respective Mortgage Files to the Trustee.
Upon discovery by either the Seller, the Master Servicer, the Loan
Seller or the Trustee of a breach of any representation or warranty set forth
in this Section 2.03 which materially and adversely affects the interests of
the applicable Certificateholders in any Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties.
2.04. Representations and Warranties of the Loan Seller.
(a) The Loan Seller hereby represents and warrants to and
covenants with the Seller, the Master Servicer and the
Trustee for the benefit of Certificateholders that:
(i) The Loan Seller is a corporation duly
organized, validly existing and in good
standing under the laws of the State of
Delaware;
(ii) The execution and delivery of this
Agreement by the Loan Seller, and the
performance and compliance with the terms
of this Agreement by the Loan Seller, will
not violate the Loan Seller's charter 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
agreement or other instrument to which it
is a party or which is applicable to it or
any of its assets;
(iii) The Loan Seller has the full power and
authority to enter into and consummate all
transactions contemplated by this
Agreement, has duly authorized the
execution, delivery and performance of this
Agreement, and has duly executed and
delivered this Agreement;
(iv) This Agreement, assuming due authorization,
execution and delivery by the Seller and
the Trustee, constitutes a valid, legal and
binding obligation of the Loan Seller,
enforceable against the Loan Seller in
accordance with the
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terms hereof, subject to (A) applicable
bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the
enforcement of creditors' rights generally,
and (B) general principles of equity,
regardless of whether such enforcement is
considered in a proceeding in equity or at
law;
(v) The Loan Seller is not in violation of, and
its execution and delivery of this
Agreement and its performance and
compliance with the terms of this Agreement
will not constitute a violation of, any
law, any order or decree of any court or
arbiter, or any order, regulation or demand
of any federal, state or local governmental
or regulatory authority, which violation is
likely to affect materially and adversely
either the ability of the Loan Seller to
perform its obligations under this
Agreement or the financial condition of the
Loan Seller;
(vi) No litigation is pending or, to the best of
the Loan Seller's knowledge, threatened
against the Loan Seller which would
prohibit its entering into this Agreement
or performing its obligations under this
Agreement or is likely to affect materially
and adversely either the ability of the
Loan Seller to perform its obligations
under this Agreement or the financial
condition of the Loan Seller;
(vii) The execution of this Agreement and the
performance of the Loan Seller's
obligations hereunder do not require any
license, consent or approval of any state
or federal court, agency, regulatory
authority or other governmental body having
jurisdiction over the Loan Seller, other
than such as have been obtained; and
(viii) No information, certificate of an officer,
statement furnished in writing or report
delivered to the Seller, any affiliate of
the Seller or the Trustee by the Loan
Seller will, to the knowledge of the Loan
Seller, contain
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any untrue statement of a material fact or
omit a material fact necessary to make the
information, certificate, statement or
report not misleading.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.04(a) shall survive the execution and
delivery of this Agreement, and shall inure to the benefit of the Seller, the
Trustee, the Master Servicer and the Certificateholders. Upon discovery by the
Seller, the Trustee, the Loan Seller or the Master Servicer of a breach of any
of the foregoing representations, warranties and covenants that materially and
adversely affects the interests of the Seller, the Master Servicer or the
Trustee, the party discovering such breach shall give prompt written notice to
the other parties.
(b) The Loan Seller hereby represents and warrants to
and covenants with the Seller, the Master Servicer
and the Trustee for the benefit of the
Certificateholders of each Series that:
(A) with respect to each Mortgage Loan in the related Loan Group,
as of the Closing Date or as of such date specifically
provided herein:
(i) The consummation of the transactions
contemplated by this Agreement is in the
ordinary course of business of the Loan
Seller, and the transfer, assignment and
conveyance of the related Mortgage Note and
the Mortgage by the Loan Seller pursuant to
the Loan Sale Agreement were not subject to
bulk transfer or any similar statutory
provisions in effect in any applicable
jurisdiction;
(ii) The Loan Seller used no selection
procedures (other than those set forth on
the applicable Mortgage Loan Schedule) that
identified the Mortgage Loan as being less
desirable or valuable than other comparable
mortgage loans in the Loan Seller's
portfolio;
(iii) The information set forth in the applicable
Mortgage Loan Schedule is true, complete
and correct;
(iv) All payments due prior to the Cut-off Date
for such Mortgage Loan have been made as of
the Closing Date, the Mortgage Loan is not
delinquent in payment more than 30 days and
has
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not been dishonored; the Loan Seller has
not advanced funds for payments of
principal or interest, or induced,
solicited or knowingly received any advance
of funds for payments of principal or
interest from a party other than the owner
of the Mortgaged Property subject to the
Mortgage, directly or indirectly, for the
payment of any amount required by the
Mortgage Loan for payments of principal or
interest; there has been no more than one
delinquency during the preceding
twelve-month period and such delinquency
did not last more than 30 days;
(v) There are no material defaults in complying
with the terms of the Mortgage, and 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 escrow funds have been
established in an amount sufficient to pay
for every such escrowed item which remains
unpaid and which has been assessed but is
not yet due and payable;
(vi) The terms of the Mortgage Note and the
Mortgage have not been impaired, waived,
altered or modified in any respect, except
by written instruments which have been
recorded to the extent any such recordation
is required by law, or, necessary to
protect the interest of the Trust and the
related Certificateholders. No instrument
of waiver, alteration or modification has
been executed, and no Mortgagor has been
released, in whole or in part, from the
terms thereof except in connection with an
assumption agreement and which assumption
agreement is part of the Mortgage File and
the terms of which are reflected in the
applicable Mortgage Loan Schedule; the
substance of any such waiver, alteration or
modification has been approved by the
issuer of any related Primary Mortgage
Insurance Policy and title insurance
policy, to the extent required by the
related policies;
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(vii) The Mortgage Note and the Mortgage are not
subject to any right of rescission,
set-off, counterclaim or defense,
including, without limitation, the defense
of usury, nor will the operation of any of
the terms of the Mortgage Note or the
Mortgage, or the exercise of any right
thereunder, render the Mortgage Note or
Mortgage unenforceable, in whole or in
part, or subject to any right of
rescission, set-off, counterclaim or
defense, including the defense of usury,
and no such right of rescission, set-off,
counterclaim or defense has been asserted
with respect thereto, other than any other
state laws providing "security first"
election of remedies, one action, and
anti-deficiency requirements; and to the
best of Loan Seller's knowledge, the
Mortgagor was not a debtor in any state or
federal bankruptcy or insolvency proceeding
at the time the Mortgage Loan was
originated;
(viii) All buildings or other customarily insured
improvements upon the Mortgaged Property
are insured by an insurer acceptable under
the FNMA Guides, against loss by fire,
hazards of extended coverage and such other
hazards as are provided for in the FNMA
Guides or by FHLMC, as well as all
additional requirements set forth in
Section 3.13 hereof. All such standard
hazard policies are in full force and
effect and on the date of origination
contained a standard mortgagee clause
naming the Loan Seller and its successors
in interest and assigns as loss payee and
such clause is still in effect and all
premiums due thereon have been paid. If
required by the Flood Disaster Protection
Act of 1973, as amended, the Mortgage Loan
is covered by a flood insurance policy
meeting the requirements of the current
guidelines of the Federal Insurance
Administration which policy conforms to
FNMA and FHLMC requirements. Such policy
was issued by an insurer acceptable under
FNMA or FHLMC guidelines. The Mortgage
obligates the Mortgagor thereunder to
maintain all such insurance at the
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Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes
the holder of the Mortgage to maintain such
insurance at the Mortgagor's cost and
expense and to seek reimbursement therefor
from the Mortgagor;
(ix) 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;
(x) The Mortgage has not been satisfied,
canceled or subordinated, in whole or in
part, or rescinded, and the Mortgaged
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.
Neither the Loan Seller nor any servicer
has waived the performance by the Mortgagor
of any action, if the Mortgagor's failure
to perform such action would cause the
Mortgage Loan to be in default, nor has the
Loan Seller nor any servicer waived any
default resulting from any action or
inaction by the Mortgagor;
(xi) The Mortgage is a valid, subsisting,
enforceable and perfected first lien on the
Mortgaged Property, including all buildings
on the Mortgaged Property and all
installations and mechanical, electrical,
plumbing, heating and air conditioning
systems affixed to such buildings, and all
additions, alterations and replacements
made at any time with respect to the
foregoing securing the Mortgage Note's
original principal balance. Such lien is
free and clear of all adverse claims, liens
and encumbrances having priority over the
first lien of the Mortgage, subject only to
Permitted Encumbrances. Any security
agreement,
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chattel mortgage or equivalent document
related to and delivered in connection with
the Mortgage Loan establishes and creates a
valid, subsisting, enforceable and
perfected first lien and first priority
security interest on the property described
therein, and the Loan Seller had the full
right to sell and assign the same to the
Seller;
(xii) The Mortgage Note and the related Mortgage
are original and genuine and each is the
legal, valid and binding obligation of the
maker thereof, enforceable in all respects
in accordance with its terms subject to
bankruptcy, insolvency and other laws of
general application affecting the rights of
creditors. The Loan Seller has taken all
action necessary to transfer such rights of
enforceability to the Seller and the Trust.
All parties to the Mortgage Note and the
Mortgage had the legal capacity to enter
into the Mortgage Loan and to execute and
deliver the Mortgage Note and the Mortgage.
The Mortgage Note and the Mortgage have
been duly and properly executed by such
parties. No fraud, error, omission,
misrepresentation, negligence or similar
occurrence with respect to a Mortgage Loan
has taken place on the part of Loan Seller
or the Mortgagor or, to the best of the
Loan Seller's knowledge, any other party
involved in the origination of the Mortgage
Loan. 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
improvements 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 or
are in the process of being paid, and the
Mortgagor is not entitled to any refund of
any amounts paid or due under the Mortgage
Note or Mortgage;
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(xiii) Immediately prior to the sale of the
Mortgage Loans pursuant to the Loan Sale
Agreement, the Loan Seller was the sole
owner of record and holder of the Mortgage
Loan and the indebtedness evidenced by the
Mortgage Note, and the Mortgage Loan,
including the Mortgage Note and the
Mortgage, were not subject to an assignment
or pledge, and the Loan Seller had good and
marketable title to and was the sole owner
thereof and had full right to transfer and
sell the Mortgage Loan to the Seller free
and clear of any encumbrance, equity, lien,
pledge, charge, claim or security interest
and had the full right and authority
subject to no interest or participation of,
or agreement with, any other party, to sell
and assign the Mortgage Loan pursuant to
the Loan Sale Agreement and such assignment
under the Loan Sale Agreement validly
transferred ownership of the Mortgage Loans
to the Seller free and clear of any
encumbrance, equity, participation
interest, lien, pledge, charge, claim or
security interest (other than Escrow Funds
due to overages, if any, to the extent
currently maintained in escrow accounts by
the Loan Seller). The Loan Seller has no
obligation or right to repurchase the
Mortgage Loan or substitute another
Mortgage Loan, except as provided in this
Agreement;
(xiv) Each Mortgage Loan is covered by an ALTA
lender's title insurance policy or other
generally acceptable form of policy or
insurance acceptable to FNMA or FHLMC,
issued by a title insurer acceptable to
FNMA or FHLMC and qualified to do business
in the jurisdiction where the Mortgaged
Property is located, insuring (subject to
any Permitted Encumbrances) the Loan
Seller, its successors and assigns, as to
the first priority lien of the Mortgage in
the original principal amount of the
Mortgage Loan. Such lender's title
insurance policy affirmatively insures
ingress and egress and against encroachment
by or upon the Mortgaged Property or any
interest
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therein. Where required by state law or
regulation, the Mortgagor has been given
the opportunity to choose the carrier of
the required mortgage title insurance. The
Loan Seller, its successors and assigns,
are the sole insureds of such lender's
title insurance policy, such title
insurance policy has been duly and validly
endorsed to the Trustee or the assignment
to the Trustee of the Loan Seller's
interest therein does not require the
consent of or notification to the insurer
and such lender's title insurance policy is
in full force and effect and will be in
full force and effect upon the consummation
of the transactions contemplated by this
Agreement. No claims have been made under
such lender's title insurance policy, and
no prior holder of the related Mortgage,
including the Loan Seller, has done, by act
or omission, anything which would impair
the coverage of such lender's title
insurance policy;
(xv) There is no default, breach, violation or
event of acceleration existing under the
Mortgage or the related Mortgage Note and
no event which, with the passage of time or
with notice and the expiration of any grace
or cure period, would constitute a default,
breach, violation or event permitting
acceleration; and neither the Loan Seller
nor any prior mortgagee has waived any
default, breach, violation or event
permitting acceleration;
(xvi) 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 law could give rise
to such liens) affecting the related
Mortgaged Property which are or may be
liens prior to or equal to the lien of the
related Mortgage;
(xvii) All improvements subject to the Mortgage
which were considered in determining the
appraised value of the Mortgaged Property
lie wholly within the boundaries and
building restriction lines of the Mortgaged
Property
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(and wholly within the project with respect
to a condominium unit) and no improvements
on adjoining properties encroach upon the
Mortgaged Property except those which are
insured against by the title insurance
policy referred to in clause (xiv) above
and all improvements on the property comply
with all applicable zoning and subdivision
laws and ordinances; as of the date of
origination of the Mortgage Loan the
Mortgage Property was, and to the best of
the Loan Seller's knowledge as of the
Closing Date the Mortgage Property is,
lawfully occupied under applicable law;
(xviii) The Mortgage Loan was originated by or for
the Loan Seller. The Mortgage Loan complies
with all the terms, conditions and
requirements of the Loan Seller's
underwriting standards in effect at the
time of origination of such Mortgage Loan.
The Mortgage Notes and Mortgages (exclusive
of any riders) are on forms acceptable to
FNMA or FHLMC. The Loan Seller is currently
selling loans to FNMA and/or FHLMC which
are the same document forms as the Mortgage
Notes and Mortgages (inclusive of any
riders); the Mortgage Loan bears interest
at a fixed rate as set forth in the
applicable Mortgage Loan Schedule, and
Monthly Payments under the Mortgage Note
are due and payable on the first day of
each month. The Mortgage contains the usual
and enforceable provisions (subject to any
applicable state, federal or local laws) of
the originator at the time of origination
for the acceleration of the payment of the
unpaid principal amount of the Mortgage
Loan if the related Mortgaged Property is
sold without the prior consent of the
mortgagee thereunder;
(xix) The Mortgaged Property is not subject to
any material damage by waste, fire,
earthquake, windstorm, flood or other
casualty and is in good repair. At
origination of the Mortgage Loan there was,
and there currently is, no proceeding
pending for the total or partial
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condemnation of the Mortgaged Property.
There have not been any condemnation
proceedings with respect to the Mortgaged
Property and, to the best of Loan Seller's
knowledge, there are no such proceedings
scheduled to commence at a future date;
(xx) The related Mortgage contains customary and
enforceable provisions such as to render
the rights and remedies of the holder
thereof adequate for the realization
against the Mortgaged Property of the
benefits of the security provided thereby,
including, (1) in the case of a Mortgage
designated as a deed of trust, by trustee's
sale, and (2) otherwise by judicial
foreclosure. There is no homestead or other
exemption available to the Mortgagor which
would interfere with the right to sell the
Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage;
(xxi) If the Mortgage constitutes a deed of
trust, a trustee, authorized and duly
qualified if required under applicable law
to act 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 the
Trust or any other Person to the trustee
under the deed of trust, except in
connection with a trustee's sale or
attempted sale after default by the
Mortgagor;
(xxii) The Mortgage File contains an appraisal of
the related Mortgaged Property signed prior
to the final approval of the mortgage loan
application by the appraiser, approved by
the Loan Seller, who, to the best of Loan
Seller's knowledge, had no interest, direct
or indirect, in the Mortgaged Property or
in any loan made on the security thereof,
and whose compensation is not affected by
the approval or disapproval of the Mortgage
Loan, and the appraisal and appraiser both
satisfy the requirements of FNMA or FHLMC
and Title XI of FIRREA and the regulations
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promulgated thereunder, all as in effect on
the date the Mortgage Loan was originated;
(xxiii) All parties which have had any interest in
the Mortgage, whether as mortgagee,
assignee, pledgee or otherwise, are (or,
during the period in which they held and
disposed of such interest, were) (A) in
compliance with any and all applicable
licensing requirements of the laws of the
state wherein the Mortgaged Property is
located, and (B) (1) organized under the
laws of such state, or (2) qualified to do
business in such state, or (3) federal
savings and loan associations or national
banks or a Federal Home Loan Bank or
savings bank having principal offices in
such state, or (4) not doing business in
such state;
(xxiv) The related Mortgage 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 above and such collateral does
not serve as security for any other
obligation;
(xxv) The Mortgagor has received all disclosure
materials required by applicable law with
respect to the making of such mortgage
loans;
(xxvi) The Mortgage Loan does not contain
"graduated payment" or "buy down" features;
(xxvii) The Mortgagor is not in bankruptcy and, to
the best of the Loan Seller's knowledge,
the Mortgagor is not insolvent; to the best
of the Loan Seller's knowledge there exist
no circumstances or conditions with respect
to the Mortgage, the Mortgaged Property,
the Mortgagor or the Mortgagor's credit
standing that could reasonably be expected
to cause investors to regard the Mortgage
Loan as an unacceptable investment, cause
the Mortgage Loan to become delinquent, or
materially adversely affect the value or
marketability of the Mortgage Loan;
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(xxviii) The Mortgage Loan is a fixed rate mortgage
loan. The Mortgage Loan has an original
term to maturity of not more than thirty
(30) years, with interest payable in
arrears on the first day of each month. The
Mortgage Note requires a monthly payment
which is sufficient to fully amortize the
original principal balance over the
original term thereof and to pay interest
at the related Mortgage Interest Rate. The
Mortgage Loan does not contain terms or
provisions which would result in negative
amortization.
(xxix) The origination and servicing practices
used by the Loan Seller, with respect to
the Mortgage Note and Mortgage have been
legal and in accordance with applicable
laws and regulations, and in all material
respects proper and prudent in the mortgage
origination and servicing business. With
respect to escrow deposits and payments
that the Loan Seller is entitled to
collect, all such payments are in the
possession of, or under the control of, the
Loan Seller, and there exist no
deficiencies in connection therewith for
which customary arrangements for repayment
thereof have not been made. All escrow
payments have been collected in full
compliance with state and federal law and
the provisions of the related Mortgage Note
and Mortgage. If the Mortgage Loan is the
subject of an escrow, escrow of funds is
not prohibited by applicable law. No escrow
deposits or other charges or payments due
under the Mortgage Note have been
capitalized under any Mortgage or the
related Mortgage Note;
(xxx) The Mortgage Loan did not have a
Loan-to-Value Ratio at origination greater
than 95%;
(xxxi) In the event the Mortgage Loan has an LTV
greater than 80%, the excess of the
principal
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balance of the Mortgage Loan over 80% of
the Collateral Value is and will be insured
as to payment defaults by a Primary
Mortgage Insurance Policy issued by a
Qualified Mortgage Insurer. All provisions
of such Primary Mortgage Insurance Policy
have been and are being complied with, such
policy is in full force and effect, and all
premiums due thereunder have been paid. No
action, inaction, or event has occurred and
no state of facts exists that has, or will
result in the exclusion from, denial of, or
defense to coverage. Subject to the
mortgagor's right to cancel under any
applicable federal or state law, any
Mortgage Loan subject to a Primary Mortgage
Insurance Policy obligates the Mortgagor
thereunder to maintain the Primary Mortgage
Insurance Policy and to pay all premiums
and charges in connection therewith. The
Mortgage Interest Rate for the Mortgage
Loan as set forth on the applicable
Mortgage Loan Schedule is net of any such
insurance premium;
(xxxii) The assignment of Mortgage is in recordable
form and is acceptable for recording under
the laws of the jurisdiction in which the
Mortgaged Property is located;
(xxxiii) If the Mortgage Loan is not secured by an
interest in a leasehold estate, the
Mortgaged Property is located in the state
identified in the applicable Mortgage Loan
Schedule and consists of a single parcel of
real property with a detached single family
residence erected thereon, or a townhouse,
or a two-to four-family dwelling, or an
individual condominium unit in a
condominium project, or an individual unit
in a planned unit development or a de
minimis planned unit development, provided,
however, that no residence or dwelling is a
single parcel of real property with a
cooperative housing corporation
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erected thereon, or a mobile home. To the
best of the Loan Seller's knowledge, as of
the date of origination, no portion of the
Mortgaged Property was used for commercial
purposes, and to the best of the Loan
Seller's knowledge, since the date of
origination, no portion of the Mortgaged
Property is used for commercial purposes;
(xxxiv) Principal payments on the Mortgage Loan
commenced no more than sixty (60) days
after the funds were disbursed in
connection with the Mortgage Loan. The
Mortgage Note is payable on the first day
of each month in equal monthly installments
of principal and interest, 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 (30)
years from commencement of amortization;
(xxxv) As of the date of origination of the
Mortgage Loan, the Mortgaged Property was
lawfully occupied under applicable law, and
all inspections, licenses and certificates
required to be made or issued with respect
to all occupied portions of the Mortgaged
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;
(xxxvi) If the Mortgaged Property is a condominium
unit or a planned unit development (other
than a de minimis planned unit development)
such condominium or planned unit
development project meets FNMA or FHLMC
eligibility requirements, or is located in
a condominium or planned
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unit development project which has received
project approval from FNMA or FHLMC;
(xxxvii) There is no pending action or proceeding
directly involving the Mortgaged Property
in which compliance with any environmental
law, rule or regulation is an issue; to the
best of Loan Seller's knowledge, there is
no violation of any environmental law, rule
or regulation with respect to the Mortgaged
Property;
(xxxviii) The Mortgagor has not notified the Loan
Seller, and the Loan Seller has no
knowledge of any relief requested or
allowed to the Mortgagor under the
Soldiers' and Sailors' Civil Relief Act of
1940;
(xxxix) The Mortgage Loan was not made in
connection with the construction or
rehabilitation of a Mortgaged Property;
(xl) The Mortgage Loan has been serviced in
compliance with those mortgage servicing
practices (including collection procedures)
of prudent mortgage banking institutions
which service mortgage loans of the same
type as such Mortgage Loan, and which are
in accordance with FNMA servicing practices
and procedures, for MBS pool mortgages, as
defined in the FNMA Guides including future
updates;
(xli) The Mortgage Loan was originated by a
mortgagee approved by the Secretary of
Housing and Urban Development pursuant to
sections 203 and 211 of the National
Housing Act, a savings and loan
association, a savings bank, a commercial
bank, credit union, insurance company or
similar institution
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which is supervised and examined by a
federal or state authority;
(xlii) With respect to any ground lease to which
the Mortgaged Property may be subject: (i)
the Mortgagor is the owner of a valid and
subsisting leasehold interest under such
ground lease; (ii) such ground lease is in
full force and effect, unmodified and not
supplemented by any writing or otherwise;
(iii) all rent, additional rent and other
charges reserved therein have been fully
paid to the extent payable as of the
Closing Date; (iv) the Mortgagor enjoys the
quiet and peaceful possession of the
leasehold estate, subject to any sublease;
(v) the Mortgagor is not in default under
any of the terms of such ground lease, and
there are no circumstances which, with the
passage of time or the giving of notice, or
both, would result in a default under such
ground lease; (vi) the lessor under such
ground lease is not in default under any of
the terms or provisions of such ground
lease on the part of the lessor to be
observed or performed; (vii) the lessor
under such ground lease has satisfied any
repair or construction obligations due as
of the Closing Date pursuant to the terms
of such ground lease; and (viii) the
execution, delivery and performance of the
Mortgage do not require the consent (other
than those consents which have been
obtained and are in full force and effect)
under, and will not contravene any
provision of or cause a default under, such
ground lease;
(xliii) The Mortgage Loan is a "qualified mortgage"
within the meaning of Section 860G(a)(3) of
the Code (without regard to Treasury
Regulations ss. 1.860G-2(f) or any similar
rule that provides that a defective
obligation is a qualified mortgage for a
temporary period);
(xliv) If the Mortgage Loan is secured by a
long-term residential lease, (1) the lessor
under the lease holds a fee simple interest
in the land;
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(2) the terms of such lease expressly
permit the mortgaging of the leasehold
estate, the assignment of the lease without
the lessor's consent and the acquisition by
the holder of the Mortgage of the rights of
the lessee upon foreclosure or assignment
in lieu of foreclosure or provide the
holder of the Mortgage with substantially
similar protections; (3) the terms of such
lease do not (a) allow the termination
thereof upon the lessee's default without
the holder of the Mortgage being entitled
to receive written notice of, and
opportunity to cure, such default, (b)
allow the termination of the lease in the
event of damage or destruction as long as
the Mortgage is in existence, (c) prohibit
the holder of the Mortgage from being
insured (or receiving proceeds of
insurance) under the hazard insurance
policy or policies relating to the
Mortgaged Property or (d) permit any
increase in rent by the lessor other than
pre-established increases set forth in the
lease; (4) the original term of such lease
is not less than 15 years; (5) the term of
such lease does not terminate earlier than
five years after the maturity date of the
Mortgage Note; and (6) the Mortgaged
Property is located in a jurisdiction in
which the use of leasehold estates in
transferring ownership in residential
properties is a widely accepted practice;
(B) with respect to the Mortgage Loans in the aggregate:
(i) Approximately 20% (by aggregate outstanding principal
balance of the Mortgage Loans as of the Cut-off Date) of the Mortgage
Loans are insured under Primary Mortgage Insurance Policies; and
(ii) No more than 1% of the Mortgaged Properties (by
outstanding principal balance of the related Mortgage Loans as of the
Cut-off Date) are secured by leasehold interests.
It is understood and agreed that the representations and warranties
set forth in this Section 2.04 are the only representations and warranties of
the Loan Seller made with respect to the Mortgage Loans that are enforceable by
the Trustee for the Certificateholders. Upon the discovery by the Seller, the
Master Servicer, the Loan Seller or the Trustee of a breach of any of the
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representations and warranties made in this Section 2.04(b) which materially
and adversely affects the interests of the Certificateholders of the applicable
Series in such Mortgage Loan and/or if the breach is one that, had it been
discovered before the Closing Date, would have prevented the Mortgage Loan from
being a "qualified mortgage" within the meaning of the REMIC Provisions, the
party discovering such breach shall give prompt written notice to the other
parties. The Loan Seller shall, within 90 days from the earlier of the date
that (x) the Seller, the Master Servicer or the Trustee notified the Loan
Seller of such breach, or (y) the Loan Seller discovered such breach, either
(i) cure such breach in all material respects or (ii) purchase such Mortgage
Loan from the applicable Trust Fund at the Purchase Price and in the manner set
forth in Section 2.02. Except as expressly set forth herein none of the
Trustee, the Seller or the Master Servicer (in its capacity as Master Servicer)
is under any obligation to discover any breach of the above mentioned
representations and warranties. It is understood and agreed that the obligation
of the Loan Seller to cure such breach or purchase such Mortgage Loan as to
which such a breach has occurred and is continuing shall constitute the sole
remedy respecting such breach available to the applicable Certificateholders or
the Trustee on behalf of such Certificateholders.
2.05. Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery of the Mortgage Files to it together with the assignment to it
of all other assets included in any Trust Fund for each Series, receipt of
which is hereby acknowledged. Concurrently with such delivery and in exchange
therefor, the Trustee, pursuant to the written request of the Seller executed
by an officer of the Seller has executed and caused to be authenticated and
delivered to, or upon the order of, the Seller the Certificates of each Series
in authorized denominations, each of which evidences ownership of the entire
Trust Fund with respect to such Series.
III ADMINISTRATION AND SERVICING OF THE TRUST FUND
3.01. Master Servicer to Act as Master Servicer.
The Master Servicer shall service and administer the Mortgage Loans in
accordance with this Agreement, the related Mortgage Notes and Mortgages and
Accepted Servicing Practices, and shall have full power and authority, acting
alone and/or through Sub-Servicers as provided in Section 3.02, to do or cause
to be done any and all things in connection with such servicing and
administration that it may deem necessary or desirable and consistent with
Accepted Servicing Practices and the terms of this Agreement. Without limiting
the generality of the foregoing, the Master Servicer in its own name or in the
name of a Sub-Servicer is hereby authorized and empowered by the Trustee when
the Master Servicer believes it appropriate in its best judgment, to (i)
execute and deliver, on behalf of the applicable Certificateholders and the
Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans and the Mortgaged
Properties, (ii) institute foreclosure proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the ownership of such properties, and (iii) hold
or cause to be held title to such properties, on behalf of the Trustee and the
applicable Certificateholders. The Master Servicer shall service and administer
the Mortgage Loans in accordance with applicable state and federal law and
shall provide to the
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Mortgagors any reports required to be provided to them thereby. Subject to
Section 3.16, the Trustee shall execute based on the written request of the
Master Servicer and furnish to the Master Servicer and any Sub-Servicer any
special or limited powers of attorney and other documents necessary or
appropriate to enable the Master Servicer and any Sub-Servicer to carry out
their servicing and administrative duties hereunder. The Trustee shall not be
liable for any action taken by the Master Servicer or any Sub-Servicer pursuant
to the application of such special or limited powers of attorney.
In accordance with the standards of the preceding paragraph, the
Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.09, and further
as provided in Section 3.11. No costs incurred by the Master Servicer or by
Sub-Servicers in effecting the payment of taxes and assessments on the
Mortgaged Properties shall, for the purpose of calculating distributions to
Certificateholders, be added to the amount owing under the related Mortgage
Loans, notwithstanding that the terms of such Mortgage Loans so permit.
Notwithstanding anything in this Agreement to the contrary, the Master
Servicer shall not (unless the Mortgagor is in default with respect to the
Mortgage Loan or such default is, in the judgment of the Master Servicer,
reasonably foreseeable) make or permit any modification, waiver or amendment of
any term of any Mortgage Loan that would both (i) effect an exchange or
reissuance of such Mortgage Loan under Section 1001 of the Code (or Treasury
regulations promulgated thereunder) and (ii) cause either the Lower REMIC or
the Upper REMIC to fail to qualify as a REMIC under the Code or the imposition
of any tax on "prohibited transactions" or "contributions" after the Startup
Day under the REMIC Provisions.
The relationship of the Master Servicer (and of any successor to the
Master Servicer under this Agreement) to the Trustee under this Agreement is
intended by the parties to be that of an independent contractor and not that of
a joint venture, partner or agent.
3.02. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers.
(a) The Master Servicer may enter into Sub-Servicing
Agreements with Sub-Servicers for the servicing and
administration of the Mortgage Loans and for the
performance of any and all other activities of the
Master Servicer hereunder. Each Sub-Servicer shall
be either (i) an institution the accounts of which
are insured by the FDIC or (ii) another entity that
engages in the business of originating or servicing
mortgage loans, and in either case shall be
authorized to transact business in the state or
states in which the related Mortgaged Properties it
is to service are situated, if and to the extent
required by applicable law to enable the
Sub-Servicer to perform its obligations hereunder
and under the Sub-Servicing Agreement, and in either
case shall be a FHLMC or FNMA approved mortgage
servicer. Any Subservicing Agreement entered into by
the Master Servicer shall include the provision that
such Subservicing Agreement may be
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immediately terminated without cause and without any
termination fee by any successor Master Servicer
hereunder. In addition, each SubServicing Agreement
must impose on the Sub-Servicer requirements
conforming to the provisions set forth in Section
3.08 and provide for servicing of the Mortgage Loans
consistent with the terms of this Agreement. With
the consent of the Trustee, which consent shall not
be unreasonably withheld, the Master Servicer and
the Sub-Servicers may enter into Sub-Servicing
Agreements and make amendments to the Sub-Servicing
Agreements or enter into different forms of
Sub-Servicing Agreements; provided, however, that
any such amendments or different forms shall be
consistent with and not violate the provisions of
this Agreement, and that no such amendment or
different form shall be made or entered into which
could be reasonably expected to be materially
adverse to the interests of the Certificateholders
of a Series, without the consent of the Holders of
Certificates of such Series evidencing Fractional
Undivided Interests aggregating not less than
662/3%.
(b) As part of its servicing activities hereunder, the
Master Servicer, for the benefit of the Trustee and
the Certificateholders, shall enforce the
obligations of each Sub-Servicer under the related
Sub-Servicing Agreement, including, without
limitation, any obligation to make advances in
respect of delinquent payments as required by a
Sub-Servicing Agreement. Such enforcement,
including, without limitation, the legal prosecution
of claims, termination of Sub-Servicing Agreements
and the pursuit of other appropriate remedies, shall
be in such form and carried out to such an extent
and at such time as the Master Servicer, in its good
faith business judgment, would require were it the
owner of the related Mortgage Loans. The Master
Servicer shall pay the costs of such enforcement at
its own expense, but shall be reimbursed therefor
only (i) from a general recovery resulting from such
enforcement only to the extent, if any, that such
recovery exceeds all amounts due in respect of the
related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is
directed.
3.03. Successor Sub-Servicers.
The Master Servicer shall be entitled to terminate any Sub-Servicing
Agreement and the rights and obligations of any Sub-Servicer pursuant to any
Sub-Servicing Agreement in accordance with the terms and conditions of such
Sub-Servicing Agreement. In the event of termination of any Sub-Servicer, all
servicing obligations of such Sub-Servicer shall be assumed simultaneously by
the Master Servicer without any act or deed on the part of such Sub-Servicer or
the Master Servicer, and the Master Servicer either shall service directly the
related Mortgage Loans or shall enter into a SubServicing Agreement with a
successor Sub-Servicer which qualifies under Section 3.02. Each Sub-
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Servicing Agreement, if any, shall include the provision that such agreement
may be immediately terminated by any successor Master Servicer without cause
and without payment of any fee or penalty in the event that the Master Servicer
shall, for any reason, no longer be the Master Servicer (including by reason of
an Event of Default).
3.04. Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer and a Sub-Servicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Trustee and Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of
Section 3.01 without diminution of such obligation or liability by virtue of
such Sub-Servicing Agreements or arrangements or by virtue of indemnification
from the Sub-Servicer and to the same extent and under the same terms and
conditions as if the Master Servicer alone were servicing and administering the
Mortgage Loans. For purposes of this Agreement, the Master Servicer shall be
deemed to have received payments on Mortgage Loans when the Sub-Servicer has
received such payments. The Master Servicer shall be entitled to enter into any
agreement with a Sub-Servicer for indemnification of the Master Servicer by
such Sub-Servicer and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification.
3.05. No Contractual Relationship Between Sub-Servicers and Trustee or
Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a
Sub-Servicer in its capacity as such and not as an originator shall be deemed
to be between the Sub-Servicer and the Master Servicer alone, and the Trustee
and Certificateholders shall not be deemed parties thereto and shall have no
claims, rights, obligations, duties or liabilities with respect to the
Sub-Servicer except as set forth in Section 3.06.
3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee.
In the event the Master Servicer shall for any reason no longer be the
master servicer (including by reason of an Event of Default) hereunder, the
Trustee, its designee or the successor Master Servicer for the Trustee shall
thereupon assume all of the rights and obligations of the Master Servicer under
each Sub-Servicing Agreement that the Master Servicer may have entered into,
unless the Trustee is then permitted and elects to terminate any Sub-Servicing
Agreement in accordance with its terms. Subject to Section 3.03, the Trustee,
its designee or the successor Master Servicer for the Trustee shall be deemed
to have assumed all of the Master Servicer's interest therein and to have
replaced the Master Servicer as a party to each Sub-Servicing Agreement to the
same extent as if the Sub-Servicing Agreements had been assigned to the
assuming party, except that the Master Servicer shall not thereby be relieved
of any liability or obligations under the Sub-Servicing Agreements, and the
Master Servicer shall continue to be entitled to any rights or benefits which
arose prior to its termination as master servicer.
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The Master Servicer at its expense shall, upon request of the Trustee,
deliver to the assuming party all documents and records relating to each
Sub-Servicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Sub-Servicing
Agreements to the assuming party.
3.07. Collection of Certain Mortgage Loan Payments.
The Master Servicer shall use reasonable efforts to collect all
payments due under each Mortgage Loan when the same shall become due and
payable and shall, to the extent such procedures shall be consistent with this
Agreement, Accepted Servicing Practices, and the terms and provisions of any
related Primary Mortgage Insurance Policy or any other related Insurance
Policy, follow such collection procedures as it follows with respect to
mortgage loans comparable to the Mortgage Loans and held for its own account.
The Master Servicer shall not be required to institute or join in litigation
with respect to collection of any payment (whether under a Mortgage, Mortgage
Note, Primary Hazard Insurance Policy or otherwise or against any public or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that it is prohibited by applicable law from enforcing the
provision of the Mortgage or other instrument pursuant to which such payment is
required. Consistent with the foregoing, the Master Servicer may in its
discretion (i) waive any prepayment charge, assumption fee, late payment charge
or other charge in connection with a Mortgage Loan, and (ii) arrange a
schedule, running for no more than 180 days after the Due Date for payment of
any installment on any Mortgage Note, for the liquidation of delinquent items.
The Master Servicer shall be responsible for preparing and distributing all
information statements relating to payments on the Mortgage Loans, in
accordance with all applicable federal and state tax laws and regulations.
3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage Loan
pursuant to a SubServicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
otherwise be acceptable to the Master Servicer. All amounts held in a
Sub-Servicing Account shall be held in trust for the Trustee for the benefit of
the Certificateholders. The Sub-Servicer will be required to deposit into the
Sub-Servicing Account on a daily basis, but in no event later than the first
Business Day after receipt of all proceeds of the Mortgage Loans received by
the Sub-Servicer, less its servicing compensation and any unreimbursed expenses
and advances, to the extent permitted by the Sub-Servicing Agreement. On each
Sub-Servicer Remittance Date the Sub-Servicer will be required to remit to the
Master Servicer all funds held in the Sub-Servicing Account with respect to any
Mortgage Loan as of the Sub-Servicer Remittance Date, after deducting from such
remittance an amount equal to the servicing compensation and unreimbursed
expenses and advances to which it is then entitled pursuant to the related
SubServicing Agreement, to the extent not previously paid to or retained by it.
In addition, on each SubServicer Remittance Date the Sub-Servicer will be
required to remit to the Master Servicer any amounts required to be advanced
pursuant to the related Sub-Servicing Agreement. The Sub-Servicer will also be
required to remit to the Master Servicer, within one Business Day of receipt,
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the proceeds of any Principal Prepayment made by the Mortgagor and any
Insurance Proceeds or Liquidation Proceeds.
3.09. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts.
The Master Servicer and the Sub-Servicers shall establish and maintain
one or more accounts (the "Servicing Accounts"), and shall deposit and retain
therein all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, Primary Hazard Insurance
Policy and Primary Mortgage Insurance Policy premiums, and comparable items for
the account of the Mortgagors, to the extent that the Master Servicer
customarily escrows for such amounts. Withdrawals of amounts so collected from
a Servicing Account may be made only to (i) effect payment of taxes,
assessments, Primary Hazard Insurance Policy and Primary Mortgage Insurance
Policy premiums and comparable items; (ii) reimburse the Master Servicer (or a
SubServicer to the extent provided in the related Sub-Servicing Agreement) out
of related collections for any payments made pursuant to Sections 3.01 (with
respect to taxes and assessments), 3.13 (with respect to Primary Hazard
Insurance Policies) and 3.25 (with respect to Primary Mortgage Insurance only);
(iii) refund to Mortgagors any sums as may be determined to be overages; (iv)
clear and terminate the Servicing Account at the termination of this Agreement
pursuant to Section 9.01 or (v) to withdraw any amounts deposited therein that
were not required to be so deposited. As part of its servicing duties, the
Master Servicer or Sub-Servicers shall, if and to the extent required by law,
pay to the Mortgagors interest on funds in Servicing Accounts from its or their
own funds, without any reimbursement therefor.
3.10. Custodial Account.
(a) The Master Servicer shall establish and maintain one
or more accounts as the Custodial Account in which
the Master Servicer shall deposit or cause to be
deposited on a daily basis, or as and when received
from the Sub-Servicers, the following payments and
collections received or made by or on behalf of it
subsequent to the Cut-off Date, or received by it
prior to the Cut-off Date but allocable to a period
subsequent thereto (other than in respect of
principal and interest on the Mortgage Loans due on
or before the Cut-off Date):
(i) all payments on account of
principal, including Principal
Prepayments, on the Mortgage
Loans;
(ii) all payments on account of
interest on the Mortgage Loans,
exclusive of any portion thereof
representing interest in excess of
the related Net Mortgage Rate;
(iii) all Insurance Proceeds (other than
proceeds that represent
reimbursement of costs and
expenses incurred by the Master
Servicer
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in connection with presenting
claims under the related Insurance
Policies), Liquidation Proceeds
and REO Proceeds;
(iv) all proceeds of any Mortgage Loan
or REO Property repurchased or
purchased in accordance with
Sections 2.02, 2.04, 3.22 or 9.01;
and
(v) any amounts required to be
deposited pursuant to Section 3.12
or 3.13.
The foregoing requirements for deposit in the Custodial Account shall
be exclusive. In the event the Master Servicer shall deposit in the Custodial
Account any amount not required to be deposited therein, it may withdraw such
amount from the Custodial Account, any provision herein to the contrary
notwithstanding. The Custodial Account shall be maintained as a segregated
account, separate and apart from trust funds created for mortgage pass-through
certificates of other series, and the other accounts of the Master Servicer.
(b) Funds in the Custodial Account may be invested in
Permitted Instruments in accordance with the
provisions set forth in Section 3.12. The Master
Servicer shall give notice to the Trustee and the
Seller of the location of the Custodial Account
after any change thereof.
3.11. Permitted Withdrawals From the Custodial Account.
The Master Servicer may, from time to time as provided herein, make
withdrawals from the Custodial Account of amounts on deposit therein pursuant
to Section 3.10 that are attributable to the Mortgage Loans for the following
purposes:
(i) to make deposits into the
Certificate Account in the amounts
and in the manner provided for in
Section 4.01;
(ii) to pay to itself, the Seller, the
Loan Seller or any other
appropriate person, as the case
may be, with respect to each
Mortgage Loan that has previously
been purchased or repurchased
pursuant to Sections 2.02, 2.04 or
9.01 all amounts received thereon
and not yet distributed as of the
date of purchase or repurchase;
(iii) to reimburse itself or any
Sub-Servicer for Advances not
previously reimbursed, the
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Master Servicer's or any
Sub-Servicer's right to
reimbursement pursuant to
this clause (iii) being limited to
amounts received which represent
Late Collections (net of the
related Servicing Fees) of Monthly
Payments on Mortgage Loans or REO
Property with respect to which
such Advances were made and as
further provided in Section 3.15;
(iv) to reimburse itself, the Trustee
or the Seller for expenses
incurred by or reimbursable to the
Master Servicer, the Trustee or
the Seller pursuant to Sections
3.22 or 6.03 except as otherwise
provided in such Sections;
(v) to reimburse itself or any
Sub-Servicer for costs and
expenses incurred by or
reimbursable to it relating to the
prosecution of any claims pursuant
to Sections 3.13 or 3.25 that are
in excess of the amounts so
recovered;
(vi) to reimburse itself or any
Sub-Servicer for unpaid Servicing
Fees and unreimbursed Servicing
Advances, the Master Servicer's or
any Sub-Servicer's right to
reimbursement pursuant to this
clause (vi) with respect to any
Mortgage Loan being limited to
late recoveries of the payments
for which such advances were made
pursuant to Section 3.01 or
Section 3.09 and any other related
Late Collections;
(vii) to pay itself as servicing
compensation (in addition to the
Servicing Fee), on or after each
Distribution Date, any interest or
investment income earned on funds
deposited in the Custodial Account
for the period ending on such
Distribution Date, subject to
Section 8.05 and 3.23;
(viii) to reimburse itself or any
Sub-Servicer for any Advance
previously made which the Master
Servicer has determined to be a
Nonrecoverable Advance, provided
that such Advance was made with
respect to a
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delinquency that ultimately
constituted an Excess Special
Hazard Loss, Excess Fraud Loss,
Excess Bankruptcy Loss or
Extraordinary Loss; and
(ix) to clear and terminate the
Custodial Account at the
termination of this Agreement
pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate accounting
records on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Custodial Account pursuant to such clauses
(ii), (iii), (iv), (v), (vi), and (viii).
3.12. Permitted Instruments.
Any institution maintaining the Custodial Account shall at the
direction of the Master Servicer invest the funds in such account in Permitted
Instruments, each of which shall mature not later than the Business Day
immediately preceding the Certificate Account Deposit Date next following the
date of such investment (except that if such Permitted Instrument is an
obligation of the institution that maintains such account, then such Permitted
Instrument shall mature not later than such Certificate Account Deposit Date)
and shall not be sold or disposed of prior to its maturity. All income and gain
realized from any such investment as well as any interest earned on deposits in
the Custodial Account shall be for the benefit of the Master Servicer, subject
to Section 3.23. The Master Servicer shall deposit in the Custodial Account
(with respect to investments made hereunder of funds held therein) an amount
equal to the amount of any loss incurred in respect of any such investment
immediately upon realization of such loss without right of reimbursement.
3.13. Maintenance of Primary Hazard Insurance.
The Master Servicer shall cause to be maintained for each Mortgage
Loan primary hazard insurance with extended coverage on the related Mortgaged
Property in an amount equal to the replacement value of the improvements, as
determined by the insurance company, on such Mortgaged Property. The Master
Servicer shall also cause to be maintained on property acquired upon
foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan, fire
insurance with extended coverage in an amount equal to the replacement value of
the improvements thereon. Pursuant to Section 3.10, any amounts collected by
the Master Servicer under any such policies (other than amounts to be applied
to the restoration or repair of the related Mortgaged Property or property thus
acquired or amounts released to the Mortgagor in accordance with the Master
Servicer's normal servicing procedures) shall be deposited in the Custodial
Account, subject to withdrawal pursuant to Section 3.11. Any cost incurred by
the Master Servicer in maintaining any such insurance shall not, for the
purpose of calculating monthly distributions to Certificateholders, be added to
the amount owing under the Mortgage Loan, notwithstanding that the terms of the
Mortgage Loan so permit. It is understood and agreed that no earthquake or
other additional insurance is to be required of any Mortgagor or maintained on
property acquired in respect of a Mortgage Loan other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. Whenever the improvements securing a
Mortgage Loan are located in a
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federally designated special flood hazard area, the Master Servicer shall cause
flood insurance (to the extent available) to be maintained in respect thereof.
Such flood insurance shall be in an amount equal to the lesser of (i) the
replacement value of the improvements, which are part of such Mortgaged
Property on a replacement cost basis and (ii) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).
In the event that the Master Servicer shall obtain and maintain a
blanket fire insurance policy with extended coverage insuring against hazard
losses on all of the Mortgage Loans, it shall conclusively be deemed to have
satisfied its obligations as set forth in the first two sentences of this
Section 3.13, it being understood and agreed that such policy may contain a
deductible clause, in which case the Master Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first two sentences of this Section 3.13 and there shall
have been a loss which would have been covered by such policy, deposit in the
Certificate Account the amount not otherwise payable under the blanket policy
because of such deductible clause. Any such deposit by the Master Servicer
shall be made on the Certificate Account Deposit Date next preceding the
Distribution Date which occurs in the month following the month in which
payments under any such policy would have been deposited in the Custodial
Account. In connection with its activities as administrator and servicer of the
Mortgage Loans, the Master Servicer agrees to present, on behalf of itself, the
Trustee and Certificateholders, claims under any such blanket policy.
3.14. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
The Master Servicer will, to the extent it has knowledge of any
conveyance or prospective conveyance by any Mortgagor of the Mortgaged Property
(whether by absolute conveyance or by contract of sale, and whether or not the
Mortgagor remains or is to remain liable under the Mortgage Note or the
Mortgage), exercise or cause to be exercised its rights to accelerate the
maturity of such Mortgage Loan under any "due-on-sale" clause applicable
thereto; provided, however, that the Master Servicer shall not exercise any
such rights if it reasonably believes that it is prohibited by law from doing
so or such exercise would result in the loss of insurance coverage under any
related Insurance Policy. If the Master Servicer is unable to enforce such
"due-on-sale" clause (as provided in the previous sentence) or if no
"due-on-sale" clause is applicable, the Master Servicer or the SubServicer will
enter into an assumption and modification agreement with the Person to whom
such property has been conveyed or is proposed to be conveyed, pursuant to
which such Person becomes liable under the Mortgage Note and, to the extent
permitted by applicable state law, the Mortgagor remains liable thereon;
provided, however, that the Master Servicer shall not enter into any assumption
and modification agreement if the coverage provided under the Primary Mortgage
Insurance Policy, if any, would be impaired by doing so. The Master Servicer is
also authorized, with the approval of the insurer under any related Primary
Mortgage Insurance Policy, to enter into a substitution of liability agreement
with such Person, pursuant to which the original Mortgagor is released from
liability and such Person is substituted as the Mortgagor and becomes liable
under the Mortgage Note. Any fee collected by or on behalf of the Master
Servicer for entering into an assumption or substitution of liability agreement
will be retained by or on behalf of the Master Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the Mortgage Rate, the amount of
the
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Monthly Payment, and any other term affecting the amount or timing of payment
on the Mortgage Loan) may be changed. The Master Servicer shall not enter into
any substitution or assumption if such substitution or assumption shall (i)
both constitute a "significant modification" effecting an exchange or
reissuance of such Mortgage Loan under the Code (or Treasury regulations
promulgated thereunder) and cause either the Upper REMIC or the Lower REMIC to
fail to qualify as a REMIC under the REMIC Provisions or (ii) cause the
imposition of any tax on "prohibited transactions" or "contributions" after the
Startup Day under the REMIC Provisions. The Master Servicer shall notify the
Trustee that any such substitution or assumption agreement has been completed
by forwarding to the Trustee the original copy of such substitution or
assumption agreement, which copy shall be added to the related Mortgage File
and shall, for all purposes, be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any assumption of
a Mortgage Loan by operation of law or any assumption that the Master Servicer
may be restricted by law from preventing, for any reason whatsoever, or if the
exercise of such right would impair or threaten to impair any recovery under
any applicable Insurance Policy. For purposes of this Section 3.14, the term
"assumption" is deemed to also include a sale of a Mortgaged Property that is
not accompanied by an assumption or substitution of liability agreement.
3.15. Realization Upon Defaulted Mortgage Loans.
The Master Servicer shall exercise reasonable efforts, consistent with
the terms of the related Mortgage, the Mortgage Note and Accepted Servicing
Practices, to foreclose upon or otherwise comparably convert (which may include
an REO Acquisition) the ownership of properties securing such of the Mortgage
Loans as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments pursuant to
Section 3.07, and which are not released from the applicable Trust Fund
pursuant to any other provision hereof. The Master Servicer shall use
reasonable efforts to realize upon such defaulted Mortgage Loans in such manner
as will maximize the receipt of principal and interest by Certificateholders,
taking into account, among other things, the timing of foreclosure proceedings.
The foregoing is subject to the provisions that, in any case in which Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Master
Servicer shall not be required to expend its own funds toward the restoration
of such property unless it shall determine in its sole discretion (i) that such
restoration will increase the net proceeds of liquidation of the related
Mortgage Loan to the applicable Certificateholders after reimbursement to
itself for such expenses, and (ii) that such expenses will be recoverable by
the Master Servicer through Insurance Proceeds or Liquidation Proceeds from the
related Mortgaged Property, as contemplated in Section 3.11. The Master
Servicer shall be responsible for all other costs and expenses incurred by it
in any such proceedings; provided, however, that it shall be entitled to
reimbursement thereof from the related property, as contemplated in Section
3.11.
The proceeds of any Cash Liquidation or REO Disposition, as well as
any recovery resulting from a partial collection of Insurance Proceeds or
Liquidation Proceeds or any income from an REO Property, will be applied in the
following order of priority: first, to reimburse the Master Servicer or any
Sub-Servicer for any related unreimbursed Servicing Advances, pursuant to
Section 3.11(vi)
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or 3.22; second, to accrued and unpaid interest on the Mortgage Loan or REO
Imputed Interest, at the Mortgage Rate, to the last day of the month in which
the Cash Liquidation or REO Disposition occurred, or to the Due Date prior to
the Distribution Date on which such amounts are to be distributed if not in
connection with a Cash Liquidation or REO Disposition; and third, as a recovery
of principal of the Mortgage Loan. If the amount of the recovery so allocated
to interest is less than a full recovery thereof, that amount will be allocated
as follows: first, to unpaid Servicing Fees; and second, to interest at the Net
Mortgage Rate. The portion of the recovery so allocated to unpaid Servicing
Fees shall be reimbursed to the Master Servicer or any Sub-Servicer pursuant to
Section 3.11(vi). The portions of the recovery so allocated to interest at the
Net Mortgage Rate and to principal of the Mortgage Loan shall be applied as
follows: first, to reimburse the Master Servicer or any Sub-Servicer for any
related unreimbursed Advances in accordance with Section 3.11(iii) or 3.22, and
second, for distribution in accordance with the provisions of Section 4.01(b),
subject to Section 3.22 with respect to certain recoveries from an REO
Disposition constituting Excess Proceeds.
3.16. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, the Master Servicer
will immediately notify the Trustee by a certification (which certification
shall include a statement to the effect that all amounts received in connection
with such payment which are required to be deposited in the Custodial Account
pursuant to Section 3.10 have been so deposited) of a Servicing Officer and
shall request delivery to it of the Mortgage File in the form of the Request
for Release attached hereto as Exhibit D-2. Upon receipt of such certification
and request, the Trustee shall promptly release the related Mortgage File to
the Master Servicer. Subject to the receipt by the Master Servicer of the
proceeds of such payment in full and the payment of all related fees and
expenses, the Master Servicer shall arrange for the release to the Mortgagor of
the original canceled Mortgage Note. All other documents in the Mortgage File
shall be retained by the Master Servicer to the extent required by applicable
law. No expenses incurred in connection with any instrument of satisfaction or
deed of reconveyance shall be chargeable to the Custodial Account, the Excess
Proceeds Account or the Certificate Account.
From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any
insurance policy relating to the Mortgage Loan, the Trustee shall, upon request
of the Master Servicer and delivery to the Trustee of a Request for Release in
the form attached hereto as Exhibit D-1, release the related Mortgage File to
the Master Servicer, and the Trustee shall execute such documents as the Master
Servicer shall prepare and request as being necessary to the prosecution of any
such proceedings. Such Request for Release shall obligate the Master Servicer
to return each document previously requested from the Mortgage File to the
Trustee when the need therefor by the Master Servicer no longer exists, unless
the Mortgage Loan has been liquidated and the Liquidation Proceeds relating to
the Mortgage Loan have been deposited in the Custodial Account or the Mortgage
File or such document has been delivered to an attorney, or to a public trustee
or other public official as required by law, for purposes of initiating or
pursuing legal action or other proceedings for the foreclosure of the Mortgaged
Property either judicially or non-judicially, and the Master Servicer has
delivered to the Trustee a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of
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a certification of a Servicing Officer in the form of the Request for Release
attached hereto as Exhibit D-1, stating that such Mortgage Loan was liquidated
and that all amounts received or to be received in connection with such
liquidation which are required to be deposited into the Custodial Account have
been or will be so deposited, or that such Mortgage Loan has become an REO
Property, a copy of such Request for Release shall be released by the Trustee
to the Master Servicer.
Upon written request of a Servicing Officer, the Trustee shall execute
and deliver to the Master Servicer any court pleadings, requests for trustee's
sale or other documents prepared by the Master Servicer that are necessary to
the foreclosure or trustee's sale in respect of a Mortgaged Property or to any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Mortgage or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity. Each such request that such pleadings or
documents be executed by the Trustee shall include a certification as to the
reason such documents or pleadings are required and that the execution and
delivery thereof by the Trustee will not invalidate or otherwise affect the
lien of the Mortgage, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale.
3.17. Servicing Compensation.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to retain, from amounts representing payments or recoveries
of interest, the Servicing Fee with respect to each Mortgage Loan (less any
portion of such amounts retained by any Sub-Servicer). In addition, the Master
Servicer shall be entitled to recover unpaid Servicing Fees out of related Late
Collections to the extent permitted in Section 3.11.
The Master Servicer also shall be entitled pursuant to Section 3.11 to
receive from the Custodial Account as additional servicing compensation
interest or other income earned on deposits therein, subject to Section 3.23,
all ancillary fees, including but not limited to any assumption fees,
reconveyance fees, prepayment fees and late fees, but only to the extent such
fees are collected by the Master Servicer and are in excess of any other
amounts due and payable with respect to the related Mortgage Loan. The Master
Servicer shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder (including payment of the premiums for
any blanket policy insuring against hazard losses pursuant to Section 3.13,
servicing compensation of the Sub-Servicer to the extent not retained by it and
the fees and expenses of the Trustee), and shall not be entitled to
reimbursement therefor except as specifically provided in Section 3.11. The
Servicing Fee may not be transferred in whole or in part except in connection
with the transfer of all of the Master Servicer's responsibilities and
obligations under this Agreement.
3.18. Maintenance of Certain Servicing Policies.
During the term of its service as Master Servicer, the Master Servicer
shall maintain in force (i) a policy or policies of insurance covering errors
and omissions in the performance of its obligations as servicer hereunder and
(ii) a fidelity bond in respect of its officers, employees or agents. Each such
policy or policies and bond shall, together, comply with the requirements from
time to time of FNMA or FHLMC for persons performing servicing for mortgage
loans purchased by such corporation. The Master Servicer shall prepare and
present, on behalf of itself, the Trustee
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and Certificateholders, claims under any such errors and omissions policy or
policies or fidelity bond in a timely fashion in accordance with the terms of
such policy or bond, and upon the filing of any claim on any policy or bond
described in this Section, the Master Servicer shall promptly notify the
Trustee of any such claims and the Trustee shall notify each Rating Agency of
such claim.
3.19. Annual Statement as to Compliance.
The Master Servicer will deliver to the Trustee and the Seller on or
before April 30th of each year, beginning with April 30, 1998, an Officers'
Certificate stating, as to each signatory thereof, that (i) a review of the
activities of the Master Servicer during the preceding fiscal year and of its
performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Master Servicer has fulfilled all of its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof.
3.20. Annual Independent Public Accountants' Servicing Statement.
On or before April 30th of each year, beginning with April 30, 1998,
the Master Servicer at its expense shall furnish to the Seller, the Trustee and
the Loan Seller (i) an opinion by a firm of independent certified public
accountants on the financial position of the Master Servicer at the end of its
fiscal year and the results of operations and changes in financial position of
the Master Servicer for such year then ended on the basis of an examination
conducted in accordance with generally accepted auditing standards, and (ii) if
the Master Servicer is then servicing any Mortgage Loans, a statement from such
independent certified public accountants to the effect that based on an
examination of certain specified documents and records relating to the
servicing of the Master Servicer's mortgage loan portfolio conducted
substantially in compliance with the audit program for mortgages serviced for
FNMA and FHLMC, the United States Department of Housing and Urban Development
Mortgage Audit Standards, or the Uniform Single Attestation Program for
Mortgage Bankers (the "Applicable Accounting Standards"), such firm is of the
opinion that such servicing has been conducted in compliance with the
Applicable Accounting Standards except for (a) such exceptions as such firm
shall believe to be immaterial and (b) such other exceptions as shall be set
forth in such statement. In rendering such statement, such firm may rely, as to
matters relating to direct servicing of mortgage loans by Sub-Servicers, upon
comparable statements for examinations conducted substantially in compliance
with the Uniform Single Attestation Program for Mortgage Bankers or the audit
program for mortgages serviced for FHLMC (rendered within one year of such
statement) of independent public accountants with respect to the related
Sub-Servicer. Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Master Servicer's expense, provided such
statement is delivered by the Master Servicer to the Trustee.
3.21. Access to Certain Documentation.
(a) The Master Servicer shall provide to the OTS, the
FDIC and other federal banking regulatory agencies,
and their respective examiners, access to the
documentation regarding the Mortgage Loans required
by applicable regulations of the OTS, the FDIC and
such other
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agencies. Such access shall be afforded without
charge, but only upon reasonable and prior written
request and during normal business hours at the
offices of the Master Servicer designated by it.
Nothing in this Section shall derogate from the
obligation of the Master Servicer to observe any
applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the
Master Servicer to provide access as provided in
this Section as a result of such obligation shall
not constitute a breach of this section.
(b) The Master Servicer shall afford the Seller and the
Trustee, upon reasonable notice, during normal
business hours access to all records maintained by
the Master Servicer in respect of its rights and
obligations hereunder and access to officers of the
Master Servicer responsible for such obligations.
Upon request, the Master Servicer shall furnish the
Seller and the Trustee with its most recent
financial statements and such other information as
the Master Servicer possesses regarding its
business, affairs, property and condition, financial
or otherwise to the extent related to the servicing
of the Mortgage Loans. The Seller may, but is not
obligated to, enforce the obligations of the Master
Servicer hereunder and may, but is not obligated to,
perform, or cause a designee to perform, any
defaulted obligation of the Master Servicer
hereunder or exercise the rights of the Master
Servicer hereunder; provided that the Master
Servicer shall not be relieved of any of its
obligations hereunder by virtue of such performance
by the Seller or its designee. The Seller shall not
have any responsibility or liability for any action
or failure to act by the Master Servicer and is not
obligated to supervise the performance of the Master
Servicer under this Agreement or otherwise.
3.22. Title, Conservation and Disposition of REO Property.
This Section shall apply only to REO Properties acquired for the
account of any Trust Fund, and shall not apply to any REO Property relating to
a Mortgage Loan which was purchased or repurchased from any Trust Fund pursuant
to any provision hereof. In the event that title to any such REO Property is
acquired, the deed or certificate of sale shall be issued to the Trustee, or to
its nominee, on behalf of the Certificateholders of the applicable Series. The
Master Servicer, on behalf of the applicable Trust Fund, shall either sell any
REO Property on or before December 31 of the third calendar year following the
calendar year in which such Trust Fund acquires ownership of such REO Property
for purposes of Section 860G(a)(8) of the Code or, at the expense of such Trust
Fund, request, more than 60 days before the day on which the three-year grace
period would otherwise expire, an extension of the three-year grace period,
unless the Master Servicer has delivered to the Trustee an Opinion of Counsel
addressed to the Trustee and the Master Servicer, to the effect that the
holding by such Trust Fund of such REO Property subsequent to such three year
period will not result in the imposition of taxes on "prohibited transactions"
thereof, as defined in Section 860F of the Code, or cause the Lower REMIC or
the Upper REMIC to fail to qualify as a REMIC under the REMIC Provisions or
comparable provisions of the laws of the any State at any time that any
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Certificates are outstanding. The Master Servicer shall manage, conserve,
protect and operate each REO Property for the Certificateholders of the
applicable Series 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) or result in
the receipt by the Lower REMIC or the Upper REMIC of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code
or any "net income from foreclosure property" which is subject to taxation
under the REMIC Provisions. Pursuant to its efforts to sell such REO Property,
the Master Servicer shall either itself or through an agent selected by the
Master Servicer protect and conserve such REO Property in the same manner and
to such extent as is customary in the locality where such REO Property is
located and in a manner consistent with Accepted Servicing Practices and may,
incident to its conservation and protection of the interests of the
Certificateholders of the applicable Series, rent the same, or any part
thereof, as the Master Servicer deems to be in the best interest of the
Certificateholders for the period prior to the sale of such REO Property.
Any REO Disposition shall be for cash only (unless changes in the
REMIC Provisions made subsequent to the Startup Day allow a sale for other
consideration).
The Master Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and
apart from its own funds and general assets. The Master Servicer shall deposit,
or cause to be deposited, on a daily basis in the Custodial Account all
revenues received with respect to the REO Properties, net of any directly
related expenses incurred and funds withheld therefrom that are necessary for
the proper operation, management and maintenance of the REO Property.
If as of the date of acquisition of title to any REO Property there
remain outstanding unreimbursed Servicing Advances with respect to such REO
Property or any outstanding Advances allocated thereto the Master Servicer,
upon an REO Disposition, shall be entitled to reimbursement for any related
unreimbursed Servicing Advances and any unreimbursed related Advances as well
as any unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.15.
The REO Disposition shall be carried out by the Master Servicer at
such price and upon such terms and conditions as the Master Servicer shall
determine; provided that, subject to the first paragraph of this Section, the
Master Servicer shall ensure that any action taken with respect to the sale of
an REO Property does not jeopardize the maximum benefits available under any
related Primary Mortgage Insurance Policy.
The Master Servicer shall deposit the proceeds from the REO
Disposition, net of any payment to the Master Servicer as provided above, in
the Custodial Account upon receipt thereof for distribution in accordance with
Section 4.01; provided that any such net proceeds which are in excess of the
applicable outstanding principal balance plus all unpaid REO Imputed Interest
thereon through the last day of the month in which the REO Disposition occurred
and any related Servicing Advances which remain outstanding ("Excess Proceeds")
shall be deposited into the Excess Proceeds Account in accordance with the
provisions of Section 3.24(a).
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Notwithstanding the foregoing provisions of this Section 3.22, with
respect to any Mortgage Loan as to which the Master Servicer has received
notice of, or has actual knowledge of, the presence of any toxic or hazardous
substance on the Mortgaged Property, the Master Servicer shall not, on behalf
of the Trustee, either (i) obtain title to the related Mortgaged Property as a
result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, the related Mortgaged Property, unless and until either (A) the
Master Servicer has, at least 30 days prior to taking such action, obtained and
delivered to the Seller and the Trustee an environmental audit report prepared
by a Person who regularly conducts environmental audits using customary
industry standards and (B) the Master Servicer deems that such action is in the
best economic interest of the applicable Trust Fund. In the event that the
Master Servicer determines not to foreclose or comparably convert any Mortgaged
Property pursuant to the immediately preceding sentence, then the Master
Servicer shall take such action as it deems to be in the best economic interest
of such Trust Fund (other than proceeding against the Mortgaged Property) and
is hereby authorized at such time as it deems appropriate to release such
Mortgaged Property from the lien of the related Mortgage.
The cost of the environmental audit report contemplated by this
Section 3.22 shall be advanced by the Master Servicer as an expense of the
applicable Trust Fund, and the Master Servicer shall be reimbursed therefor
from the Custodial Account as provided in Section 3.11, any such right of
reimbursement being prior to the rights of the Certificateholders of the
applicable Series to receive any amount in the Custodial Account.
If the Master Servicer determines, as described above, that it is in
the best economic interest of the applicable Trust Fund to take such actions as
are necessary to bring any such Mortgaged Property in compliance with
applicable environmental laws, or to take such action with respect to the
containment, clean-up or remediation of hazardous substances, hazardous
materials, hazardous wastes, or petroleum-based materials affecting any such
Mortgaged Property, then the Master Servicer shall take such action as it deems
to be in the best economic interest of the applicable Trust Fund. The cost of
any such compliance, containment, clean-up or remediation shall be advanced by
the Master Servicer as an expense of the applicable Trust Fund, and the Master
Servicer shall be entitled to be reimbursed therefor from the Custodial Account
as provided in Section 3.11, any such right of reimbursement being prior to the
rights of the Certificateholders of the applicable Series to receive any amount
in the Custodial Account.
The Master Servicer shall have the option to purchase from the
applicable Trust Fund any Mortgage Loan that is 90 days or more delinquent
(i.e., any Mortgage Loan on which the related Mortgagor has failed to make four
or more consecutive Monthly Payments) and that the Master Servicer determines
in good faith will otherwise become subject to foreclosure proceedings (such
determination to be evidenced by an Officers' Certificate of the Master
Servicer delivered to the Trustee prior to purchase) for an amount equal to the
Purchase Price. The Purchase Price for any Mortgage Loan purchased pursuant to
this Section 3.22 shall be deposited in the Custodial Account, and upon receipt
of written certification from the Master Servicer of such deposit, the Trustee
shall release or cause to be released to the Master Servicer the related
Mortgage File and shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Master Servicer shall furnish
and as shall be necessary to vest in the Master Servicer title to any Mortgage
Loan released pursuant to this Section 3.22.
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3.23. Additional Obligations of the Master Servicer.
On each Certificate Account Deposit Date, the Master Servicer shall
deliver to the Trustee for deposit in the Certificate Account from its own
funds and without any right of reimbursement therefor, a total amount equal to
the aggregate of the Prepayment Interest Shortfalls for such Distribution Date;
provided that the Master Servicer's obligations under this Section on any
Distribution Date shall not be more than the total amount of its servicing
compensation payable in such month.
3.24. Excess Proceeds Account.
(a) The Trustee shall establish and maintain one or more
accounts (collectively, the "Excess Proceeds
Account") in which the Master Servicer shall, on
behalf of each Trust Fund, deposit or cause to be
deposited on a daily basis, or as and when received
from the Sub-Servicers, the Excess Proceeds, if any,
with respect to each Mortgage Loan as to which an
REO Disposition occurs. The Excess Proceeds Account
shall be maintained as a segregated account,
separate and apart from trust funds created for
mortgage pass-through certificates of other series,
from funds of investors, from funds or other assets
of the Trustee, and from the other accounts of the
Trustee.
(b) On or before 2:00 P.M. (Pacific Standard Time) on
each Certificate Account Deposit Date, the Trustee
shall withdraw or cause to be withdrawn the entire
amount on deposit in the Excess Proceeds Account and
shall deposit or cause to be deposited such amount
in the Certificate Account, by wire transfer of
immediately available funds.
(c) [RESERVED]
(d) The Excess Proceeds Account shall be an Eligible
Account in accordance with the definition of "Excess
Proceeds Account" in Section 1.01. The Trustee
shall, upon written request from the Master
Servicer, invest or cause the institution
maintaining the Excess Proceeds Account to invest
the funds in the Excess Proceeds Account in one or
more Permitted Instruments designated in the name of
the Trustee for the benefit of the
Certificateholders, each of which Permitted
Instruments shall be held to maturity, unless
payable on demand, and shall mature, unless payable
on demand, not later than the Business Day
immediately preceding the Certificate Account
Deposit Date next following the date of such
investment (except that if such Permitted Instrument
is an obligation of the institution with which the
Excess
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Proceeds Account is maintained, then such Permitted
Instrument shall mature not later than such
Certificate Account Deposit Date). All income and
gain realized from any such investment as well as
any interest earned on deposits in the Excess
Proceeds Account shall be for the benefit of the
Certificateholders and shall be held in the Excess
Proceeds Account (or in Permitted Instruments in
which the funds in the Excess Proceeds Account are
invested) until transferred from the Excess Proceeds
Account to the Certificate Account in accordance
with Section 3.24(b) or (c). The amount of any loss
incurred in respect of any such investment shall be
borne by the Certificateholders without any right of
reimbursement.
(e) As part of each Determination Date Report delivered
to the Trustee in accordance with Section 4.03(a),
the Master Servicer shall provide information with
respect to the amount, if any, of Excess Proceeds
deposited in the Excess Proceeds Account in respect
of each Mortgage Loan as to which an REO Disposition
occurred during the related Prepayment Period.
(f) The Trustee shall promptly provide notice to the
Seller and the Master Servicer of the initial
location of the Excess Proceeds Account and shall
promptly provide notice to the Seller and the Master
Servicer of the location of the Excess Proceeds
Account after any change in location of the Excess
Proceeds Account.
3.25. Maintenance of the Primary Mortgage Insurance Policies;
Collections Thereunder.
The Master Servicer shall not take any action which would result in
non-coverage under any applicable Primary Mortgage Insurance Policy of any loss
which, but for the actions of the Master Servicer, would have been covered
thereunder. The Master Servicer shall use reasonable efforts to keep in force
and effect each such Primary Mortgage Insurance Policy applicable to a Mortgage
Loan for so long as the related Mortgagor is obligated to maintain such Primary
Mortgage Insurance Policy under the terms of the related Mortgage Loan or until
the Loan-to-Value Ratio of the related Mortgage Loan has been reduced to less
than 80%, whichever is earlier. The Master Servicer shall not cancel or refuse
to renew any such Primary Mortgage Insurance Policy applicable to a Mortgage
Loan that is in effect at the Closing Date and is required to be kept in force
hereunder unless a replacement Primary Mortgage Insurance Policy for such
canceled or non-renewed policy is obtained from and maintained with a Qualified
Mortgage Insurer. In connection with any assumption or modification agreement
entered into or to be entered into pursuant to Section 3.14, the Master
Servicer shall promptly notify the insurer under the related Primary Mortgage
Insurance Policy, if any, of such assumption or modification in accordance with
the terms of such policy and shall take all actions which may be required by
such insurer as a condition to the continuation of coverage under the Primary
Mortgage Insurance Policy. If such Primary Mortgage Insurance Policy is
terminated as a result of such assumption or substitution of liability, the
Loan Seller shall obtain a replacement Primary Mortgage Insurance Policy as
provided above. Any amounts advanced by the Master Servicer to maintain Primary
Mortgage Insurance shall be recoverable by the Master Servicer pursuant to
Section 3.11 out of Liquidation Proceeds, Insurance Proceeds or otherwise.
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The Master Servicer shall present, on behalf of the Trustee and
Certificateholders, claims to the insurer under any Primary Mortgage Insurance
Policies and, in this regard, take such reasonable action as shall be necessary
to permit recovery under any Primary Mortgage Insurance Policies respecting
defaulted Mortgage Loans. Pursuant to Section 3.10, any amounts collected by
the Master Servicer under any Primary Mortgage Insurance Policies shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
3.11.
3.26. Special Servicing.
The Master Servicer may, in its sole and absolute discretion, enter
into a Special Servicing Agreement with an unaffiliated holder of 100%
Percentage Interest of a Class B Security to be substantially in the form of
Exhibit H hereto, or subject to each Rating Agency's acknowledgment that the
ratings of the Securities in effect immediately prior to the entering into of
such agreement would not be qualified, downgraded or withdrawn and the
Securities would not be placed on credit review status (except for possible
upgrading) as a result of such agreement. Any such agreement may contain
provisions whereby such holder may instruct the Master Servicer to commence or
delay foreclosure proceedings with respect to delinquent Mortgage Loans and
will contain provisions for the disposition of cash by the holder that would be
available for distribution to Certificateholders if Liquidation Proceeds are
less than they otherwise may have been had the Master Servicer acted in
accordance with its normal procedures.
3.27. Duties with respect to REMICs.
(a) [RESERVED]
(b) The Master Servicer shall assist the Trustee in
taking, to the extent reasonably requested to do so,
such action as shall be necessary to create or
maintain the status of the Upper REMIC and the Lower
REMIC as REMICs under the REMIC Provisions.
(c) For the purposes of this Paragraph (c), "Adverse
REMIC Event" shall mean any action or failure to act
which could (i) endanger the status of either the
Upper REMIC or the Lower REMIC as a REMIC or (ii)
result in the imposition of a tax upon any Trust
Fund (including but not limited to the tax on
prohibited transactions as defined in Section
860F(a)(2) of the Code and the tax on contributions
to a REMIC set forth in Section 860G(d) of the
Code). Prior to taking any action with respect to
any Trust Fund or its assets, or causing either the
Upper REMIC or the Lower REMIC to take any action
which is not expressly permitted under the terms of
this Agreement or the Series Supplement, the Master
Servicer will consult with the Trustee or its
designee, in writing, with respect to whether such
action could cause an Adverse REMIC Event to occur
with respect to either the Upper REMIC or the Lower
REMIC , and the Master Servicer shall not take any
such action or cause either the Upper REMIC or the
Lower REMIC to take any such action as to which the
Trustee has advised
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it in writing that an Adverse REMIC Event could
occur. The Trustee may consult with counsel to make
such written advice, and the cost of same shall be
borne by the party seeking to take the action not
permitted by this Agreement (but in no event shall
such cost be an expense of the Trustee).
(d) The Master Servicer shall, for federal income tax
purposes, maintain books and records with respect to
any Trust Fund on a calendar year and on an accrual
basis.
(e) The Master Servicer shall not permit the acquisition
of any assets by either the Upper REMIC or the Lower
REMIC unless it shall have received an Opinion of
Counsel (which such Opinion of Counsel shall not be
an expense of the Trustee) to the effect that the
inclusion of such assets in either the Upper REMIC
or the Lower REMIC will not cause either the Upper
REMIC or the Lower REMIC to fail to qualify as a
REMIC at any time that any Certificates are
outstanding or subject either the Upper REMIC or the
Lower REMIC to any tax under the REMIC Provisions or
other applicable provisions of federal, state and
local law or ordinances.
(f) The Master Servicer shall not enter into any
arrangement by which either the Upper REMIC or the
Lower REMIC will receive a fee or other compensation
for services nor permit either of such REMICs to
receive any income from assets other than "qualified
mortgages" as defined in Section 860G(a)(3) of the
Code or "permitted investments" as defined in
Section 860G(a)(5) of the Code.
(g) The Master Servicer agrees to indemnify any Trust
Fund, the Seller, the Loan Seller and the Trustee
for any taxes and costs (including, without
limitation, any reasonable attorneys' fees) imposed
on or incurred by any Trust Fund, the Seller or the
Trustee, as a result of a breach of the Master
Servicer's covenants set forth in this Section 3.27
or in Article III with respect to compliance with
the REMIC Provisions, including without limitation,
any penalties arising from the Trustee's execution
of Tax Returns prepared by the Master Servicer that
contain errors or omissions.
IV PAYMENTS TO CERTIFICATEHOLDERS
4.01. Certificate Account.
(a) The Trustee shall establish and maintain a
Certificate Account in which the Master Servicer
shall cause to be deposited on behalf of the Trustee
on or before 12:00 P.M. (Pacific Standard Time) on
each
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Certificate Account Deposit Date by wire transfer of
immediately available funds an amount equal to the
sum of (i) any Advance (other than a Servicing
Advance) for the immediately succeeding Distribution
Date, (ii) any amount required to be deposited in
the Certificate Account pursuant to Sections 3.13,
3.22, 3.23 or 3.24 and (iii) all other amounts
constituting the aggregate Available Distribution
Amount with respect to each Series for the
immediately succeeding Distribution Date.
(b) On each Distribution Date, the Trustee shall, unless
otherwise specified below, distribute an amount
equal to the Available Distribution Amount in
respect of each Series to the Certificateholders of
such Series from the Certificate Account with
respect to each Series.
With respect to each Series, the foregoing distributions shall be made
to each Certificateholder of record as of the immediately preceding Record Date
(except as provided in Section 9.2 of this Agreement with respect to
termination and final payment) by wire transfer of federal funds to an account
specified in writing by such Certificateholder or such other method agreed to
between the Trustee and such Certificateholder, based on such
Certificateholder's pro rata share (based on the aggregate Fractional Undivided
Interest represented by the Certificates of the respective Series held by such
holder on the Record Date) of the foregoing amounts.
(c) [RESERVED].
(d) On each Distribution Date the Trustee shall
distribute (i) to the Master Servicer, prior to any
distributions on the Certificates of the applicable
Series, out of the Available Distribution Amount for
such Distribution Date and such Series, any Advance
Reimbursement Amount for such Distribution Date with
respect to the Mortgage Loans in the related Loan
Group, to the extent not previously reimbursed to
the Master Servicer through withdrawals from the
Custodial Account, and (ii) to each
Certificateholder of record on the related Record
Date (other than as provided in Section 9.01
respecting the final distribution) either in
immediately available funds (by wire transfer or
otherwise) to the account of such Certificateholder
at a bank or other entity having appropriate
facilities therefor, if such Certificateholder has
so notified the Trustee at least five Business Days
prior to the related Record Date, or otherwise by
check mailed to such Certificateholder at the
address of such Holder appearing in the Certificate
Register, such Certificateholder's share (based on
the aggregate of the Fractional Undivided Interest
represented by Certificates of the applicable Series
held by such Holder) of the Certificate Distribution
Amounts with respect to such Series, in each case to
the extent of the related Available Distribution
Amount.
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(e) The Trustee shall, upon written request from the
Master Servicer, invest or cause the institution
maintaining the Certificate Account to invest the
funds in the Certificate Account in Permitted
Instruments designated in the name of the Trustee
for the benefit of the Certificateholders, which
shall mature not later than the Business Day next
preceding the Distribution Date next following the
date of such investment (except that (i) any
investment in obligations of the institution with
which the Certificate Account is maintained may
mature on such Distribution Date and (ii) any other
investment may mature on such Distribution Date if
the Trustee shall agree to advance funds on such
Distribution Date to the Certificate Account in the
amount payable on such investment on such
Distribution Date, pending receipt thereof to the
extent necessary to make distributions on the
Certificates) and shall not be sold or disposed of
prior to maturity. All income and gain realized from
any such investment shall be for the benefit of the
Master Servicer and shall be subject to its
withdrawal or order from time to time. The amount of
any losses incurred in respect of any such
investments shall be deposited in the Certificate
Account by the Master Servicer out of its own funds
immediately as realized without right of
reimbursement.
(f) Except as otherwise provided in Section 9.01,
whenever the Trustee expects that the final
distribution with respect to any Series of
Certificates will be made on the next Distribution
Date, the Trustee shall, no later than five days
after the Determination Date, mail to each Holder on
such date of such Series of Certificates a notice to
the effect that:
(i) the Trustee expects that the final
distribution with respect to such
Series will be made on such
Distribution Date but only upon
presentation and surrender of such
Certificates at the office of the
Trustee therein specified, and
(ii) no interest shall accrue on such
Certificates from and after the
end of the related Interest
Accrual Period.
Any funds not distributed to any Holder or Holders of Certificates of
such Series on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
in trust uninvested and credited to the account of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has
been given pursuant to this Section 4.01(f) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non-tendering
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Certificateholders instructing such Certificateholders to surrender their
Certificates for cancellation in order to receive the final distribution with
respect thereto. If within six months after the second notice all such
Certificates shall not have been surrendered for cancellation, the Trustee
shall take reasonable steps as directed by the Seller, or appoint an agent to
take reasonable steps, to contact the remaining non-tendering
Certificateholders concerning surrender of their Certificates. The costs and
expenses of maintaining the funds in trust and of contacting such
Certificateholders shall be paid out of the assets remaining in any Trust Fund.
If within nine months after the second notice any such Certificates shall not
have been surrendered for cancellation, the Seller shall be entitled to all
unclaimed funds and other assets which remain subject hereto. No interest shall
accrue or be payable to any Certificateholder on any amount held in trust as a
result of such Certificateholder's failure to surrender its Certificate(s) for
final payment thereof in accordance with this Section 4.01(f).
4.02. Statements to Certificateholders.
With respect to each Series, on each Distribution Date, the Trustee
shall forward or cause to be forwarded by mail to each Holder of a Certificate
of such Series and to the Seller, the Loan Seller and the Master Servicer a
statement as to such distribution with respect to such Series setting forth:
(i) the amount of such distribution
allocable to principal, separately
identifying the amounts referred
to in paragraphs (1), (3), (5),
(7), (9), and (11) of Section
4.01(b) above included in such
distribution;
(ii) the amount of such distribution
allocable to interest, separately
identifying the amounts referred
to in paragraphs (2), (4), (6),
(8), (10) and (11) of Section
4.01(b) above included in such
distribution;
(iii) the amount of Realized Losses,
with the respective amounts of
Deficient Valuations, Excess Fraud
Losses, Excess Special Hazard
Losses and Extraordinary Losses
set forth separately, and Debt
Service Reductions on the Mortgage
Loans incurred on the Mortgage
Loans in the respective Loan Group
since the immediately preceding
Distribution Date;
(iv) the aggregate amount of Prepayment
Interest Shortfalls incurred on
the Mortgage Loans in the
respective Loan Group since the
immediately preceding Distribution
Date;
(v) the principal balances of the
Mortgage Loans in the respective
Loan Group at the opening of
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business on the first day of the
month of distribution after (A)
giving effect to payments on the
Mortgage Loans due on the Due Date
and distributed either as
collections or advances and (B)
reducing such balances by the
amount of Realized Losses
attributable to the Mortgage Loans
in such Loan Group since the
immediately preceding Distribution
Date;
(vi) the aggregate scheduled principal
balance, as of the related
Distribution Date, of the Mortgage
Loans in the respective Loan
Group;
(vii) the amount, if any, by which the
aggregate amount remitted from the
Certificate Account exceeds the
aggregate remittances referred to
in clauses (i) and (ii) above;
(viii) the aggregate cumulative amount of
Realized Losses, with the
respective amounts of Deficient
Valuations, Excess Fraud Losses,
Excess Special Hazard Losses and
Extraordinary Losses set forth
separately from all other causes
of Realized Losses, Debt Service
Reductions and Prepayment Interest
Shortfalls on the Mortgage Loans
in the related Loan Group; and
The Trustee shall have no liability or responsibility to any
Certificateholder for the accuracy or completeness of the information provided
by the Master Servicer under Section 4.03. The parties hereto acknowledge that
in the event that The First National Bank of Chicago in its capacity as
Indenture Trustee for the holders of collateralized mortgage obligations issued
by the Issuer, or a qualified nominee thereof, is the sole Certificateholder,
then the Trustee may elect not to deliver a written statement to any
Certificateholder pursuant to Section 4.03. The Trustee shall forward to the
Master Servicer a copy of each written statement, if any, delivered to any
Certificateholder.
(ix) Within sixty (60) calendar days
after the end of each calendar
year, the Trustee shall furnish to
each Person who at any time during
the calendar year was a
Certificateholder a statement
containing the information set
forth in subclauses (i) and (ii)
above aggregated for such calendar
year or applicable portion
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thereof during which such person
was a Certificateholder. Such
obligation shall be deemed to have
been satisfied to the extent that
substantially comparable
information shall be provided by
the Trustee pursuant to any
requirements of the Code, as from
time to time in force. Upon
request, the Master Servicer
agrees to provide information to
the Trustee as necessary to meet
such requirements of the Code.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall prepare and forward, to each Person who at any time
during the calendar year was a Holder of a Certificate a statement containing
the information set forth in subclauses (i)-(iii) above, aggregated for such
calendar year or applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code and
regulations thereunder as from time to time are in force.
4.03. Reports; Advances by the Master Servicer.
(a) On the second Business Day following each
Determination Date, the Master Servicer shall
deliver to the Trustee a report, prepared as of the
close of business on the Determination Date (the
"Determination Date Report"), in the form of an
electromagnetic tape or disk. The Determination Date
Report and any written information supplemental
thereto shall include such information with respect
to the Mortgage Loans that is reasonably available
to the Master Servicer and that is required by the
Trustee for purposes of making the calculations
referred to in the following paragraph, as set forth
in Exhibit G hereto and the information necessary to
enable the Trustee to prepare the statements
referred to in Section 6 of the Series Supplement
and in Section 4.02 of this Agreement. Not later
than 10:00 A.M. (Pacific Standard Time) on the
Business Day preceding each Certificate Account
Deposit Date, the Trustee shall furnish by telecopy
to the Master Servicer a statement (the information
in such statement to be made available to
Certificateholders or the Seller by the Master
Servicer on request) setting forth (i) the Available
Distribution Amount (in the aggregate and on a
Series-by-Series basis) and (ii) the amounts
required to be withdrawn from the Custodial Account
and deposited into the Certificate Account on the
immediately succeeding Certificate Account Deposit
Date pursuant to Section 4.01(a). The Trustee shall
have no obligation to recompute, recalculate or
verify any information provided to it by the Master
Servicer. The determination by the Trustee of such
amounts shall, in the absence of
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obvious error, be presumptively deemed to be correct
for all purposes hereunder.
(b) Prior to the close of business on the Business Day
preceding each Certificate Account Deposit Date, the
Trustee shall notify the Master Servicer of the
amount of Advances (other than Servicing Advances)
required to be made for the related Distribution
Date, which shall be in an aggregate amount equal to
the aggregate amount of Monthly Payments, (with each
interest portion thereof adjusted to the Net
Mortgage Rate) less the amount of any related Debt
Service Reductions or reductions in the amount of
interest collectable from the Mortgagor pursuant to
the Soldiers' and Sailors' Civil Relief Act of 1940,
on the Outstanding Mortgage Loans as of the related
Due Date, which Monthly Payments were delinquent as
of the close of business as of the related
Determination Date; no Advance shall be made if it
would be a Nonrecoverable Advance. On or before
12:00 P.M. (Pacific Standard Time) on each
Certificate Account Deposit Date, the Master
Servicer shall either (i) deposit in the Certificate
Account from its own funds, or funds received
therefor from the SubServicers, an amount equal to
the Advances to be made by the Master Servicer in
respect of the related Distribution Date, (ii)
withdraw from amounts on deposit in the Custodial
Account and deposit in the Certificate Account all
or a portion of the amounts held for future
distribution in discharge of any such Advance, or
(iii) make advances in the form of any combination
of (i) and (ii) aggregating the amount of such
Advance. Any portion of the amounts held for future
distribution so used shall be replaced by the Master
Servicer by deposit in the Certificate Account on or
before 11:00 A.M. (Pacific Standard Time) on any
future Certificate Account Deposit Date to the
extent that funds attributable to the Mortgage Loans
that are available in the Custodial Account for
deposit in the Certificate Account on such
Certificate Account Deposit Date shall be less than
payments to Certificateholders required to be made
on the following Distribution Date. The amount of
any reimbursement in respect of outstanding Advances
on any Distribution Date shall be allocated to
specific Monthly Payments due but delinquent for
previous Due Periods, which allocation shall be
made, to the extent practicable, to Monthly Payments
which have been delinquent for the longest period of
time. Such allocations shall be conclusive for
purposes of reimbursement to the Master Servicer
from recoveries on related Mortgage Loans pursuant
to Section 3.11. The determination by the Master
Servicer that it has made a Nonrecoverable Advance
or that any proposed Advance, if made, would
constitute a Nonrecoverable Advance, shall be
evidenced by a certificate of a Servicing Officer
delivered to the Loan Seller and the Trustee. The
Trustee shall deposit all funds it receives pursuant
to this Section 4.03 into the Certificate Account.
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(c) In the event that the Master Servicer determines as
of the Business Day preceding any Certificate
Account Deposit Date that it will be unable to
deposit in the Certificate Account an amount equal
to the Advance required to be made for the
immediately succeeding Distribution Date in the
amount determined by the Trustee pursuant to
paragraph (b) above, it shall give notice in the
form of an Officers' Certificate to the Trustee of
its inability to advance (such notice may be given
by telecopy), not later than 11:00 A.M. (Pacific
Standard Time), on such Business Day, specifying the
portion of such amount that it will be unable to
deposit. Not later than 2:30 P.M. (Pacific Standard
Time), on the Certificate Account Deposit Date,
unless by such time the Master Servicer shall have
directly or indirectly deposited in the Certificate
Account the entire amount of the Advances required
to be made for the related Distribution Date,
pursuant to Section 7.01, the Trustee shall (a)
terminate all of the rights and obligations of the
Master Servicer under this Agreement in accordance
with Section 7.01 and (b) assume the rights and
obligations of the Master Servicer hereunder,
including the obligation to deposit in the
Certificate Account an amount equal to the Advance
for the immediately succeeding Distribution Date;
provided, however, that the Trustee's obligation to
advance such amounts shall be as of the related
Distribution Date.
4.04. Information Reports to be Filed by the Master Servicer.
The Master Servicer or Sub-Servicers shall file information reports
with respect to the receipt of mortgage interest received in a trade or
business, reports of foreclosures and abandonments of any Mortgaged Property
and cancellation of indebtedness income with respect to any Mortgaged Property
as required by Sections 6050H, 6050J and 6050P of the Code, respectively, and
promptly deliver upon such filing to the Trustee an Officers' Certificate
stating that such reports have been filed. Such reports shall be in form and
substance sufficient to meet the reporting requirements imposed by such
Sections 6050H, 6050J and 6050P of the Code.
4.05. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount on the Mortgage
Loans, that the Trustee reasonably believes are applicable under the Code. The
consent of Certificateholders shall not be required for such withholding. In
the event the Trustee withholds any amount from interest or original issue
discount payments or advances thereof to any Certificateholder pursuant to
federal withholding requirements, the Trustee shall, together with its monthly
report to such Certificateholders pursuant to Section 4.02 hereof, indicate
such amount withheld.
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4.06. Reporting of Realized Losses.
Prior to each Distribution Date, the Master Servicer shall determine
the total amount of Realized Losses (in the aggregate and on a Loan Group by
Loan Group basis), if any, that resulted from any Cash Liquidation, Debt
Service Reduction, Deficient Valuation or REO Disposition that occurred during
the related Prepayment Period. The amount of each Realized Loss shall be
evidenced by an Officer's Certificate by the Master Servicer delivered to the
Trustee.
V THE CERTIFICATES
5.01. The Certificates.
The Certificates shall be substantially in the form set forth in
Exhibit A and shall be executed and delivered by the Seller to the Trustee for
authentication and redelivery to or upon the order of the Seller upon receipt
by the Trustee of the documents specified in Section 2.01. The Certificates
shall be issued in denominations of 100/100th Fractional Undivided Interest and
shall be executed by manual or facsimile signature on behalf of the Seller by
its President or one of its Vice Presidents, or one of its Authorized Officers
(as appointed pursuant to the Bylaws of the Seller), under its seal imprinted
thereon and attested by the manual or facsimile signature of its Secretary or
one of its Assistant Secretaries. Certificates bearing the manual or facsimile
signature of individuals who were at any time the proper officers of the Seller
shall bind the Seller, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery of
such Certificates or did not hold such offices at the date of such Certificate.
No Certificate shall be entitled to any benefit under this Agreement, or be
valid for any purpose, unless there appears on such Certificate a certificate
of authentication substantially in the form set forth in Exhibit A executed by
the Trustee by manual signature of an authorized signatory, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. The Trustee's signature shall be for authentication purposes and
neither the Trustee nor any Person signing on its behalf shall have any
liability on the respective Certificate (other than the certificate of
authentication thereon). All Certificates shall be dated the date of their
authentication.
5.02. Registration of Transfer and Exchange of Certificates.
The Trustee, or such other Person as it shall designate in writing,
shall be the Certificate Registrar, who shall cause to be kept at the office or
agency to be maintained by the Certificate Registrar a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the
Certificate Registrar shall provide for the registration of each Series of
Certificates and of transfers and exchanges of all such Certificates as herein
provided. The Trustee, whose principal corporate trust office is located at the
Corporate Trust Office, is hereby initially appointed Certificate Registrar for
the purpose of registering each Series of Certificates and transfers and
exchanges of all such Certificates as herein provided.
No transfer of a Certificate or Certificates shall be made unless such
transfer is made pursuant to an effective registration statement under the
Certificates Act of 1933, as amended, (the "Act") or is exempt from the
registration requirements under the Act. In the event that a transfer is
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to be made in reliance upon an exemption from the Act, the Certificate
Registrar may require, in order to assure compliance with the Act, that the
Certificateholder desiring to effect such transfer and such Certificateholder's
prospective transferee each certify to the Certificate Registrar in writing the
facts surrounding such transfer. In the event that such certification of facts
does not on its face establish the availability of an exemption under Section
4(5) or a comparable provision of the Act, the Certificate Registrar may
require an Opinion of Counsel satisfactory to it that such transfer may be made
pursuant to an exemption from the Act, which Opinion of Counsel shall not be an
expense of the Master Servicer or the Trustee. Neither the Master Servicer nor
the Trustee is obligated to register any of the Certificates under the Act or
any other federal or state securities law.
It is a condition to the transfer of any Certificate that the
transferee certify in writing to the Seller and the Certificate Registrar that
such transferee (i) is not an employee benefit plan, trust or account,
including an individual retirement account, that is subject to the Employee
Retirement Income Security Act of 1974, as amended, or that is described in
Section 4975(e)(1) of the Federal Tax Laws (any such plan, trust or account
being referred to as a "Plan") and (ii) has not acquired and will not acquire
such Certificate with plan assets, within the meaning of 29 CFR 2510.3-101, of
a Plan.
A form of the letter from the purchaser of any Certificate, containing
the representations described in the preceding two paragraphs, is in the form
of a Purchaser Letter attached hereto as Exhibit E.
Subject to the preceding three paragraphs, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Certificate Registrar maintained for such purpose pursuant to this Section 5.02
and upon satisfaction of all requirements for transfer, the Seller shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Series and of a like aggregate Fractional Undivided Interest.
At the option of the Certificateholders, Certificates may, upon
satisfaction of the requirement for exchange, be exchanged for other
Certificates of such Series of authorized denominations of the same aggregate
Fractional Undivided Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange the Seller shall execute, and the Trustee shall
authenticate and deliver, the Certificates which the Certificateholder making
the exchange is entitled to receive. Every Certificate presented or surrendered
for transfer or exchange shall (if so required by the Seller or the Trustee or
the Certificate Registrar) (a) be duly endorsed by, or be accompanied by a
written instrument of transfer in form acceptable to transfer agents registered
with the Securities and Exchange Commission and the Seller, the Trustee and the
Certificate Registrar, and (b) be duly executed by the holder thereof or his
attorney duly authorized in writing.
No service charge shall be made for any transfer or exchange of any
Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of any Certificates.
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All Certificates surrendered for transfer and exchange shall be held
by the Certificate Registrar for a period of three years after termination of
this Agreement, and thereafter may be destroyed, in which event a destruction
certificate shall be delivered to the Trustee.
5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee or the
Certificate Registrar, or the Certificate Registrar and the Trustee receive
evidence to their satisfaction of the destruction, loss or theft of any
Certificate and of the ownership thereof, and (ii) there is delivered to the
Trustee and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of receipt
by the Seller or the Trustee of written notice that such Certificate has been
acquired by a bona fide purchaser, the Seller 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
Series, tenor and Fractional Undivided Interest. Upon the issuance of any new
Certificate under this Section, the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Certificate Registrar and of the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the applicable
Trust Fund relating to the particular Series for which such replacement
Certificate was issued, as if originally issued, whether or not the Certificate
believed to be lost, stolen or destroyed shall be found at any time.
5.04. Persons Deemed Owners.
Prior to due presentation of a Certificate for registration or
transfer, the Seller, the Trustee, the Certificate Registrar and any agent of
the Seller, the Trustee or the Certificate Registrar may treat the person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 4.01(b) and for all
other purposes whatsoever, and neither the Seller, the Trustee, the Certificate
Registrar nor any agent of the Seller, the Trustee or the Certificate Registrar
shall be affected by notice to the contrary.
VI LIABILITY
6.01. Liability of the Seller, the Loan Seller and the Master
Servicer.
The Seller, the Loan Seller and the Master Servicer each shall be
liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Seller, the Loan Seller and the
Master Servicer herein.
6.02. Merger; Consolidation or Conversion of the Seller or the Master
Servicer.
Except in connection with a merger or consolidation permitted by this
Section 6.02, the Seller, the Loan Seller and the Master Servicer (except as
contemplated in the announcement dated June 23, 1997 regarding the acquisition
of the Master Servicer by Dime Bancorp, Inc by means of a stock for stock
exchange) each will keep in full effect its existence, rights and franchises as
a
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corporation under the laws of the state of its incorporation, and each will
obtain and preserve its qualification to do business as a foreign corporation
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Certificates or
any of the Mortgage Loans and to perform its respective duties under this
Agreement.
Any Person into which the Seller, the Loan Seller or the Master
Servicer may be merged, consolidated or converted, or any corporation resulting
from any merger or consolidation to which the Seller, the Loan Seller or the
Master Servicer shall be a party, or any Person succeeding to the business of
the Seller, the Loan Seller or the Master Servicer shall be the successor of
the Seller, the Loan Seller or the Master Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
Any Person into which the Seller, Loan Seller or Master Servicer may
be merged, consolidated or converted, or any corporation resulting from any
merger or consolidation to which the Seller, Loan Seller or Master Servicer
shall be a party, as the case may be, or any Person succeeding to the business
of the Seller, Loan Seller or Master Servicer (including by a transfer of
servicing portfolio or operations by the Loan Seller or Master Servicer), shall
be the successor of the Seller, Loan Seller or Master Servicer hereunder, as
the case may be, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Loan Seller or Master Servicer must meet the criteria set forth in Section
7.02 for a successor Master Servicer and shall be qualified to sell mortgage
loans to and service mortgage loans for FNMA or FHLMC.
6.03. Limitation on Liability of the Seller, the Master Servicer and
Others.
Neither the Seller, the Master Servicer nor any of the directors,
officers, employees or agents of the Seller or the Master Servicer shall be
under any liability to any Trust Fund or the related Certificateholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Seller or the Master Servicer (but this
provision shall protect the above described persons) against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Master Servicer pursuant to Section 3.01 or any other Section
hereof; and provided further that this provision shall not protect the Seller,
the Master Servicer or any such person, against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Seller, the Master Servicer and any
director, officer, employee or agent of the Seller or the Master Servicer may
rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder. The
Seller, the Master Servicer and any director, officer, employee or agent of the
Seller or the Master Servicer shall be indemnified and held harmless by any
Trust Fund against any loss, liability or expense
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incurred in connection with any legal action relating to this Agreement or the
Certificates INCLUDING ANY LOSS, LIABILITY OR EXPENSE CAUSED BY ANY INDEMNIFIED
PARTY'S OWN NEGLIGENCE, other than any loss, liability or expense related to
Master Servicer's servicing obligations with respect to any specific mortgage
loan or mortgage loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) or related to the Master
Servicer's obligations under Section 3.01, or any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Seller nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its respective duties under this Agreement
and which in its opinion may involve it in any expense or liability; provided,
however, that the Seller or the Master Servicer may in its sole discretion
undertake any such action which it may deem necessary or desirable with respect
to this Agreement and the rights and duties of the parties hereto and the
interests of the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom (except
any action or liability related to the Master Servicer's obligations under
Section 3.01) shall be expenses, costs and liabilities of the applicable Trust
Fund, and the Seller and the Master Servicer shall be entitled to be reimbursed
therefor from the Certificate Account as provided in Section 3.11, any such
right of reimbursement being prior to the rights of Certificateholders to
receive any amount in the Certificate Account.
6.04. Limitation on Resignation of the Master Servicer.
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) upon appointment of a successor servicer and
receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not, in and of itself, result in a withdrawal
or downgrading of the Certificates or (b) upon determination that its duties
hereunder are no longer permissible under applicable law and cannot be cured.
Any such determination permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Counsel (at the expense of the resigning Master
Servicer) to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor servicer shall have assumed
the Master Servicer's responsibilities, duties, liabilities and obligations
hereunder.
VII MASTER SERVICER DEFAULT
7.01. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to remit to the Trustee for
distribution to the Certificateholders any payment (other than an Advance)
required to be made under the terms of the Certificates of a Series or this
Agreement which continues unremedied for a period of five days after the date
upon which written notice of such failure, requiring the same to be remedied,
shall have been given to the Master Servicer by the Seller or the Loan Seller
(with a copy to the Trustee) or the Trustee, or to the Master Servicer, the
Seller and the Trustee by the Holders of Certificates of such Series evidencing
Fractional Undivided Interests aggregating not less than 25% of the applicable
Trust Fund; or
(ii) any failure on the part of the Master Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on the
part of the Master Servicer contained in the Certificates or in this Agreement
(including any breach of the Master Servicer's representations and warranties
pursuant to Section 2.03(a) which materially and adversely affects
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the interests of the Certificateholders of a Series) which continues unremedied
for a period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Master Servicer
by the Seller or the Loan Seller (with a copy to the Trustee) or the Trustee,
or to the Master Servicer, the Seller and the Trustee by the Holders of
Certificates of the affected Series evidencing Fractional Undivided Interests
aggregating not less than 25% of the Trust Fund for the affected Series; or
(iii) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future federal
or state bankruptcy, insolvency or similar law or 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
Master Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Master Servicer or of or relating to all or substantially all of its
property; or
(v) the Master Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take advantage of or
otherwise voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations; or
(vi) the Master Servicer shall notify the Trustee pursuant to Section
4.03(b) and shall fail to deposit in the Certificate Account on any Certificate
Account Deposit Date by the time required therein an amount equal to any
required Advance in accordance with the procedures set forth in Section
4.03(b).
If an Event of Default described in clauses (i) - (v) of this Section
shall occur with respect to a Series (each event described in clauses (iii) -
(v) of this Section to be deemed to occur with respect to each Series if such
event occurs), then, and in each and every such case, so long as such Event of
Default shall not have been remedied, the Seller or the Trustee may, and at the
direction of the Holders of Certificates of such Series evidencing Fractional
Undivided Interests aggregating not less than 51%, the Trustee shall, by notice
to the Master Servicer (and to the Seller and the Loan Seller if given by the
Trustee or to the Trustee and the Loan Seller if given by the Seller terminate
all of the rights and obligations of the Master Servicer (but not as Loan
Seller in the event they are the same Person) under this Agreement and in and
to the applicable Trust Fund, other than its rights as a Certificateholder
hereunder. If an Event of Default described in clause (vi) hereof shall occur,
the Trustee shall, by notice to the Master Servicer, the Seller and the Loan
Seller, terminate all of the rights and obligations of the Master Servicer
under this Agreement and in and to the applicable Trust Fund, other than its
rights as a Certificateholder hereunder. On or after the receipt by the Master
Servicer of such notice, all authority and power of the Master Servicer under
this Agreement, whether with respect to the Certificates (other than as a
holder thereof) or the Mortgage Loans or otherwise, shall pass to and be vested
in the Trustee pursuant to and under this Section, and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
the
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Master Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary
or appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee or its appointed agent for administration by it of all
cash amounts which shall at the time be deposited by the Master Servicer or
should have been deposited to the Custodial Account, the Excess Proceeds
Account or the Certificate Account or thereafter be received with respect to
the Mortgage Loans. The Trustee shall not be deemed to have breached any
obligation hereunder as a result of a failure to make or delay in making any
distribution as and when required hereunder caused by the failure of the Master
Servicer to remit any amounts received on it or to deliver any documents held
by it with respect to the Mortgage Loans. For purposes of this Section 7.01,
the Trustee shall not be deemed to have knowledge of an Event of Default unless
a Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Office has actual knowledge thereof or unless notice of any
event which is in fact such an Event of Default is received by the Trustee and
such notice references the Certificates, the applicable Trust Fund or this
Agreement.
Notwithstanding any termination of the activities of North American
Mortgage Company ("NAMC") in its capacity as Master Servicer hereunder, NAMC
shall be entitled to receive, out of any Late Collection of a Monthly Payment
on a Mortgage Loan which was due prior to the notice terminating NAMC's rights
and obligations as Master Servicer hereunder and received after such notice,
that portion to which NAMC would have been entitled pursuant to Sections
3.11(ii), (iii), (iv), (v) and (viii) as well as its Servicing Fee in respect
thereof, and any other amounts payable to NAMC hereunder the entitlement to
which arose prior to the termination of its activities hereunder.
7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01, the Trustee or its appointed agent shall
be the successor in all respects to the Master Servicer in its capacity as
Master Servicer under this Agreement and the transactions set forth or provided
for herein and shall be subject thereafter to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer including the
obligation to make Advances which have been or will be required to be made
(except for the responsibilities, duties and liabilities contained in Section
2.03 and its obligations to deposit amounts in respect of losses pursuant to
Sections 3.12 and 4.01(e)) by the terms and provisions hereof; and provided
further, that any failure to perform such duties or responsibilities caused by
the Master Servicer's failure to provide information required by Section 4.03
shall not be considered a default by the Trustee hereunder. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans which the Master Servicer would have been entitled to charge to the
Custodial Account and the Certificate Account if the Master Servicer had
continued to act hereunder. Notwithstanding the above, the Trustee may, if it
shall be unwilling to so act, or shall, if it is unable to so act (exclusive of
the obligations set forth in Section 4.03) or if the Holders of Certificates of
a Series evidencing Fractional Undivided Interests aggregating not less than
51% of the Trust Fund for a Series so request in writing to the Trustee,
appoint, or petition a court of competent jurisdiction to appoint, any mortgage
loan servicing institution (acceptable to the Rating Agencies) having a net
worth of not
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less than $10,000,000 (or other amount acceptable to the Rating Agencies) as
the successor to the Master Servicer hereunder in the assumption of all or any
part of the responsibilities, duties or liabilities of the Master Servicer
hereunder. Pending appointment of a successor to the Master Servicer hereunder,
the Trustee shall act in such capacity as hereinabove provided. In connection
with such appointment and assumption, the Trustee may make such arrangements
for the compensation of such successor out of payments on Mortgage Loans as it
and such successor shall agree; provided, however, that no such compensation
shall be in excess of that permitted the Master Servicer hereunder. The Loan
Seller, the Seller, the Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
Any successor, including the Trustee, to the Master Servicer shall
maintain in force during its term as master servicer hereunder policies and
fidelity bonds to the same extent as the Master Servicer is so required
pursuant to Section 3.18.
7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a
successor to the Master Servicer, the Trustee shall
give prompt notice thereof to Certificateholders.
(b) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all
Holders of Certificates notice of each such Event of
Default hereunder known to the Trustee, unless such
Event of Default shall have been cured or waived.
7.04. Waiver of Events of Default.
The Holders of Certificates of each Series evidencing Fractional
Undivided Interests aggregating not less than 662/3% affected by a default or
Event of Default hereunder, may waive such default or Event of Default;
provided, however, that (a) a default or Event of Default under clause (i) of
Section 7.01 may be waived only by all of the Holders of Certificates affected
by such default or Event of Default and (b) no waiver pursuant to this Section
7.04 shall affect the Holders of Certificates in the manner set forth in the
third paragraph of Section 11.01 or have a material adverse affect on any
non-consenting Certificateholder. Upon any such waiver of a default or Event of
Default as provided above, such default or Event of Default shall cease to
exist and shall be deemed to have been remedied for every purpose hereunder. No
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon except to the extent expressly so
waived.
VIII CONCERNING THE TRUSTEE
8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such
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duties as are specifically set forth in this Agreement. If an Event of Default
occurs and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs unless it is acting as Master
Servicer, in which case it shall use the degree of care and skill as is
required of the Master Servicer under this Agreement. Any permissive right of
the Trustee enumerated in this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall request that the presenting Person have the instrument corrected.
The Trustee shall sign on behalf of each Trust Fund any tax return
that the Trustee is required to sign pursuant to applicable federal, state or
local tax laws.
The Trustee covenants and agrees that it shall perform its obligations
hereunder in a manner so as to maintain the status of either the Lower REMIC or
the Upper REMIC as a REMIC under the REMIC Provisions and to prevent the
imposition of any federal, state or local income, prohibited transaction,
contribution or other tax on any Trust Fund to the extent that maintaining such
status and avoiding such taxes are reasonably within the control of the Trustee
and are reasonably within the scope of its duties under this Agreement.
The Trustee shall cooperate to the extent practicable, with the Seller
in the preparation of any information, for the Holder of any Certificate, which
the Seller in its sole discretion deems necessary and appropriate for purposes
of satisfying applicable information reporting requirements under Rule 144A or
otherwise.
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; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing or waiver of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in
this Agreement, no implied covenants or obligations shall be read into this
Agreement against the Trustee and, in the absence of bad faith on the part of
the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
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(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it with respect to a Series in
good faith in accordance with the direction of Holders of Certificates
evidencing Fractional Undivided Interests aggregating not less than 25%
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.
8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(a) The Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon
any resolution, Officers' Certificate, certificate
of auditors or any other certificate, statement,
instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or
document reasonably believed by it to be genuine and
to have been signed or presented by the proper party
or parties;
(b) The Trustee may consult with counsel and on the
advice of such counsel any Opinion of Counsel shall
be full and complete authorization and protection in
respect of any action taken or suffered or omitted
by it hereunder in good faith and in accordance
therewith;
(c) The Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this
Agreement or to make any investigation of matters
arising hereunder or to institute, conduct or defend
any litigation hereunder or in relation hereto at
the request, order or direction of any of the
Certificateholders, pursuant to the provisions of
this Agreement, unless such Certificateholders shall
have offered to the Trustee reasonable security or
indemnity against the costs, expenses and
liabilities which may be incurred therein or
thereby; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the
occurrence of an Event of Default (which has not
been cured or waived), to exercise such of the
rights and powers vested in it by this Agreement,
and to use the same degree of care and skill in
their exercise as a prudent man would exercise or
use under the circumstances in the conduct of his
own affairs;
(d) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it
by this Agreement;
(e) Prior to the occurrence of an Event of Default with
respect to a Series hereunder and after the curing
or waiver of all Events of Default which may have
occurred, the Trustee shall not, with respect to
such
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Series, be bound to make any investigation into the
facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing
to do so by Holders of Certificates of such Series
evidencing Fractional Undivided Interests
aggregating not less than 25% of the applicable
Trust Fund; provided, however, that if the payment
within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred
by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or
liability as a condition to taking any such action.
The reasonable expense of every such reasonable
examination shall be paid by the Master Servicer or,
if paid by the Trustee, shall be repaid by the
Master Servicer upon demand; and
(f) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either
directly or by or through agents, affiliates,
custodians or attorneys; provided that the Trustee
shall remain directly liable with respect to the
execution of such trusts or powers and the
performance of such duties without regard to the
presence of such agents or attorneys.
8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates, other than the
signature of the Trustee on the Certificates and the certificate of
authentication, shall be taken as the statements of the Seller or the Master
Servicer, as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations or warranties as to the
validity or sufficiency of this Agreement or of the Certificates or of any
Mortgage Loan or related document, other than the signature of the Trustee on
the Certificates and the Certificate of Authentication. The Trustee shall not
be accountable for the use or application by the Seller or the Master Servicer
of any of the Certificates or of the proceeds of such Certificates, or for the
use or application of any funds paid to the Loan Seller in respect of the
Mortgage Loans or deposited in or withdrawn from the Custodial Account, the
Excess Proceeds Account or the Certificate Account or any other account by or
on behalf of the Seller or the Master Servicer, other than any funds on deposit
with the Trustee held by or on behalf of the Trustee in accordance with Section
3.10.
8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights it would have if it were
not Trustee.
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8.05. Master Servicer to Pay Trustee's Fees.
The Master Servicer covenants and agrees to pay to the Trustee from
time to time, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder or of the Trustee. Except
as otherwise provided in this Agreement, the Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified by any Trust Fund and
held harmless against any claim, loss, liability or expense incurred in
connection with any Event of Default, any breach of this Agreement, any claim
or legal action, including any pending or threatened claim or legal action
relating to the acceptance or administration of its trusts hereunder or the
Certificates, other than any claim, loss, liability or expense incurred in
connection with a breach constituting willful misfeasance, bad faith or
negligence of the Trustee in the performance of its duties hereunder or by
reason of reckless disregard of its obligations and duties hereunder. The
provisions of this Section 8.05 shall survive the resignation or removal of the
Trustee and the termination of this Agreement.
The Master Servicer shall indemnify, defend, and hold harmless the
Trustee, its directors, employees, officers, and agents, from and against all
losses, claims, damages, and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties herein
contained, except to the extent that such loss, claim, damage, or liability:
(a) shall be due to the willful misfeasance, bad faith, or negligence of the
Trustee, its directors, employees, officers, and agents, or (b) shall be one as
to which any Trust Fund is required to indemnify the Trustee. Indemnification
under this Section shall include reasonable fees and expenses of counsel and
expenses of litigation and shall survive the termination of this Agreement and
of the Master Servicer for actions or inactions by the Master Servicer when it
acted as such.
8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a
national banking association organized and doing business under the laws of any
state or the United States of America or the District of Columbia, authorized
under such laws to exercise corporate trust powers, having a combined capital
and surplus of at least $50,000,000 and subject to supervision or examination
by federal or state authority. In addition, the Trustee shall at all times be
acceptable to each Rating Agency rating the Securities. If such corporation
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
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07. The corporation or national banking association serving as
Trustee may have normal banking and trust relationships with the Seller and its
affiliates, Loan Seller and its affiliates or the Master Servicer and its
affiliates; provided, however, that such corporation cannot be an affiliate of
the Master Servicer other than the Trustee in its role as successor to the
Master Servicer.
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8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving notice thereof to the Seller, the Master Servicer and
to all Certificateholders; provided, that such resignation shall not be
effective until a successor trustee is appointed and accepts appointment in
accordance with the following provisions. Upon receiving such notice of
resignation, the Master Servicer shall promptly appoint a successor trustee who
meets the eligibility requirements of Section 8.06 by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee and to
the successor trustee. A copy of such instrument shall be delivered to the
Certificateholders and the Master Servicer by the Seller. If no successor
trustee shall have been so appointed and have accepted appointment within 60
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; provided, however, that the resigning Trustee shall not resign and be
discharged from the trusts hereby created until such time as the Rating Agency
rating the Certificates approves the successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Master Servicer, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or if
the rating of the long-term debt obligations of the Trustee is not acceptable
to a Rating Agency, then the Master Servicer may remove the Trustee and appoint
a successor trustee who meets the eligibility requirements of Section 8.06 by
written instrument, in duplicate, which instrument shall be delivered to the
Trustee so removed and to the successor trustee. A copy of such instrument
shall be delivered to the Certificateholders and the Master Servicer by the
Seller.
The Holders of Certificates of each Series evidencing Fractional
Undivided Interests aggregating not less than 51% of the Trust Fund for each
such Series may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Master Servicer, one complete set to the Trustee so
removed and one complete set to the successor so appointed. A copy of such
instrument shall be delivered to the Certificateholders and the Master Servicer
by the Seller.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.
The costs and expenses incurred in connection with the resignation or
removal of the Trustee shall be paid by the Trustee.
8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 shall
execute, acknowledge and deliver to the Master Servicer and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
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become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Mortgage Files and related documents and statements held by it hereunder, and
the Master Servicer and the predecessor trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Master Servicer shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register. If the Master Servicer 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
Master Servicer.
8.09. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to the business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of any Trust Fund or property securing the same may at the time be located, the
Seller 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, or
separate trustee or separate trustees, of all or any part of such Trust Fund,
and to vest in such Person or Persons, in such capacity, such title to such
Trust Fund, or any part thereof, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the Seller
and the Trustee may consider necessary or desirable. If the Seller shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice
to Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts
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are to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to any Trust Fund or any portion thereof in any
such jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Every such instrument shall be filed with the
Trustee.
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.
IX ▇▇▇▇▇▇▇▇▇▇▇
▇.▇▇. ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ or Liquidation of All Mortgage
Loans.
Subject to Section 9.02, the respective obligations and
responsibilities of the Seller, the Master Servicer and the Trustee created
hereby (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to provide for and the
Trustee to make payments to Certificateholders as hereafter set forth) shall
terminate upon payment to the Certificateholders of all amounts held by or on
behalf of the Trustee and required to be paid to them hereunder following the
earlier to occur of (i) the repurchase by the Master Servicer or the Issuer of
all Mortgage Loans and each REO Property in respect thereof remaining in each
Trust Fund at a price at the Repurchase Price; and (ii) the final payment or
other liquidation (or any Advance with respect thereto) of the last Mortgage
Loan remaining in each Trust Fund (or the disposition of all REO Property in
respect thereof); provided, however, that in no event shall the trust created
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the
United States to the Court of St. ▇▇▇▇▇, living on the date hereof. In the case
of any repurchase by the Master Servicer pursuant to clause (i), the Master
Servicer shall include in such repurchase price the amount of any Advances that
will be reimbursed to the Master Servicer pursuant to Section 3.11(iii) and the
Master Servicer shall exercise reasonable efforts to cooperate fully with the
Trustee in effecting such repurchase and the transfer of the Mortgage Loans and
related Mortgage Files and related records to the Master Servicer.
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The right of the Master Servicer or the Issuer to repurchase all
Mortgage Loans pursuant to (i) above shall be conditioned upon the aggregate
Stated Principal Balance of such Mortgage Loans at the time of any such
repurchase aggregating an amount equal to or less than 5% of the aggregate
Stated Principal Balance of the Mortgage Loans at the Cut-off Date and may be
exercised (a) by the Master Servicer on an Optional Termination Date on giving
to the Trustee and the Issuer not less the 5 Business Days' prior written
notice of the exercise of such option and (b) in the event that the Master
Servicer does not give such notice with respect to any Optional Termination
Date, by the Issuer on such Optional Termination Date on giving not less than 2
Business Days' prior written notice to the Trustee and the Master Servicer. If
such right is exercised, the Master Servicer or the Issuer, as applicable, upon
such repurchase shall provide to the Trustee, the certification required by
Section 3.16.
Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Master Servicer or the Issuer, as applicable, by letter to the Trustee and
the Certificateholders mailed (a) in the event such notice is given in
connection with the Master Servicer's election to repurchase, not earlier than
the 15th day and not later than the 25th day of the month next preceding the
month of such final distribution or (b) otherwise during the month of such
final distribution on or before the Determination Date in such month, in each
case specifying (i) the Distribution Date upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at
the office of the Certificate Registrar therein designated, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Certificate
Registrar therein specified. In the event such notice is given in connection
with the Master Servicer's election to repurchase, the Master Servicer shall
deliver to the Trustee for deposit in the Certificate Account on the Business
Day immediately preceding the Distribution Date specified in such notice an
amount equal to the above-described repurchase price payable out of its own
funds. Upon presentation and surrender of the Certificates by the
Certificateholders, the Trustee shall distribute to the Certificateholders the
amount otherwise distributable on such Distribution Date. Upon certification to
the Trustee by a Servicing Officer, following such final deposit, the Trustee
shall promptly release the Mortgage Files as directed by the Master Servicer
for the remaining Mortgage Loans, and the Trustee shall execute all
assignments, endorsements and other instruments required by the Master Servicer
as being necessary to effectuate such transfer.
In the event that all of the Certificateholders of a Series shall not
surrender their Certificates for cancellation within six months after the time
specified in the above-mentioned notice, the Trustee shall give a second notice
to the remaining Certificateholders instructing such Certificateholders to
surrender their Certificates for cancellation and receive the final
distribution with respect thereto. If within six months after the second notice
all of the Certificates shall not have been surrendered for cancellation, the
Trustee shall take reasonable steps as directed by the Seller, or appoint an
agent to take reasonable steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost thereof shall be paid
out of the funds and other assets which remain subject hereto. If, within nine
months after the second notice, all of the Certificates shall not have been
surrendered for cancellation, the Seller shall be entitled to all unclaimed
funds and other assets of the applicable Trust Fund, respectively, which remain
subject hereto.
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In addition and without prejudice to the foregoing, the respective
obligations of the Seller, the Master Servicer, the Loan Seller and the Trustee
created hereby may be terminated in respect of one or more Series of
Certificates on any date occurring after maturity of the Securities and the
release of the Certificates from any pledge securing the Securities.
Termination in the foregoing circumstances shall be effected upon receipt by
the Trustee of written notice from 100% of the Certificateholders of the
related Series of Certificate or Certificates requiring termination of this
Agreement in respect of such Series of Certificate or Certificates and
requesting the transfer of any Trust Fund to them in the manner specified in
such notice.
9.02. Additional Termination Requirements.
In the event the Master Servicer repurchases the Mortgage Loans as
provided in Section 9.01, the Lower REMIC and, in turn, the Upper REMIC shall
be terminated in accordance with the following additional requirements, unless
the Master Servicer, at its own expense, obtains for the Trustee an Opinion of
Counsel to the effect that the failure to comply with the requirements of this
Section 9.02 will not (i) result in the imposition of taxes on the net income
derived from "prohibited transactions" of either the Lower REMIC or the Upper
REMIC, as defined in Section 860F of the Code or (ii) cause either the Lower
REMIC or Upper REMIC to fail to qualify as a REMIC under the REMIC Provisions
at any time that any Certificates are outstanding:
(a) The Trustee shall establish a 90-day liquidation
period for the REMICs and specify the first day of
such period in a statement attached to the final Tax
Returns of the REMICs pursuant to Treasury
Regulation Section 1.860F-1. The Trustee shall
satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any
regulations thereunder, as evidenced by an Opinion
of Counsel obtained at the expense of the Master
Servicer; and
(b) During such 90-day liquidation period, and at or
prior to the time of making of the final payment on
the Certificates, the Trustee shall sell all of the
non-cash assets of the Lower REMIC and the Upper
REMIC for cash.
X [RESERVED]
XI MISCELLANEOUS PROVISIONS
11.01. Amendment.
This Agreement may be amended from time to time by the Seller, the
Master Servicer, the Loan Seller and the Trustee without notice to or the
consent of any of the Certificateholders, (i) to cure any ambiguity, (ii) to
correct or supplement any provisions herein which may be defective or
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inconsistent with any other provisions herein, (iii) to amend this Agreement in
any respect subject to the provisions below, (iv) to modify, eliminate, or add
to any of its provisions to such extent as shall be necessary or appropriate to
maintain the qualifications of the Upper REMIC and the Lower REMIC as REMICs
under the Code at all times that any Certificates are outstanding, or (v) if
such amendment, as evidenced by an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee, otherwise is reasonably
necessary to comply with any requirements imposed by the Code or any successor
or amendatory statute or any temporary or final regulation, revenue ruling,
revenue procedure or other written official announcement or interpretation
relating to federal income tax laws or any proposed such action which, if made
effective, would apply retroactively to any Trust Fund at least from the
effective date of such amendment; provided that such action (except any
amendment described in (iv) above) shall not, as evidenced by an Opinion of
Counsel (provided by the Person requesting such amendment) delivered to the
Trustee, adversely affect in any material respect the interests of any
Certificateholder (other than Certificateholders who shall consent to such
amendment).
This Agreement may also be amended with respect to a Series from time
to time by the Seller, the Master Servicer, the Loan Seller and the Trustee
with the consent of the Holders of Certificates of such Series evidencing
Fractional Undivided Interests aggregating not less than 662/3% for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received
on Mortgage Loans which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) adversely affect in
any material respect the interests of the Holders of any Series of Certificates
in a manner other than as described in (i), without the consent of the Holders
of Certificates of such Series evidencing Fractional Undivided Interests equal
to 100% of the Trust Fund relating to such Series, or (iii) reduce the
aforesaid percentage of Certificates of a Series the Holders of which are
required to consent to any such amendment, without the consent of the Holders
of all Certificates then outstanding. Notwithstanding any other provision of
this Agreement, for purposes of the giving or withholding of consents pursuant
to this Section 11.01, Certificates registered in the name of the Loan Seller
or the Master Servicer or any affiliate thereof shall be taken into account
when calculating Fractional Undivided Interests with respect to matters
described in (i), (ii) and (iii) of this paragraph.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel (provided by the Person requesting such
amendment) to the effect that such amendment will not result in the imposition
of any tax on the Securities pursuant to the REMIC Provisions or cause either
the Lower REMIC or the Upper REMIC to fail to qualify as a REMIC at any time
that any of the Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish a statement describing the amendment to each Certificateholder.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment,
but it shall be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents and of evidencing the
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authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
Prior to executing any amendment pursuant to this Section, the Trustee
shall be entitled to receive an Opinion of Counsel (provided by the Person
requesting such amendment) to the effect that such amendment is authorized or
permitted by this Agreement. The cost of an Opinion of Counsel delivered
pursuant to this Section 11.01 shall be an expense of the party requesting such
amendment, but in any case shall not be an expense of the Trustee.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer and at the expense of the Seller on direction by the Trustee,
but only upon direction accompanied by an Opinion of Counsel to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or any Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of any
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder of a Series shall have any right to vote (except
as expressly provided for herein) or in any manner otherwise control the
operation and management of any Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third party by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a notice of an Event of Default, or
of a default by the Loan Seller or the Trustee in the performance of any
obligation hereunder, and of the continuance thereof, as hereinbefore provided,
and unless also the Holders of
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Certificates evidencing Fractional Undivided Interests aggregating not less
than 25% of such Series shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after its receipt of such notice, request
and offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding. It is understood and intended, and expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates shall have any right in
any manner whatever by virtue of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of such
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of
this Section, each and every Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law or in equity.
11.04. Governing Law.
This Agreement and the Certificates shall be construed in accordance
with the laws of the State of New York without reference to any choice of law
doctrine (but with reference to Section 5- 1401 of the New York General
Obligations Law, which by its terms is applicable to this Agreement) the
obligations, rights and remedies of the parties hereunder shall be determined
in accordance with such laws.
11.05. Notices.
All demands, notices and direction hereunder shall be in writing and
shall be deemed effective upon receipt when delivered to (a) in the case of the
Seller, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇ ▇▇▇▇▇▇, or such other address as may hereafter be furnished to the Trustee
and the Master Servicer in writing by the Seller, (b) in the case of the
Trustee, to the Corporate Trust Office, Attention: CMCSC IV/NAMC 1997-3 or such
other address as may hereafter be furnished to the Master Servicer and the
Seller in writing by the Trustee, (c) in the case of the Master Servicer, North
American Mortgage Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, or such other address as may hereafter be
furnished to the Seller and the Trustee in writing and (d) in the case of the
Loan Seller, North American Mortgage Company, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, or such other address as
may hereafter be furnished to the Trustee, the Master Servicer and the Seller
in writing. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms
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shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
11.07. Successors and Assigns; Third Party Beneficiary.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto, and
all such provisions shall inure to the benefit of the Trustee and the
Certificateholders.
11.08. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
11.09. Notice to Rating Agencies and Certificateholder.
The Trustee shall use its best efforts to promptly provide notice to
each Rating Agency referred to below with respect to each of the following of
which it has actual knowledge:
1. Any material change or amendment to this Agreement;
2. The occurrence of any Event of Default that has not
been cured;
3. The resignation or termination of the Master
Servicer or the Trustee;
4. The repurchase of Mortgage Loans pursuant to Section
2.03;
5. The final payment to Certificateholders; and
6. Any change in the location of the Custodial Account,
the Excess Proceeds Account or the Certificate
Account.
In addition, the Trustee shall promptly furnish to each Rating Agency
copies of the following:
1. Each report to Certificateholders described in
Section 4.02; and
2. Each annual independent public accountants'
servicing report described in Section 3.20.
Any such notice pursuant to this Section 11.09 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to (i) in the
case of Standard & Poor's, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Surveillance Department, and (ii) in the case of DCR, ▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
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Floor, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: MBS Monitoring, or, in each case,
such other address as such Rating Agency may designate in writing to the
parties thereto.
-95-
101
IN WITNESS WHEREOF, the Seller, the Master Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized all as of the day and year first above written.
CMC SECURITIES CORPORATION IV,
as Seller
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
NORTH AMERICAN MORTGAGE COMPANY,
as Master Servicer and as Loan Seller
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Pooling and Servicing Agreement - Signature Page
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ )
) ss.:
COUNTY OF DALLAS )
On the ____ day of ___________, 1997 before me, a notary public in and
for said State, personally appeared _____________________________, known to me
to be an Officer of CMC Securities IV, one of the corporations that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
STATE OF CALIFORNIA )
) ss.:
COUNTY OF SONOMA )
On the ______ day of ___________, 1997 before me, a notary public in
and for said State, personally appeared ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, known to me to be a
Senior Vice President of North American Mortgage Company, one of the
corporations that executed the within instrument, and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to
me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ )
) ss.:
CITY OF DALLAS )
On the _____ day of ____________, 1997 before me, a notary public in
and for said State, personally appeared ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, known to me to be a
Vice President of The First National Bank of Chicago, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
---------------------------
Notary Public
[Notarial Seal]
104
EXHIBIT A-1
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
CMO MORTGAGE PASS-THROUGH
CERTIFICATE, SERIES 1997-NAMC 3-A
evidencing a beneficial interest in a pool of conventional
single-family loans transferred to the Trustee
referred to below by
CMC SECURITIES CORPORATION IV
serviced by
NORTH AMERICAN MORTGAGE COMPANY
as Master Servicer
(This Certificate does not represent an interest in
or obligation of CMC Securities Corporation IV,
North American Mortgage Company,
Capstead Mortgage Corporation or the Trustee)
No. 1 100/100th Undivided Interest
This certifies that The First National Bank of Chicago, is the
registered owner of a 100/100th Fractional Undivided Interest in a pool of
conventional single-family mortgage loans (the "Mortgage Loans") assigned to
the series referred to above (the "Series") of Certificates (the "Loan Group")
and transferred to the Trustee referred to below by CMC Securities Corporation
IV ("CMCSC IV"), and serviced by North American Mortgage Company, as Master
Servicer. The Loan Group was created pursuant to a Pooling and Servicing
Agreement dated as of September 1, 1997 (the "Agreement") among CMCSC IV, North
American Mortgage Company as Master Servicer and Loan Seller (the "Master
Servicer" or "Loan Seller") and The First National Bank of Chicago, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereinbelow. Mortgage Loans identified as Group I Mortgage Loans on
the Mortgage Loan Schedule attached as Exhibit F to the Pooling and Servicing
Agreement, having an aggregate principal amount of $149,306,493.81 as of
September 1, 1997 (the "Cut-off Date"), after deducting all payments due on or
before the Cut-off Date, were transferred and assigned to the Loan Group for
this Series. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the holder of
this Certificate by virtue of the acceptance hereof assents and by which such
holder is bound. Capitalized terms not defined herein shall have the meanings
set forth in the Agreement.
A-1-1
105
Pursuant to the Agreement, the Trustee will distribute on the Business
Day prior to the 25th day of the month (each, a "Distribution Date"),
commencing in October, 1997, to the Person in whose name this Certificate is
registered at the close of business on the last day (or if such last day is not
a Business Day, the Business Day immediately preceding such last day) of the
month next preceding the month of such distribution (the "Record Date"), such
Person's pro rata share (based on the aggregate Fractional Undivided Interest
evidenced by this Certificate) of the aggregate amount required to be
distributed to the Holders of the Series 1997-NAMC 3-A Certificates pursuant to
Section 4.01(b) of the Agreement. For the purposes hereof, amounts received in
connection with the liquidation of defaulted Mortgage Loans in the Loan Group
through Insurance Proceeds, foreclosure or trustee's sales proceeds or
otherwise, shall be deemed to be amounts received on Mortgage Loans in the Loan
Group.
Distributions on this Certificate will be made by the Trustee by wire
transfer in immediately available funds for the account of the Person entitled
thereto as specified by such Person in accordance with the terms of the
Agreement or by such other method as shall be acceptable to both the Trustee
and such Person. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency maintained for that purpose by the Trustee in the City
of New York, State of New York.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth above (herein called the "Certificates") and
representing the Fractional Undivided Interest in the Trust Fund created
pursuant to the Agreement.
The Certificates do not represent an obligation of, or an interest in,
CMCSC IV, the Master Servicer, or the Trustee and are not insured or guaranteed
by the Government National Mortgage Association or any other governmental
agency. The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans in the Loan Group, all as more
specifically set forth hereinabove and in the Agreement.
As provided in the Agreement, withdrawals from the Certificate Account
may be made by the Trustee from time to time for purposes other than
distributions to Certificateholders, such purposes including reimbursement to
the Master Servicer of certain expenses incurred, by them in connection with
the Mortgage Loans in the Loan Group.
The Agreement permits, with respect to this Series and with certain
exceptions therein provided, the amendment thereof and the modification of the
rights and obligations of the Master Servicer and the rights of the
Certificateholders of this Series under the Agreement at any time by CMCSC IV,
the Master Servicer and the Trustee with the consent of the holders of
Certificates of this Series evidencing Fractional Undivided Interests
aggregating not less than 66% of the Trust Fund. Any such amendment or
modification shall be effective only as to this Series. Any consent to such an
amendment or modification by the holder of this Certificate shall be conclusive
and
A-1-2
106
binding on such holder and upon all future holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange therefore or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the holders of any of the
Certificates of this Series.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Certificate Registrar, which initially is The First
National Bank of Chicago, as Certificate Trustee, upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Certificate Registrar, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the holder hereof or such holder as attorney duly authorized in
writing, and thereupon one or more new Certificates of this Series of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates in this Series are exchangeable for new
Certificates of this Series of authorized denominations evidencing the same
aggregate Fractional Undivided Interest in the Trust Fund, as requested by the
holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMCSC IV, the Master Servicer, the Trustee, the Certificate Registrar
and any agent of the Master Servicer, the Trustee or the Certificate Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither CMCSC IV, the Master Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund shall
terminate upon (i) the later of the maturity or other liquidation (including
repurchase by the Loan Seller) of the last Mortgage Loan in the Loan Group or
the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan in the Loan Group, and (ii) the payment to
Certificateholders of this Series of all amounts held on their behalf and
required to be paid to them pursuant to the Agreement. The Master Servicer or
CMCSC IV may effect early retirement of the Certificates of this Series by
exercising its right under the Agreement to repurchase all the Mortgage Loans
in the Loan Group and the related Trust Property in the event that the
aggregate outstanding principal balance of the Mortgage Loans in the Loan Group
is less than five percent (5%) of the adjusted aggregate principal balance of
the Mortgage Loans in the Loan Group at the Cut-off Date.
The Trustee's signature shall be for authentication purposes only and
neither the Trustee nor any person signing on its behalf shall have liability
on this Certificate (other than for the certificate of authentication).
A-1-3
107
IN WITNESS WHEREOF, CMCSC IV has caused this Certificate to be duly
executed under its official seal.
CMC SECURITIES CORPORATION IV
By:
------------------------------
Name:
-------------------------
Title:
------------------------
[Seal]
Attest
-----------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Dated: September 30, 1997
A-1-4
108
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ____________________________________ (Please print or
typewrite name and address including postal zip code of assignee)
a Fractional Undivided Interest equal to ______________________ of the
Fractional Undivided Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register.
I (we) further direct the Certificate Registrar to issue a new
Certificate of like Series of a Fractional Undivided Interest equal to
_____________________________________________________________, to the above
named assignee and deliver such Certificate to the following address:
_______________________________________________________________________________
_______________________________________________________________________________
Dated: ___________________
-------------------------------------------
tax identification Signature by or on behalf of assignor
no. of assignee: (signature must be signed as registered)
------------------ -------------------------------------------
(signature must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange)
The assignee should include the following for the information of the
Trustee:
Distributions shall be made by wire transfer in immediately available
funds to _________________________ for the account of account number
________________________, or, if mailed by check, to ________________.
Applicable statements should be mailed to _____________________________________
_______________________________________________________________________________
_______________________________________________________________________________.
This information is provided by _____________________________ the
assignee named above, or _____________________________________ as its agent.
A-1-5
109
EXHIBIT A-2
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY ONLY BE MADE IN A TRANSACTION EXEMPTED
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
CMO MORTGAGE PASS-THROUGH
CERTIFICATE, SERIES 1997-NAMC 3-B
evidencing a beneficial interest in a pool of conventional
single-family loans transferred to the Trustee
referred to below by
CMC SECURITIES CORPORATION IV
serviced by
NORTH AMERICAN MORTGAGE COMPANY
as Master Servicer
(This Certificate does not represent an interest in
or obligation of CMC Securities Corporation IV,
North American Mortgage Company,
Capstead Mortgage Corporation or the Trustee)
No. 1 100/100th Undivided Interest
This certifies that The First National Bank of Chicago, is the
registered owner of a 100/100th Fractional Undivided Interest in a pool of
conventional single-family mortgage loans (the "Mortgage Loans") assigned to
the series referred to above (the "Series") of Certificates (the "Loan Group")
and transferred to the Trustee referred to below by CMC Securities Corporation
IV ("CMCSC IV"), and serviced by North American Mortgage Company, as Master
Servicer. The Loan Group was created pursuant to a Pooling and Servicing
Agreement dated as of September 1, 1997 (the "Agreement") among CMCSC IV, North
American Mortgage Company as Master Servicer and Loan Seller (the "Master
Servicer" or "Loan Seller") and The First National Bank of Chicago, as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth hereinbelow. Mortgage Loans identified as Group 2 Mortgage Loans on
the Mortgage Loan Schedule attached as Exhibit F to the Pooling and Servicing
Agreement, having an aggregate principal amount of $131,985,226.85 as of
September 1, 1997 (the "Cut-off Date"), after deducting all payments due on or
before the Cut-off Date, were transferred and assigned to the Loan Group for
this Series. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the holder of
this Certificate by virtue of the acceptance hereof assents and by which such
holder is bound. Capitalized terms not defined herein shall have the meanings
set forth in the Agreement.
A-2-1
110
Pursuant to the Agreement, the Trustee will distribute on the Business
Day prior to the 25th day of the month (each, a "Distribution Date"),
commencing in October, 1997, to the Person in whose name this Certificate is
registered at the close of business on the last day (or if such last day is not
a Business Day, the Business Day immediately preceding such last day) of the
month next preceding the month of such distribution (the "Record Date"), such
Person's pro rata share (based on the aggregate Fractional Undivided Interest
evidenced by this Certificate) of the aggregate amount required to be
distributed to the Holders of the Series 1997-NAMC 3-B Certificates pursuant to
Section 4.01(b) of the Agreement. For the purposes hereof, amounts received in
connection with the liquidation of defaulted Mortgage Loans in the Loan Group
through Insurance Proceeds, foreclosure or trustee's sales proceeds or
otherwise, shall be deemed to be amounts received on Mortgage Loans in the Loan
Group.
Distributions on this Certificate will be made by the Trustee by wire
transfer in immediately available funds for the account of the Person entitled
thereto as specified by such Person in accordance with the terms of the
Agreement or by such other method as shall be acceptable to both the Trustee
and such Person. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the office or agency maintained for that purpose by the Trustee in the City
of New York, State of New York.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
This Certificate is one of a duly authorized issue of Certificates
designated as set forth above (herein called the "Certificates") and
representing the Fractional Undivided Interest in the Trust Fund created
pursuant to the Agreement.
The Certificates do not represent an obligation of, or an interest in,
CMCSC IV, the Master Servicer, or the Trustee and are not insured or guaranteed
by the Government National Mortgage Association or any other governmental
agency. The Certificates are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans in the Loan Group, all as more
specifically set forth hereinabove and in the Agreement.
As provided in the Agreement, withdrawals from the Certificate Account
may be made by the Trustee from time to time for purposes other than
distributions to Certificateholders, such purposes including reimbursement to
the Master Servicer of certain expenses incurred, by them in connection with
the Mortgage Loans in the Loan Group.
The Agreement permits, with respect to this Series and with certain
exceptions therein provided, the amendment thereof and the modification of the
rights and obligations of the Master Servicer and the rights of the
Certificateholders of this Series under the Agreement at any time by CMCSC IV,
the Master Servicer and the Trustee with the consent of the holders of
Certificates of this Series evidencing Fractional Undivided Interests
aggregating not less than 66% of the Trust Fund. Any such amendment or
modification shall be effective only as to this Series. Any consent to such an
amendment or modification by the holder of this Certificate shall be conclusive
and
A-2-2
111
binding on such holder and upon all future holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange therefore or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the holders of any of the
Certificates of this Series.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registerable in the
Certificate Register of the Certificate Registrar, which initially is The First
National Bank of Chicago, as Certificate Trustee, upon surrender of this
Certificate for registration of transfer at the office or agency maintained by
the Certificate Registrar, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Certificate Registrar, duly
executed by the holder hereof or such holder as attorney duly authorized in
writing, and thereupon one or more new Certificates of this Series of
authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust Fund will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates without
coupons. As provided in the Agreement and subject to certain limitations
therein set forth, Certificates in this Series are exchangeable for new
Certificates of this Series of authorized denominations evidencing the same
aggregate Fractional Undivided Interest in the Trust Fund, as requested by the
holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMCSC IV, the Master Servicer, the Trustee, the Certificate Registrar
and any agent of the Master Servicer, the Trustee or the Certificate Registrar
may treat the person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither CMCSC IV, the Master Servicer, the
Trustee, the Certificate Registrar nor any such agent shall be affected by
notice to the contrary.
The obligations created by the Agreement and the Trust Fund shall
terminate upon (i) the later of the maturity or other liquidation (including
repurchase by the Loan Seller) of the last Mortgage Loan in the Loan Group or
the disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan in the Loan Group, and (ii) the payment to
Certificateholders of this Series of all amounts held on their behalf and
required to be paid to them pursuant to the Agreement. The Master Servicer or
CMCSC IV may effect early retirement of the Certificates of this Series by
exercising its right under the Agreement to repurchase all the Mortgage Loans
in the Loan Group and the related Trust Property in the event that the
aggregate outstanding principal balance of the Mortgage Loans in the Loan Group
is less than five percent (5%) of the adjusted aggregate principal balance of
the Mortgage Loans in the Loan Group at the Cutoff Date.
The Trustee's signature shall be for authentication purposes only and
neither the Trustee nor any person signing on its behalf shall have liability
on this Certificate (other than for the certificate of authentication).
A-2-3
112
IN WITNESS WHEREOF, CMCSC IV has caused this Certificate to be duly
executed under its official seal.
CMC SECURITIES CORPORATION IV
By:
------------------------------
Name:
-------------------------
Title:
------------------------
[Seal]
Attest
-----------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred
to in the within-mentioned Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
------------------------------
Name:
-------------------------
Title:
------------------------
Dated: September 30, 1997
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ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ___________________________________________________________
_____________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
a Fractional Undivided Interest equal to ______________________ of the
Fractional Undivided Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such interest to assignee on the
Certificate Register.
I (we) further direct the Certificate Registrar to issue a new
Certificate of like Series of a Fractional Undivided Interest equal to
____________________________________________
_____________________________________________, to the above named assignee and
deliver such Certificate to the following address:
Dated: ___________________
-----------------------------------------
tax identification Signature by or on behalf of assignor
no. of assignee: (signature must be signed as registered)
------------------ -----------------------------------------
(signature must be guaranteed by a
commercial bank or trust company or a
member firm of a major stock exchange)
The assignee should include the following for the information of the
Trustee:
Distributions shall be made by wire transfer in immediately available
funds to ______________________________________________________ for the account
of account number __________________________________________, or, if mailed by
check, to __________________________________________. Applicable statements
should be mailed to ______________________________________________________
_________________________________________________________________________.
This information is provided by _____________________________ the
assignee named above, or _____________________________________ as its agent.
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EXHIBIT B
FORM OF TRUSTEE INITIAL CERTIFICATION
[DATE]
CMC Securities Corporation IV
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
North American Mortgage Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of September 1, 1997, among CMC Securities
Corporation IV, as Seller, North American Mortgage Company, as Loan
Seller and Master Servicer, and The First National Bank of Chicago, as
Trustee, Mortgage Pass-Through Securities, Series 1997-NAMC 3-A and
3-B
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that as to each
Mortgage Loan listed in each Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto) it has reviewed the
Mortgage File and the applicable Mortgage Loan Schedule and has determined
that, except as noted on the Schedule of Exceptions attached hereto: (i) all
documents required to be included in the Mortgage File are in its possession,
(ii) such documents have been reviewed by it and appear regular on their face
and relate to such Mortgage Loan, and (iii) based on examination by it, and
only as to such documents, the information set forth in items (i)-(vi), (xiv)
and (xv) of the definition or description of "Mortgage Loan Schedule" is
correct.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representation that any documents specified in clause (vi) of Section 2.01
should be included in any Mortgage File. The Trustee makes no representations
as to and shall not be responsible to verify: (i) the validity, legality,
sufficiency, enforceability, due authorization, recordability, or genuineness
of any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule, (ii) the collectability,
insurability, effectiveness, or suitability of any such Mortgage Loan, or (iii)
the existence of any assumption, modification, written assurance or
substitution agreement with respect to any Mortgage File if no such documents
appear in the Mortgage File delivered to the Trustee.
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115
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
A-2-7
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EXHIBIT C
FORM OF TRUSTEE FINAL CERTIFICATION
[DATE]
CMC Securities Corporation IV
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
North American Mortgage Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of September 1, 1997, among CMC Securities
Corporation IV, as Seller, North American Mortgage Company, as Loan
Seller and Master Servicer, and The First National Bank of Chicago, as
Trustee, Mortgage Pass-Through Securities, Series 1997-NAMC 3-A and
3-B
Ladies and Gentlemen:
In accordance with Section 2.02 of the Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage
Loan paid in full or listed on the attachment hereto) it has received the
documents set forth in Section 2.01.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representation that any
documents specified in clause (vi) of Section 2.01 should be included in any
Mortgage File. The Trustee makes no representations as to and shall not be
responsible to verify: (i) the validity, legality, sufficiency, enforceability,
due authorization, recordability, or genuineness of any of the documents
contained in each Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, (ii) the collectability, insurability, effectiveness,
or suitability of any such Mortgage Loan, or (iii) the existence of any
assumption, modification, written assurance or substitution agreement with
respect to any Mortgage File if no such documents appear in the Mortgage File
delivered to the Trustee.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO
By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
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EXHIBIT D-1
FORM OF REQUEST FOR RELEASE
[For Trustee]
Loan Information
Name of Mortgagor: __________________________________
Master Servicer __________________________________
Loan No.: __________________________________
Trustee
Name: __________________________________
Address: __________________________________
__________________________________
Trustee
Mortgage File No.: __________________________________
Request for Requesting Documents (check one):
1._____ Mortgage Loan Liquidated.
(The Master Servicer hereby certifies that all
proceeds of foreclosure, insurance or other
liquidation have been finally received and deposited
into the Custodial Account to the extent required
pursuant to the Pooling and Servicing Agreement.)
2._____ Mortgage Loan in Foreclosure.
3._____ Mortgage Loan Repurchased Pursuant to Section 9.01 of the
Pooling and Servicing Agreement.
4._____ Mortgage Loan Repurchased Pursuant to Article 11 of the
Pooling and Servicing Agreement. (The Master Servicer hereby
certifies that the repurchase price has been deposited into
the Custodial Account pursuant to the Pooling and Servicing
Agreement.)
5._____ Other (explain)_____________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
D-1-1
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The undersigned Master Servicer hereby acknowledges that it has
received from The First National Bank of Chicago, as Trustee for the Holders of
Mortgage Pass-Through Securities, Series 1997-NAMC 3-A and 3-B, the documents
referred to below (the "Documents"). All capitalized terms not otherwise
defined in this Request for Release shall have the meanings given them in the
Pooling and Servicing Agreement, dated as of September 1, 1997 (the "Pooling
and Servicing Agreement"), among CMC Securities Corporation IV, North American
Mortgage Company, and the Trustee.
( ) Promissory Note dated __________,19__, in the original principal sum
of $__________, made by _______________, payable to, or endorsed to
the order of, the Trustee.
( ) Mortgage recorded on _________________ as instrument no.__________ in
the County Recorder's Office of the County of ______________, State of
____________ in book/reel/docket ____________ of official records at
page/image __________.
( ) Deed of Trust recorded on _______________ as instrument no. __________
in the County Recorder's Office of the County of __________, State of
___________ in book/reel/docket ___________ of official records at
page/image __________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________ as instrument no. ____________ in the County Recorder's
Office of the County of __________, State of _________ in
book/reel/docket ___________ of official records at page/image
__________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ___________________
( ) ___________________
( ) ___________________
( ) ___________________
The undersigned Master Servicer hereby acknowledges and agrees as follows:
(1) The Master Servicer shall hold and retain possession of the
Documents in trust for the benefit of the Trustee, solely for the purposes
provided in the Agreement.
(2) The Master Servicer shall not cause or knowingly permit the
Documents to become subject to, or encumbered by, any claim, liens, security
interest, charges, writs of attachment or other impositions nor shall the
Master Servicer assert or seek to assert any claims or rights of setoff to or
against the Documents or any proceeds thereof.
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119
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no Ion-per exists, unless the Mortgage Loan relating to the Documents
has been liquidated and the proceeds thereof have been remitted to the
Custodial Account and except as expressly provided in the Agreement.
(4) The Documents and any proceeds thereof, including any proceeds of
proceeds, coming into the possession or control of the Master Servicer shall at
all times be earmarked for the account of the Trustee, and the Master Servicer
shall keep the Documents and any proceeds separate and distinct from all other
property in the Master Servicer's possession , custody or control.
NORTH AMERICAN MORTGAGE COMPANY
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Date:______, 19__
▇-▇-▇
▇▇▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICER'S CERTIFICATE AND TRUST RECEIPT
MORTGAGE PASS-THROUGH SECURITIES
SERIES 1997-NAMC 3-A and 3-B
__________________________ HEREBY CERTIFIES THAT HE/SHE IS AN OFFICER OF THE
MASTER SERVICER, HOLDING THE OFFICE SET FORTH BENEATH HIS/HER SIGNATURE,
AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER:__________________ BORROWER'S NAME:__________________
COUNTY: ______________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE CUSTODIAL ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
DATED:____________________ ___________________________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
D-2-1
121
EXHIBIT E
[Purchaser Letterhead]
[Date]
[Issuer]
[Certificate Registrar]
and
[Seller #1]
Ladies and Gentlemen:
In connection with the purchase by [Purchaser] from [Seller #1] of
approximately $________________ aggregate principal amount of Pass-Through
Certificates, Capstead Inc. CMO Pass-Through Program, Series 1997-NAMC 3-___
through 1997-NAMC 3-___ ("the Certificates"), administered by Capstead Mortgage
Corporation, we hereby represent and covenant to you the following:
(a) [Purchaser] is acquiring the Certificates for itself and not
for any other persons or entity.
(b) [Purchaser] is an "accredited investor" as defined in Rule
501(a) under the Securities Act of 1933 and is experienced in
making investments in securities comparable to the
Certificates.
(c) [Purchaser] has been furnished with all information regarding
the Certificates which it has requested from [Seller #1] or
[Issuer].
(d) [Purchaser] has not offered or sold any of the Certificates
to, solicited offers to buy any Certificates from, or
otherwise approached or negotiated with respect to the
Certificates with, any prospective purchaser, or taken any
other action which would result in a violation of Section 5
of the Securities Act of 1933 or any applicable state
securities laws.
(e) [Purchaser] is acquiring the Certificates for investment
purposes and not with a view to resale.
(f) [Purchaser] will not transfer, sell, pledge, encumber or
otherwise dispose of the Certificates in any manner which
would result in a violation of Section 5 of the Securities
Act of 1933 or any applicable state securities laws.
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122
(g) [Purchaser] (i) is not an employee benefit plan, trust or
account, including an individual retirement account, that is
subject to the Employee Retirement Income Security Act of
1974, as amended, or that is described in Section 4975(e)(1)
of the Internal Revenue Code of 1986, as amended, (any such
plan, trust or account being referred to as a "Plan") and
(ii) has not acquired and is not acquiring the Certificates
with plan assets, within the meaning of 29 CFR 2510.3-101, of
a Plan.
Very truly yours,
[Purchaser]
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
▇-▇
▇▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇ LOAN SCHEDULE
INTENTIONALLY OMITTED
F-1
124
EXHIBIT G
LOAN DATA REQUIREMENTS - MONTHLY DATA
CMC Securities Corporation IV, 1997-NAMC 3-A and 3-B
Field Description
----- -----------
DEALID Deal Name (Character)
GROUP Group Number (1 or 2) (Numeric)
LOAN Loan Number (Numeric)
BEG_SCHED Stated Principal Balance as of the Beginning of the Due Period (Numeric)
END_SCHED Stated Principal Balance as of the End of the Due Period (Numeric)
PMT Monthly Payment for the related Due Period (Numeric)
SCHED_I Interest portion of the Monthly Payment for the related Due Period (Numeric)
SCHED_P Principal portion of the Monthly Payment for the related Due Period (Numeric)
ADVANC_I Interest portion of the Advance for the related Due Period determined as of the
Determination Date (Numeric)
ADVANC_P Principal portion of the Advance for the related Due Period determined as of
the Determination Date (Numeric)
RATE Interest Rate used to calculate the Accrued Interest payable in the related Due
Period (Numeric)
PREPAY Prepayments received during the related Prepayment Period (Numeric)
CURTAIL Curtailments received during the related Prepayment Period (Numeric)
PREP_DAT Prepayment/Curtailment Date during the related Prepayment Period
(19910528) (Character)
PPIS Prepayment Interest Shortfall (Excess as negative number) (Numeric)
NEXT PAYMENT Next Payment Due Date as of the Determination Date (19910528) (Character)
DUE DATE
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DEL Delinquency Code (for following status: 31-60 days, 61-90 days, 91+ days)
as of the related Determination Date (Numeric)
STATUS Status Code (for following status: foreclosure, bankruptcy, REO) as of the
related Determination Date (Numeric)
BOOK Book Value of REO as of the end of the related Prepayment Period (Numeric)
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126
EXHIBIT H
[FORM OF SPECIAL SERVICING AGREEMENT]
SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the "Agreement")
is made and entered into as of __________________, between North American
Mortgage Company (the "Company") and ___________ (the "Purchaser").
PRELIMINARY STATEMENT
_____________ is the holder of the entire interest in the CMC
Securities Corporation IV Collateralized Mortgage Obligations Series 1997-3,
Class _____ (the "Class B Securities"). The Class B Securities were issued
pursuant to a Series Supplement dated as of September 1, 1997 among CMC
Securities Corporation IV, as Issuer (the "Issuer") and The First National Bank
of Chicago, as Trustee.
Collateral for the Class B Securities is provided by CMC Securities
Corporation Pass-Through Certificates 1997-NAMC 3 issued pursuant to a Pooling
and Servicing Agreement dated as of September 1, 1997 among the Issuer, as the
Seller, the Company, as Master Servicer and Loan Seller, and The First National
Bank of Chicago, as Trustee.
_______________ intends to resell all of the Class B Securities
directly to the Purchaser on or promptly after the date hereof.
In connection with such sale, the parties hereto have agreed that the
Company will engage in certain special servicing procedures relating to
foreclosures for the benefit of the Purchaser, and that the Purchaser will
deposit funds in a collateral fund to cover any losses attributable to such
procedures as well as all advances and costs in connection therewith, as set
forth herein.
In consideration of the mutual agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser agree that the following provisions shall become effective and shall
be binding on and enforceable by the Company and the Purchaser:
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of New York are required or
authorized by law or executive order to be closed.
▇-▇
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇: The Fund established and maintained pursuant to
Section 3.01 hereof.
Collateral Fund Permitted Investments: Either (i) obligations of, or
obligations fully guaranteed as to principal and interest by, the United
States, or any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States, (ii) a money market
fund rated in the highest rating category by a nationally recognized rating
agency selected by the Company, (iii) cash, (iv) mortgage pass-through
certificates issued or guaranteed by Government National Mortgage Association,
FNMA or FHLMC, (v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date), the issuer of which may be an affiliate of the Company, having
at the time of such investment the highest short-term ratings by Standard and
Poor's ("S&P") or Duff & ▇▇▇▇▇▇ Credit Rating Co. ("DCR"), and together with
S&P, (the "Rating Agencies") or (vi) demand and time deposits in, certificates
of deposit of, any depository institution or trust company (which may be an
affiliate of the Company) incorporated under the laws of the United States of
America or any state thereof and subject to supervision and examination by
federal and/or state banking authorities, so long as the time of such
investment either (x) the long-term debt obligations of such depository
institution or trust company have a rating of at least AA by the Rating
Agencies, (y) the certificate of deposit or other unsecured short-term debt
obligations of such depository institution or trust company have a short term
rating of at least A-1 or equivalent by the Rating Agencies or (z) the
depository institution or trust company is one that is acceptable to any of the
Rating Agencies and, for each of the preceding clauses (i), (iv), (v) and (vi),
the maturity thereof shall be not later than the earlier to occur of (A) 30
days from the date of the related investment and (B) the next succeeding
Distribution Date as defined in the related Pooling and Servicing Agreement.
Commencement of Foreclosure: The first official action required under
local law in order to commence foreclosure proceedings or to schedule a
trustee's sale under a deed of trust, including (i) in the case of a mortgage,
any filing or service or process necessary to commence an action to foreclose,
or (ii) in the case of a deed of trust, posting, the publishing, filing or
delivery of a notice of sale, but not including in either case (x) any notice
of default, notice of intent to foreclose or sell or any other action
prerequisite to the actions specified in (i) or (ii) above, (y) the acceptance
of a deedin-lieu of foreclosure (whether in connection with a sale of the
related property or otherwise) or (z) initiation and completion of a short
pay-off.
Current Appraisal: With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, an appraisal of the
related Mortgaged Property obtained by the Purchaser at its own expense from an
independent appraiser (which shall not be an affiliate of the Purchaser)
acceptable to the Company as nearly contemporaneously as practicable to the
time of the Purchaser's election, prepared based on the Company's customary
requirements for such appraisals.
Election to Delay Foreclosure: Any election by the Purchaser to delay
the Commencement of Foreclosure, made in accordance with Section 2.02(b).
Election to Foreclose: Any election by the Purchaser to proceed with
the Commencement of Foreclosure, made in accordance with Section 2.03(a).
H-2
128
Monthly Advances: Principal and interest advances and servicing
advances including costs and expenses of foreclosure.
Required Collateral Fund Balance: As of any date of determination, an
amount equal to the aggregate of all amounts previously required to be
deposited in the Collateral Fund pursuant to Section 2.02(d) (after adjustment
for all withdrawals and deposits pursuant to Section 2.02(e)) and Section
2.03(b) (after adjustment for all withdrawals and deposits pursuant to Section
2.02(e)) and Section 3.02 to be reduced by all withdrawals therefrom pursuant
to Section 2.02(g) and Section 2.03(d).
Section 1.02. Definitions Incorporated by Reference
All capitalized terms not otherwise defined in this Agreement shall
have the meanings assigned in the Pooling and Servicing Agreement or the Series
Supplement.
ARTICLE II
SPECIAL SERVICING PROCEDURES
Section 2.01. Reports and Notices
(a) In connection with the performance of its duties under
the Pooling and Servicing Agreement relating to the realization upon defaulted
Mortgage Loans, the Company as Master Servicer shall provide to the Purchaser
the following notices and reports:
(i) Within five Business Days after each Distribution Date
(or included in or with the monthly statements to Securityholders
pursuant to the Pooling and Servicing Agreement), the
[Company][Trustee], shall provide to the Purchaser a report, using the
same methodology and calculations in its standard servicing reports,
indicating for the Trust the number of Mortgage Loans that are (A)
thirty days, (B) sixty days, (C) ninety days or more delinquent or (D)
in foreclosure, and indicating for each such Mortgage Loan the loan
number and outstanding principal balance.
(ii) Prior to the Commencement of Foreclosure in
connection with any Mortgage Loan, the Company shall provide the
Purchaser with a notice (sent by telecopier) of such proposed and
imminent foreclosure, stating the loan number and the aggregate amount
owing under the Mortgage Loan. Such notice may be provided to the
Purchaser in the form of a copy of a referral letter from such
Servicer to an attorney requesting the institution of foreclosure.
(b) If requested by the Purchaser, the Company shall make its
servicing personnel available (during their normal business hours) to respond
to reasonable inquiries, by phone or in writing by facsimile, electronic, or
overnight mail transmission, by the Purchaser in connection with any Mortgage
Loan identified in a report under subsection (a) (i) (B), (a) (i) (C), (a) (i)
(D), or (a) (ii) which has been given to the Purchaser; provided, that (1) the
related Servicer shall only be required to provide information that is readily
accessible to its servicing personnel and is non-confidential and
H-3
129
(2) the related Servicer shall respond within five Business Days orally or in
writing by facsimile transmission.
(c) In addition to the foregoing, the Company shall provide
to the Purchaser such information as the Purchaser may reasonably request
provided, however, that such information is consistent with normal reporting
practices, concerning each Mortgage Loan that is at least ninety days
delinquent and each Mortgage Loan which has become real estate owned, through
the final liquidation thereof; provided, that the Company shall only be
required to provide information that is readily accessible to its servicing
personnel and is non-confidential provided, however, that the Purchaser will
reimburse the Company for any out of pocket expenses.
Section 2.02. Purchaser's Election to Delay Foreclosure Proceedings
(a) The Purchaser shall be deemed to direct the Company that
in the event that the Company does not receive written notice of the
Purchaser's election pursuant to subsection (b) below within 24 hours
(exclusive of any intervening non-Business Days) of transmission of the notice
provided by the Company under Section 2.01(a)(ii) subject to extension as set
forth in Section 2.02(b), it may proceed with the Commencement of Foreclosure
in respect of such Mortgage Loan in accordance with its normal foreclosure
policies without further notice to the Purchaser. Any foreclosure that has been
initiated may be discontinued (i) without notice to the Purchaser if the
Mortgage Loan has been brought current or if a refinancing or prepayment occurs
with respect to the Mortgage Loan (including by means of a short payoff
approved by the Company) or (ii) if the Company has reached the terms of a
forbearance agreement with the borrower. In such latter case, the Company may
complete such forbearance agreement unless instructed otherwise by the
Purchaser within two Business Days notification.
(b) In connection with any Mortgage Loan with respect to
which a notice under Section 2.01(a)(ii) has been given to the Purchaser, the
Purchaser may elect to instruct the Company to delay the Commencement of
Foreclosure until such time as the Purchaser determines that the Company may
proceed with the Commencement of Foreclosure. Such election must be evidenced
by written notice received within 24 hours (exclusive of any intervening
non-Business Days) of transmission of the notice provided by the Company under
Section 2.01(a)(ii). Such 24 hour period shall be extended for no longer than
an additional four Business Days after the receipt of the information if the
Purchaser requests additional information related to such foreclosure;
provided, however, that the Purchaser will have at least one Business day to
respond to any requested additional information. Any such additional
information shall (i) be provided only to the extent it is not confidential in
nature and (ii) be obtainable by the Company from existing reports,
certificates or statements or otherwise be readily accessible to its servicing
personnel. The Purchaser agrees that it has no right to deal with the mortgagor
during such period. However, if such servicing activities include acceptance of
a deed-in-lieu of foreclosure or short payoff, the Purchaser will be notified
and given two Business Days to respond.
(c) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Purchaser shall obtain
a Current Appraisal as soon as practicable, but in no event more than 15
business days thereafter, and shall provide the Company with a copy of such
Current Appraisal.
H-4
130
(d) Within two Business Days of making any Election to Delay
Foreclosure, the Purchaser shall remit by wire transfer to the Company, for
deposit in the Collateral Fund, an amount, as calculated by the Company, equal
to the sum of (i) 125% of the greater of the unpaid principal balance of the
Mortgage Loan and the value shown in the Current Appraisal referred to in
subsection (c) above (or, if such Current Appraisal has not yet been obtained,
the Company's estimate thereof, in which case the required deposit under this
subsection shall be adjusted upon obtaining such Current Appraisal), and (ii)
three months' interest on the Mortgage Loan at the applicable Mortgage Interest
Rate. If any Election to Delay Foreclosure extends for a period in excess of
three months (such excess period being referred to herein as the "Excess
Period"), within two Business Days the Purchaser shall remit by wire transfer
in advance to the Company for deposit in the Collateral Fund the amount of each
additional month's interest, as calculated by the Company, equal to interest on
the Mortgage Loan at the applicable Mortgage Interest Rate for the Excess
Period. The terms of this Agreement will no longer apply to the servicing of
any Mortgage Loan upon the failure of the Purchaser to deposit any of the above
amounts relating to the Mortgage Loan within two Business Days of the Election
to Delay Foreclosure or within two Business Days of the commencement of the
Excess Period subject to Section 3.01.
(e) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Company may withdraw
from the Collateral Fund from time to time amounts necessary to reimburse the
related Servicer for all related Monthly Advances and Liquidation Expenses
thereafter made by such Servicer in accordance with the Pooling and Servicing
Agreement. To the extent that the amount of any such Liquidation Expenses is
determined by the Company based on estimated costs, and the actual costs are
subsequently determined to be higher, the Company may withdraw the additional
amount from the Collateral Fund. In the event that the Mortgage Loan is brought
current by the mortgagor and the foreclosure action is discontinued, the
amounts so withdrawn from the Collateral Fund shall be redeposited therein and
to the extent that reimbursement therefor from amounts paid by the mortgagor is
not prohibited pursuant to the Pooling and Servicing Agreement as of the date
hereof, applicable law or the related mortgage note. Except as provided in the
preceding sentence, amounts withdrawn from the Collateral Fund to cover Monthly
Advances and Liquidation Expenses shall not be redeposited therein or otherwise
reimbursed to the Purchaser. If and when any such Mortgage Loan is brought
current by the mortgagor, all amounts remaining in the Collateral Fund in
respect of such Mortgage Loan (after adjustment for all permitted withdrawals
and deposits pursuant to this subsection) shall be released to the Purchaser.
(f) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Master Servicer shall
continue to service the Mortgage Loan in accordance with its customary
procedures (other than the delay in Commencement of Foreclosure as provided
herein). If and when the Purchaser shall notify the Company that it believes
that it is appropriate to do so, the Master Servicer may proceed with the
Commencement of Foreclosure. In any event, if the Mortgage Loan is not brought
current by the mortgagor by the time the loan becomes 6 months delinquent, the
Purchaser's election shall no longer be effective and at the Purchaser's
option, either (i) the Purchaser shall purchaser the Mortgage Loan from the
Trust at a purchase price equal to the fair market value as shown on the
Current Appraisal, to be paid by (x) applying any balance in the Collateral
Fund to such purchase price, and (y) to the extent of any deficiency, by wire
transfer if immediately available funds from the Purchaser to the Company for
deposit in the related Asset Proceeds Account; or (ii) the Master Servicer may
proceed with the Commencement of Foreclosure.
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(g) Upon the occurrence of a liquidation with respect to any
Mortgage Loan as to which the Purchaser made an Election to Delay Foreclosure
and as to which the Master Servicer proceeded with the Commencement of
Foreclosure in accordance with subsection (f) above, the Company shall
calculate the amount, if any, by which the value shown on the Current Appraisal
obtained under subsection (c) exceeds the actual sales price obtained for the
related Mortgaged Property (net of Liquidation Expenses and accrued interest
related to the extended foreclosure period), and the Company shall withdraw the
amount of such excess from the Collateral Fund, shall remit the same to the
Trust and in its capacity as Master Servicer shall apply such amount as
additional Liquidation Proceeds pursuant to the Pooling and Servicing
Agreement. After making such withdrawal, all amounts remaining the Collateral
Fund in respect of such Mortgage Loan (after adjustment for all permitted
withdrawals and deposits pursuant to this Agreement) shall be released to the
Purchaser.
Section 2.03. Purchaser's Election to Commence Foreclosure Proceedings
(a) In connection with any Mortgage Loan identified in a
report under Section 2.01(a)(i)(B), the Purchaser may elect to instruct the
Company to proceed with the Commencement of Foreclosure as soon as practicable.
Such election must be evidenced by written notice received by the Company by
5:00 p.m., [New York City] time, on the third Business Day following the
delivery of such report under Section 2.01(a)(i).
(b) Within two Business Days of making any Election to
Foreclosure, the Purchaser shall remit to the Company, for deposit in the
Collateral Fund, an amount, as calculated by the Company, equal to 125% of the
current unpaid principal balance of the Mortgage Loan and three months interest
on the Mortgage Loan at the applicable Mortgage Interest Rate. If any when any
such Mortgage Loan is brought current by the mortgagor, all amounts in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
permitted withdrawals and deposits pursuant to this Agreement) shall be
released to the Purchaser and to the extent that reimbursement therefor from
amounts paid by the mortgagor is not prohibited pursuant to the Pooling and
Servicing Agreement as of the date hereof, applicable law or the related
mortgage note. The terms of this Agreement will no longer apply to the
servicing of any Mortgage Loan upon the failure of the Purchaser to deposit the
above amounts relating to the Mortgage Loan within two Business days of the
Election to Foreclose subject to Section 3.01.
(c) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Foreclose, the Master Servicer shall continue
to service the Mortgage Loan in accordance with its customary procedures (other
than Commencement of Foreclosure as provided herein). In connection therewith,
the Company shall have the same rights to make withdrawals for Monthly Advances
and Liquidation Expenses from the Collateral Fund as are provided under Section
2.02(e), and the Company shall make reimbursements thereto the limited extent
provided under such subsection in accordance with its customary procedures. The
Company shall not be required to proceed with the Commencement of Foreclosure
if (i) the same is stayed as a result of the mortgagor's bankruptcy or is
otherwise barred by applicable law, or to the extent that all legal conditions
precedent thereto have not yet been complied with, or (ii) the Company believes
there is a breach of representations or warranties by the Company or the Loan
Seller, which may result in a repurchase or substitution of such Mortgage Loan,
or (iii) the Company reasonably believes the Mortgaged
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Property may be contaminated with or affected by hazardous wastes or hazardous
substances (and, without limiting the Master Servicer's right not to proceed
with the Commencement of Foreclosure, the Company supplies the Purchaser with
information supporting such belief). Any foreclosure that has been initiated
may be discontinued (x) without notice to the Purchaser if the Mortgage Loan
has been brought current or if a refinancing or prepayment occurs with respect
to the Mortgage Loan (including by means of a short payoff approved by the
Purchaser) or (y) with notice to the Purchaser if the Master Servicer has
reached the terms of a forbearance agreement unless instructed otherwise by the
Purchaser within two Business Days of such notification. Any such information
shall be based upon a decision that such forbearance agreement is not in
conformity with reasonable servicing practices.
(d) Upon the occurrence of a liquidation with respect to any
Mortgage Loan as to which the Purchaser made an Election to Foreclose and as to
which the Master Servicer proceeded with the Commencement of Foreclosure in
accordance with subsection (c) above, the Company shall calculate the amount,
if any, by which the unpaid principal balance of the Mortgage Loan at the time
of liquidation (plus all unreimbursed interest and servicing advances and
Liquidation Expenses in connection therewith other than those paid from the
Collateral Fund) exceeds the actual sales price obtained for the related
Mortgaged Property, and the Company shall withdraw the amount of such excess
from the Collateral Fund, shall remit the same to the Trust and in its capacity
as Master Servicer shall apply such amount as additional Liquidation Proceeds
pursuant to the Pooling and Servicing Agreement. After making such withdrawal,
all amounts remaining in the Collateral Fund (after adjustment for all
withdrawals and deposits pursuant to subsection (c) of such Mortgage Loan shall
be released to the Purchaser.
Section 2.04. Termination
(a) With respect to all Mortgage Loans included in the Trust,
the Purchaser's right to make any Election of Delay Foreclosure or any Election
to Foreclose and the Company's obligations under Section 2.01 shall terminate
(i) at such time as the Security Principal Balance of the Class B Securities
has been reduced to zero, (ii) if the greater of (x) [43]% (or such lower or
higher percentage that represents the Master Servicer's actual historical loss
experience with respect to the Mortgage Loan in the related pool as determined
by the Company) of the aggregate principal balance of all Mortgage Loans that
are in foreclosure or are more than 90 days delinquent on a contractual basis
and REO properties or (y) the aggregate amount that the Company estimates
through the normal servicing practices of the related Servicer will be required
to be withdrawn from the Collateral Fund with respect to Mortgage Loans as to
which the Purchaser has made an Election to Delay Foreclosure or an Election to
Foreclosure, exceeds (z) the then-current principal balance of the Class B
Securities, (iii) upon any transfer by the Purchaser of any interest (other
than the minority interest therein, but only if the transferee provides written
acknowledgment to the Company of the Purchaser's right hereunder and that such
transferee will have no rights hereunder) in the Class B Securities (whether or
not such transferee is registered under the Pooling and Servicing Agreement),
including any such transfer in connection with a termination of the Trust or
(iv) any breach of the terms of this Agreement by the Purchaser.
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(b) Except as set forth in 2.04(a), this Agreement and the
respective rights, obligations and responsibilities of the Purchaser and the
Company hereunder shall terminate upon the later to occur of (i) the final
liquidation of the last Mortgage Loan as to which the Purchaser made any
Election to Delay Foreclosure or any Election to Foreclose and the withdrawal
of all remaining amounts in the Collateral Fund as provided herein and (ii) ten
Business Days' notice. The Purchaser's right to make an election pursuant to
Section 2.02 or Section 2.03 hereof with respect to a particular Mortgage Loan
shall terminate if the Purchaser fails to make any deposit required pursuant to
Section 2.02(d) or 2.03(b) or if the Purchaser fails to make any other deposit
to the Collateral Fund pursuant to this Agreement.
ARTICLE III
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. Collateral Fund
Upon receipt from the Purchaser of the initial amount required to be
deposited in the Collateral Fund pursuant to Article II, the Company shall
establish and maintain with the Trustee as a segregated account on its books
and records an account (the "Collateral Fund"), entitled "North American
Mortgage Company, as Master Servicer, for the benefit of registered holders of
Financial Asset Securitization, Inc., Mortgage Participation Securities, Series
1997-NAMC 3." Amounts held in the Collateral Fund shall continue to be the
property of the Purchaser, subject to the first priority interest granted
hereunder for the benefit of the Securityholders, until withdrawn from the
Collateral Fund pursuant to Section 2.02 or 2.03 hereof. The Collateral Fund
shall be an "outside reserve fund" within the meaning of the REMIC Provisions,
beneficially owned by the Purchaser for federal income tax purposes. All
income, gain, deduction or loss with respect to the Collateral Fund shall be
that of the Purchaser. All distributions from the Trust Fund to the Collateral
Fund shall be treated as distributed to the Purchaser as the beneficial owner
thereof.
Upon the termination of this Agreement and the liquidation of all
Mortgage Loans as to which the Purchaser has made any Election to Delay
Foreclosure or any Election to Foreclose pursuant to Section 2.04 hereof, the
Company shall distribute to the Purchaser all amounts remaining in the
Collateral Fund (after adjustment for all deposits and permitted withdrawals
pursuant to this Agreement) together with any investment earnings thereon. In
the event the Purchaser has made any Election to Delay Foreclosure or any
Election to Foreclose, prior to any distribution to the Purchaser of all
amounts remaining in the Collateral Fund, funds in the Collateral Fund shall be
applied consistent with the terms of this Agreement.
Section 3.02. Collateral Fund Permitted Investments
The Company shall, at the written direction of the Purchaser, invest
the funds in the Collateral Fund in Collateral Fund Permitted Investments. Such
direction shall not be changed more frequently than quarterly. In the absence
of any direction, the Company shall select such investments in accordance with
the definition of Collateral Fund Permitted Investments in its discretion.
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All income and gain realized from any investments as well as any
interest earned on deposits in the Collateral Fund (net of any losses on such
investments) and any payments of principal made in respect of any Collateral
Fund Permitted Investment shall be deposited in the Collateral Fund upon
receipt. All costs and realized losses associated with the purchase and sale of
Collateral Fund Permitted Investments shall be borne by the Purchaser and the
amount of net realized losses shall be deposited by the Purchaser in the
Collateral Fund promptly upon realization. The Company shall periodically (but
not more frequently than monthly) distribute to the Purchaser upon request an
amount of cash, to the extent cash is available therefore in the Collateral
Fund, equal to the amount by which the balance of the Collateral Fund, after
giving effect to all other distributions to be made from the Collateral Fund on
such date, exceeds the Required Collateral Fund Balance. Any amounts so
distributed shall be released from the lien and security interest of this
Agreement.
Section 3.03. Grant of Security Interest
The Purchaser hereby grants to the Company for the benefit of the
Securityholders under the Pooling and Servicing Agreement a security interest
in and lien on all of the Purchaser's right, title and interest, whether now
owned or hereafter acquired, in and to: (1) the Collateral Fund, (2) all
amounts deposited in the Collateral Fund and Collateral Fund Permitted
Investments in which such amounts are invested (and the distributions and
proceeds of such investments) and (3) all cash and non-cash proceeds of any of
the foregoing, including proceeds of the voluntary conversion thereof (all of
the foregoing collectively, the "Collateral").
The Purchaser acknowledges the lien on the security interest in the
Collateral for the benefit of the Securityholders. The Purchaser shall take all
actions requested by the Company as may be reasonably necessary to perfect the
security interest created under this Agreement in the Collateral and cause it
to be prior to all other security interests and liens, including the execution
and delivery to the Company for filing of appropriate financing statements in
accordance with applicable law. The Company shall file appropriate continuation
statements, or appoint an agent on its behalf to file such statements, in
accordance with applicable law.
Section 3.04. Collateral Shortfalls
In the event that amounts on deposit in the Collateral Fund at any
time are insufficient to cover any withdrawals therefrom that the Company is
then entitled to make hereunder, the Purchaser shall be obligated to pay such
amounts to the Company immediately upon demand. Such obligation shall
constitute a general corporate obligation of the Purchaser. The failure to pay
such amounts within two business Days of such demand (except for amounts to
cover interest on a Mortgage Loan pursuant to Sections 2.02(d) and 2.03(b)),
shall cause an immediate termination of the Purchaser's right to make any
Election to Delay Foreclosure or Election to Foreclose and the Company's
obligations under this Agreement with respect to all Mortgage Loans to which
such insufficiencies relate, without the necessity of any further notice or
demand on the part of the Company.
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ARTICLE IV
MISCELLANEOUS PROVISIONS
Section 4.01. Amendment
This Agreement may be amended from time and time by the Company and
the Purchaser by written agreement signed by the Company and the Purchaser.
Section 4.02. Counterparts
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
Section 4.03. Governing Law
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 4.04. Notices
All demands, notices and direction hereunder shall be in writing or by
telecopy and shall be deemed effective upon receipt to:
(a) in the case of the Company,
North American Mortgage Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Phone:
Fax:
(b) in the case of the Purchaser,
_______________________________________
_______________________________________
_______________________________________
_______________________________________
Attention:_____________________________
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Section 4.05. Severability of Provisions
If any one or more of the covenants, agreements, provision or terms of
this Agreement shall be for any reason whatsoever, including regulatory, held
invalid, then such covenants, agreements, provisions or terms of this Agreement
and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
Section 4.06. Successors and Assigns
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto, and
all such provisions shall inure to the benefit of the Securityholders;
provided, however, that the rights under this Agreement cannot be assigned by
the Purchaser without the consent of the Company.
Section 4.07. Article and Section Headings
The article and section headings herein are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Section 4.08. Confidentiality
The Purchaser agrees that all information supplied by or on behalf of
the Company pursuant to Sections 2.01 or 2.02, including individual account
information, is the property of the Company and the Purchaser agrees to hold
such information confidential and not to disclose such information.
Each party hereto agrees that neither it, nor any officer, director,
employee, affiliate or independent contractor acting at such party's direction
will disclose the terms of Section 4.09 of this Agreement to any person or
entity other than such party's legal counsel except pursuant to a final,
non-appealable order of court, the pendency of such order the other party will
have received notice of at least five business days prior to the date thereof,
or pursuant to the other party's prior express written consent.
Section 4.09. Indemnification
The Purchaser agrees to indemnify and hold harmless the Company, The
Issuer and each person who controls the Company or the Issuer, and each of
their respective officers, directors, affiliates and agents acting at the
Company's or the Issuer's direction (the "Indemnified Parties") against any and
all losses, claims, damages or liabilities to which they may be subject,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, actions taken by, or actions not
taken by, the Company or the Issuer, or on their behalf, in accordance with the
provisions of this Agreement and (i) which actions conflict with the Company's
or the Issuer's obligations under the Pooling and Servicing Agreement, or (ii)
give rise to securities law liability under federal or state securities laws
with respect to the Securities. The Purchaser hereby agrees to reimburse the
Indemnified Parties for the reasonable legal or other expenses incurred by them
in connection with investigating or defending any such loss, claim damage,
liability or action. The indemnification obligations of the Purchaser hereunder
shall survive the termination or expiration of this Agreement.
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IN WITNESS WHEREOF, the Company and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
North American Mortgage Company
By:
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Name:
--------------------------------
Title:
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By:
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Name:
--------------------------------
Title:
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