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SALE AND SERVICING AGREEMENT
Dated as of ___________, 199__
among
_____________ HOME LOAN OWNER TRUST 199__-__
(Issuer)
PAINEWEBBER MORTGAGE ACCEPTANCE CORPORATION IV
(Depositor)
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(Transferor and Master Servicer)
and
------------------------------------
(Indenture Trustee)
____________ HOME LOAN OWNER TRUST 199__-__
HOME LOAN ASSET BACKED NOTES
SERIES 199__-__
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS
Section 1.01. Definitions...........................................
Section 1.02. Other Definitional Provisions.........................
ARTICLE II CONVEYANCE OF THE HOME LOANS
Section 2.01. Conveyance of the Home Loans..........................
Section 2.02. Ownership and Possession of Home Loan Files...........
Section 2.03. Books and Records.....................................
Section 2.04. Delivery of Home Loan Documents.......................
Section 2.05. Acceptance by the Indenture Trustee of the Home Loans;
Certain Substitutions; Certification by the Custodian.
ARTICLE III REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the Depositor.......
Section 3.02. Representations and Warranties of the Transferor......
Section 3.03. Representations, Warranties and Covenants
of the Master Servicer................................
Section 3.04. Representations and Warranties Regarding
Individual Home Loans.................................
Section 3.05. Purchase and Substitution.............................
ARTICLE IV ADMINISTRATION AND SERVICING OF THE HOME LOANS
Section 4.01. Appointment and Duties of the Master Servicer.........
Section 4.02. Interim Servicer......................................
Section 4.03. Powers of Attorney....................................
Section 4.04. Filing of Continuation Statements.....................
Section 4.05. Reports to the Securities and Exchange Commission.....
ARTICLE V ESTABLISHMENT OF TRUST ACCOUNTS
Section 5.01. Collection Account and Note Payment Account...........
Section 5.01A. Claims Under Guaranty Policy..........................
Section 5.02. Certificate Distribution Account......................
Section 5.03. Trust Accounts; Trust Account Property................
Section 5.04. Allocation of Losses..................................
ARTICLE VI STATEMENTS AND REPORTS; WITHHOLDING
Section 6.01. Statements............................................
Section 6.02. Withholding...........................................
ARTICLE VII GENERAL SERVICING PROCEDURES
Section 7.01. Servicing Advances....................................
Section 7.02. Release of Home Loan Files............................
Section 7.03. Servicing Compensation................................
Section 7.04. Statement as to Compliance and Financial Statements...
Section 7.05. Independent Public Accountants' Servicing Report......
Section 7.06. Reports to the Indenture Trustee;
Collection Account Statements.........................
Section 7.07. Financial Statements and Records of Servicer..........
ARTICLE VIII (RESERVED)
ARTICLE IX THE MASTER SERVICER
Section 9.01. Indemnification; Third Party Claims...................
Section 9.02. Merger or Consolidation of the Master Servicer........
Section 9.03. Limitation on Liability of the Master Servicer
and Others................................69
Section 9.04. Master Servicer Not to Resign; Assignment.............
Section 9.05. Term of Master Servicer Engagement....................
Section 9.06. Relationship of Master Servicer to the Issuer
and the Indenture Trustee.............................
Section 9.07. Master Servicer May Own Securities....................
Section 9.08. Right to Examine Master Servicer Records..............
Section 9.09. Financial Statements..................................
ARTICLE X DEFAULT
Section 10.01. Master Service Events of Default.....................
Section 10.02. [Reserved]...........................................
Section 10.03. Waiver of Defaults...................................
Section 10.04. Accounting Upon Termination of Master Servicer.......
ARTICLE XI TERMINATION
Section 11.01. Termination..........................................
Section 11.02. Optional Termination.................................
Section 11.03. Notice of Termination................................
ARTICLE XII MISCELLANEOUS PROVISIONS
Section 12.01. Acts of Noteholders..................................
Section 12.02. Amendment............................................
Section 12.03. Recordation of Agreement.............................
Section 12.04. Duration of Agreement................................
Section 12.05. Governing Law........................................
Section 12.06. Notices..............................................
Section 12.07. Severability of Provisions...........................
Section 12.08. No Partnership.......................................
Section 12.09. Counterparts.........................................
Section 12.10. Successors and Assigns...............................
Section 12.11. Headings.............................................
Section 12.12. Actions of Securityholders...........................
Section 12.13. Reports to Rating Agencies...........................
Section 12.14. Holders of the Residual Interest Certificates........
Section 12.15. Year 2000 Compliance..................................
Section 12.16. Grant of Noteholder Rights to Securities Insurer.....
Section 12.17. Third Party Beneficiary..............................
Section 12.18. Suspension and Termination of Securities
Insurer's Rights.....................................
EXHIBITS:
A - Home Loan Schedule
B - Form of Servicer's Monthly Remittance Report to Indenture Trustee
C - Form of Loan Liquidation Report
D - Form of Master Servicer Renewal Notice
E - Form of Standard Servicing Terms
This SALE AND SERVICING AGREEMENT is entered into effective as of
_________, 199__, (this "Agreement") among ______________ HOME LOAN OWNER TRUST
199__-__, a Delaware business trust (the "Issuer" or the "Trust"), PAINEWEBBER
MORTGAGE ACCEPTANCE CORPORATION IV, a Delaware corporation, as Depositor (the
"Depositor"), ______________________________ , a ________________________
("___________ "), as Transferor (in such capacity, the "Transferor") and Master
Servicer (in such capacity, the "Master Servicer") and
_____________________________ , a ____________________ , as Indenture Trustee on
behalf of the Noteholders (the "Indenture Trustee").
W I T N E S S E T H:
In consideration of the mutual agreements herein contained, the parties
hereto hereby agree as follows for the benefit of each of them and for the
benefit of the holders of the Notes issued under the Indenture, the Residual
Interest Certificates issued under the Owner Trust Agreement [and the Securities
Insurer for issuing the Guaranty Policy]:
ARTICLE I
DEFINITIONS
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Section 1.01. Definitions.
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Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article. Unless otherwise specified, all calculations of interest described
herein shall be made on the basis of the actual number of days elapsed during
the related Interest Accrual Period and a 360-day year.
Accepted Servicing Procedures: Servicing procedures that satisfy the
following: (a) meet at least the same standards the Servicer would follow in
exercising reasonable care in servicing mortgage loans such as the Home Loans
held for its own account; (b) comply with applicable state and federal law; (c)
comply with the provisions of the related Debt Instruments and Mortgages; and
(d) give due consideration to the accepted standards of practice of prudent loan
servicers that service sub-prime mortgage loans comparable to the Home Loans,
including the terms set forth in the Standard Servicing Terms set forth herein
as Exhibit E, and the reliance placed by [the Securities Insurer,] the Master
Servicer and Securityholders on the Servicer for the servicing of the Home
Loans, but without regard to:
(i)..any relationship that the Servicer or any Affiliate of the
Servicer may have with the related Obligor;
(ii). the ownership of any Notes or the Residual Interest Certificates
by the Servicer or any Affiliate of the Servicer;
(iii). the Servicer's obligation to make Servicing Advances; or
(iv)..the Servicer's right to receive compensation for its services
hereunder with respect to any particular transaction.
Accrual Period: With respect to the Notes and any Payment Date, the
period commencing on the Payment Date preceding the month in which the related
Payment Date occurs and ending on the day immediately preceding the related
Payment Date, except in the case of the first Payment Date, which shall be the
period commencing on the Closing Date and ending on the first Payment Date.
Administration Agreement: The Administrative Agreement, dated as of
__________, 199__, by and among the Issuer, _______________________ and
________________________.
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by, or under common control with such specified Person.
For the purposes of this definition, the term "control", when used with respect
to any specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have corresponding meanings.
Agreement: This Sale and Servicing Agreement and all amendments hereof
and supplements hereto.
Annual Loss Percentage: With respect to any Payment Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate of all
Realized Losses for the twelve preceding Due Periods ending on the last day of
the preceding Due Period and the denominator of which is the Pool Principal
Balance as of the first day of the twelfth preceding Due Period.
Assignment of Mortgage: With respect to each Home Loan, an assignment,
notice of transfer or equivalent instrument sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect or
record the sale of the related Home Loan which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county,
if permitted by law.
Available Collection Amount: With respect to any Payment Date, an
amount without duplication equal to the sum of: (i) all amounts received on the
Home Loans or required to be paid by the Master Servicer, the Servicer or the
Transferor during the related Due Period (exclusive of amounts not required to
be deposited in the Collection Account pursuant to Section 5.01(b)(1) hereof and
amounts permitted to be withdrawn by the Indenture Trustee from the Collection
Account pursuant to Section 5.01(b)(3) hereof); (ii) upon exercise of optional
redemption of the Notes and termination of the Issuer pursuant to Section 11.02
hereof, the Termination Price; and (iii) the Purchase Price paid for any Home
Loans purchased pursuant to Section 3.05 hereof prior to the related
Determination Date and the Substitution Adjustment to be deposited in the
Collection Account in connection with any substitution, in each case prior to
the related Determination Date.
Available Payment Amount: With respect to any Payment Date, the
Available Collection Amount deposited into the Note Payment Account, minus the
amount of any Trust Fees and Expenses required to be paid from the Note Payment
Account pursuant to Section 5.01(c)(i) hereof.
Business Day: Any day other than (a) a Saturday or Sunday, or (b) a day
on which the banking institutions are authorized or obligated by law or
executive order to be closed in a city at any of the following locations: (i)
The City of New York, [(ii) where the Securities Insurer is located,] (iii)
where the Corporate Trust Office of the Indenture Trustee is located, (iv) where
the servicing operations of the Servicer are located or (v) where the master
servicing operations of the Master Servicer are located.
Call Option Date: The first Payment Date on which the Pool Principal
Balance has declined to ___% or less of the Original Pool Principal Balance.
Certificate Distribution Account: The account designated as such,
established and maintained pursuant to Section 5.02 hereof.
Certificate Register: The register established pursuant to Section 3.4
of the Owner Trust Agreement.
Certificateholder: A holder of a Residual Interest Certificate.
Closing Date: ___________, 199__.
Code: The Internal Revenue Code of 1986, as amended from time to time,
and Treasury Regulations promulgated thereunder.
Collection Account: The Eligible Account established and maintained by
the Indenture Trustee pursuant to Section 5.01(a)(1) hereof.
Compensating Interest: With respect to any Due Period, the amount of
the shortfall in the interest portion of the Monthly Payments due on Home Loans
that prepay in full or in part during the related month other than on the date
the Monthly Payments were due.
Custodial Agreement: The custodial agreement dated as of __________,
199__ by and among the Depositor, the Issuer, ___________, as the Transferor and
as the Master Servicer, and _______________________, a
__________________________, as the custodian, providing for the retention of the
Indenture Trustee's Home Loan Files by such custodian on behalf of the Owner
Trust.
Custodian: Any custodian [acceptable to the Securities Insurer and]
appointed by the Indenture Trustee pursuant to the Custodial Agreement, which
custodian shall not be affiliated with the Master Servicer, the Transferor, the
Servicer or the Depositor.___________________, ________________ shall be the
initial Custodian pursuant to the terms of the Custodial Agreement.
Custodian's Final Certification: As defined in Section 1(c) of the
Custodial Agreement.
Custodian's Initial Certification: As defined in Section 1(a) of the
Custodial Agreement.
Custodian's Updated Certification: As defined in Section 1(c) of the
Custodial Agreement.
Cut-Off Date: The close of business on _____________, 199__.
Debt Instrument: The mortgage note evidencing the indebtedness of an
Obligor under a Home Loan.
Defaulted Home Loan: With respect to any date of determination, any
Home Loan, including, without limitation, any Liquidated Home Loan with respect
to which any of the following has occurred as of the end of the preceding Due
Period: (a) foreclosure or similar proceedings have been commenced; or (b) the
Servicer has determined in good faith and in accordance with the Accepted
Servicing Procedures that such Home Loan is in default for a period in excess of
30 days or imminent default and that such default or imminent default involves
the nonpayment of any Monthly Payment or a default which has or would have a
material adverse affect on such Home Loan.
Defective Home Loan: As defined in Section 3.05 hereof.
Deficiency Amount: As of any Payment Date, the sum of (a) the amount by
which (1) the Noteholders' Interest Payment Amount for the Notes on such Payment
Date less Relief Act Shortfalls for such Payment Date, exceeds (2) the Available
Payment Amount for such Payment Date, and (b) the Noteholders' Principal
Deficiency Amount for such Payment Date.
Deleted Home Loan: A Home Loan replaced or to be replaced by one or
more than one Qualified Substitute Home Loan.
Delinquent: A Home Loan is "Delinquent" if any Monthly Payment due
thereon is not made by the Due Date. A Home Loan shall be deemed to be "30 days
Delinquent" if the delinquency remains uncured for two calendar months, but not
three. The determination of whether a Home Loan is "60 days Delinquent," "90
days Delinquent", etc., shall be made in like manner.
Delivery: When used with respect to Trust Account Property means the
delivery of such Trust Account Property in a manner that results in the
transferee having either the status of a perfected security interest free of any
adverse claims or a holder in due course in accordance with the following: (a)
in the case of "certificated securities" or "uncertificated securities" (in
either case as defined in Article 8 of the UCC), the applicable provisions of
Article 8 of the UCC, and in the case of "instruments", "accounts" or "general
intangibles" (in either case as defined in Article 9 of the UCC), the applicable
provisions of Article 9 of the UCC; or (b) in the case of book-entry securities
governed by Federal law, the applicable provisions of Federal law.
Denomination: With respect to a Note, the portion of the Original Note
Principal Balance represented by such Note as specified on the face thereof.
Depositor: PaineWebber Mortgage Acceptance Corporation IV, a Delaware
corporation, and any successor
thereto.
Determination Date: With respect to any Payment Date, the _______
calendar day of the month in which such Payment Date occurs or if such day is
not a Business Day, the immediately preceding Business Day.
Due Date: With respect to a Monthly Payment, the day of the month on
which such Monthly Payment is due from the Obligor on a Home Loan.
Due Period: With respect to any Determination Date or Payment Date, the
____ day of the calendar month preceding the month in which the relevant
Determination Date or Payment Date occurs, and ending on the ______ day of the
month in which the relevant Determination Date or Payment Date occurs.
Eligible Account: At any time, an account that is either:
(a) A segregated account or accounts maintained with an institution
that satisfies the following: (1) whose deposits are insured by the FDIC; (2)
whose unsecured and uncollateralized long-term debt obligations of which are
then rated by each Rating Agency in one of their two highest short-term ratings;
and (3) which is either (i) a federal savings and loan association duly
organized, validly existing and in good standing under the federal banking laws,
(ii) an institution duly organized, validly existing and in good standing under
the applicable banking laws of any state, (iii) a national banking association
duly organized, validly existing and in good standing under the federal banking
laws, (iv) a principal subsidiary of a bank holding company, or (v) an
institution approved in writing by the Securities Insurer and each Rating
Agency; or
(b) A segregated trust account or accounts maintained with the
corporate trust department of a federal or state chartered depository
institution that satisfies the following: (1) is acceptable to the Securities
Insurer and each Rating Agency; (2) has capital and surplus of not less than
$100,000,000; and (3) is acting in its fiduciary capacity.
Eligible Servicer: A Person that (i) has demonstrated the ability
professionally and competently to service a portfolio of mortgage loans similar
to the Home Loans, (ii) has a net worth calculated in accordance with GAAP of at
least $500,000, and (iii) is acceptable to the Securities Insurer and each
Rating Agency.
Excess Spread: With respect to any Payment Date, the excess of (a) the
Available Payment Amount over (b) the Regular Payment Amount.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: ▇▇▇▇▇▇▇ Mac (f/k/a Federal Home Loan Mortgage Corporation) and
any successor thereto.
FNMA: ▇▇▇▇▇▇ Mae (f/k/a Federal National Mortgage Association) and any
successor thereto.
Foreclosed Loan: As of any date of determination, any Home Loan that
has been discharged as a result of (i) the completion of foreclosure or
comparable proceedings; (ii) the Issuer's acceptance of the deed or other
evidence of title to any related Mortgaged Property in lieu of foreclosure or
other comparable proceeding; or (iii) the acquisition by the Issuer of title to
any related Mortgaged Property by operation of law.
Foreclosure Property: Any real property securing a Foreclosed Loan that
has been acquired by the Servicer through foreclosure, deed in lieu of
foreclosure or similar proceedings in respect of the related Home Loan.
GAAP: Generally accepted accounting principles as in effect in the
United States.
[Guaranty Insurance Premium: The premium payable monthly that is
specified in the Premium Letter.]
[Guaranty Policy: That certain financial guaranty insurance policy for
the Notes, number dated _________ , 199__ , and issued by the Securities Insurer
to the Indenture Trustee and guaranteeing payment of any Insured Payment
thereunder.]
Home Loan: Any mortgage loan that is included in the Home Loan Pool. As
applicable, a Home Loan shall be deemed to refer to the related Debt Instrument,
the Mortgage and any related Foreclosure Property, and shall include, among
other items, all Monthly Payments with a Due Date after the Cut-Off Date.
Home Loan File: As to each Home Loan, the Indenture Trustee's Home Loan
File and the Servicer's Home
Loan File.
Home Loan Interest Rate: The annual rate of interest borne by a Debt
Instrument, as shown on the related Home Loan Schedule.
Home Loan Pool: The pool of Home Loans conveyed to the Issuer pursuant
to this Agreement on the Closing Date, together with the payments thereon and
proceeds therefrom received after the applicable Cut-Off Date, as identified on
the Home Loan Schedule annexed hereto as Exhibit A.
Home Loan Purchase Agreement: The Home Loan Purchase Agreement between
the Transferor and the Depositor, dated as of __________, 199__.
Home Loan Schedule: The schedule of Home Loans set forth on Exhibit A
attached hereto, as amended or supplemented from time to time specifying, with
respect to each Home Loan, the following information: (i) the Transferor's Home
Loan number; (ii) the Obligor's name and the street address; (iii) the current
principal balance; (iv) the original principal amount with respect to any Home
Loan originated by the Transferor and the principal amount purchased by the
Transferor with respect to a Home Loan acquired by the Transferor subsequent to
its origination; (v) any related Loan-to-Value Ratio as of the date of the
origination of the related Home Loan; (vi) the paid through date; (vii) whether
the Home Loan pays interest at a fixed rate or an adjustable rate; (viii) the
current Home Loan Interest Rate; (ix) if such Home Loan has an adjustable Home
Loan Rate, (A) the initial rate reset date, (B) the frequency of the rate reset,
(C) the initial periodic cap, (D) the subsequent periodic cap, (E) the margin,
(F) the maximum lifetime rate and (G) the minimum lifetime rate; (x) the final
maturity date under the Debt Instrument; (xi) the current Monthly Payment; (xii)
the occupancy status of the Mortgaged Property, if any; and (xiii) the original
term of the Debt Instrument.
Indemnification and Contribution Agreement: The Indemnification and
Contribution Agreement dated as of __________, 199__ by and among
_________________________ , the Depositor, PaineWebber Incorporated,
_______________________________ and _____________ _________________________.
Indenture: The Indenture, dated as of ____________, 199__, between the
Issuer and the Indenture Trustee.
Indenture Trustee: ________________________, a
___________________________, as Indenture Trustee under the Indenture and this
Agreement acting on behalf of the Noteholders, or any successor indenture
trustee under the Indenture or this Agreement.
Indenture Trustee Fee: As to any Payment Date, the one-twelfth (1/12)
of the Indenture Trustee Fee Rate times the Pool Principal Balance as of the
opening of business on the first day of the Due Period immediately preceding the
calendar month of such Payment Date (or, with respect to the first Payment Date,
the Original Pool Principal Balance).
Indenture Trustee Fee Rate: __________ % ( ________ basis points) per
annum.
Indenture Trustee's Home Loan File: As defined in Section 2.04 hereof.
Independent: When used with respect to any specified Person, such
Person (i) is in fact independent of the Transferor, the Servicer, the Master
Servicer, the Depositor, [the Securities Insurer,] the Indenture Trustee or any
of their respective Affiliates, (ii) does not have any direct financial interest
in, or any material indirect financial interest in, any of the Transferor, the
Servicer, the Master Servicer, the Depositor, [the Securities Insurer,] the
Indenture Trustee or any of their respective Affiliates and (iii) is not
connected with any of the Transferor, the Servicer, the Depositor, [the
Securities Insurer,] the Indenture Trustee or any of their respective
Affiliates, as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions; provided, however, that a
Person shall not fail to be Independent of the Transferor, the Servicer, the
Depositor, [the Securities Insurer,] the Indenture Trustee or any of their
respective Affiliates merely because such Person is the beneficial owner of 1%
or less of any the securities issued by the Transferor, the Servicer, the
Depositor or any of their respective Affiliates, as the case may be.
Independent Accountants: A firm of nationally recognized certified
public accountants that is in fact Independent.
[Insurance Agreement: The Insurance and Indemnity Agreement, dated as
of _________, 199__, among the Securities Insurer, the Transferor, the Master
Servicer, the Depositor and the Issuer.]
[Insured Payment: With respect to the Guaranty Policy, as of any
Payment Date (i) any Deficiency Amount
and (ii) any Preference Amount.]
[Insured Securities: Each of the Notes.]
Interest Reduction Amount: As to any Payment Date, the sum of the
Servicing Fee, the Master Servicer Fee, the Indenture Trustee Fee, [and the
Guaranty Insurance Premium] payable with respect to such Payment Date or the
related Interest Accrual Period or Due Period as applicable, provided that on
any Payment Date on or after the Payment Date occurring in __________ 200__ ,
the Interest Reduction Amount shall increase by an amount equal to one-twelfth
of the product of ____ % and the aggregate Principal Balance of the Home Loans
as of the first day of the related Due Period.
Issuer: _____________ Home Loan Owner Trust 199__-__, a Delaware
business trust.
Liquidated Home Loan: With respect to any date of determination, any
Foreclosure Property or any Home Loan in respect of which a Monthly Payment is
in excess of 30 days past due and as to which the Servicer has determined that
all amounts which it reasonably and in good faith expects to collect have been
recovered from or on account of such Home Loan or the related Foreclosure
Property; provided, however, that in any event any Home Loan or the related
Foreclosure Property shall be deemed uncollectible and therefore be a Liquidated
Home Loan upon the earliest to occur of: (i) the liquidation or disposition of
such Home Loan or the related Foreclosure Property; or (ii) the determination by
the Servicer in accordance with the Accepted Servicing Procedures that there is
no reasonable likelihood of (A) recovering an economically significant amount
attributable to the outstanding interest and principal owing on such Home Loan
from either the related Mortgaged Property or the Obligor, in excess of (B) the
costs and expenses to obtain such recovery (including without limitation any
Servicing Advances), and in relation to (C) the expected timing of such recovery
therefrom.
Liquidation Proceeds: With respect to a Liquidated Home Loan, any cash
amounts received in connection with the liquidation or disposition of such
Liquidated Home Loan, whether through trustee's sale, foreclosure sale or other
disposition, any cash amounts received in connection with the management of the
Foreclosure Properties from Foreclosed Home Loans and any other amounts required
to be deposited in the Collection Account pursuant to Section 5.01(b) hereof, in
each case other than Property Insurance Proceeds and Released Mortgaged Property
Proceeds.
Loan-to-Value Ratio: With respect to any Home Loan, the fraction,
expressed as a percentage, (a) the numerator of which is the principal balance
of such Home Loan at origination and (b) the denominator of which is the value
as determined pursuant to the Transferor's underwriting guidelines of the
related Mortgaged Property at the time of origination of such Home Loan.
Majority Noteholders: The holder or holders of in excess of 50% of the
Note Principal Balance of all the Notes.
Majority Residual Interestholders: The holder or holders of more than
50% of the Residual Interest.
Master Servicer: _______________________ , a _______________________ ,
as Master Servicer hereunder, or any successor Master Servicer hereunder.
Master Servicer Compensation: The Master Servicer Fee and other amounts
to which the Master Servicer is entitled pursuant to Section 4.01(a) hereof.
Master Servicer Event of Default: As described in Section 10.01 hereof.
Master Servicer Fee: As to each Home Loan (including any Home Loan that
has been foreclosed and has become a Foreclosure Property, but excluding any
Liquidated Home Loan), the fee payable monthly to the Master Servicer on each
Payment Date, which shall equal the product of (a) one-twelfth (1/12) of _______
% (___ basis points) and (b) the Principal Balance of such Home Loan as of the
beginning of the immediately preceding Due Period.
Maturity Date: With respect to the Notes, the Payment Date occurring in
__________ 203__.
Monthly Advance: As defined in Section 4.01(h) hereof.
Monthly Advance Reimbursement Amount: With respect to any date of
determination and with respect to the receipt of proceeds from or the
liquidation of a Home Loan for which any Monthly Advances have been made, the
amount of any such Monthly Advances that have not been reimbursed as of such
date, including Nonrecoverable Monthly Advances.
Monthly Cut-Off Date: The last day of any calendar month and, with
respect to any Payment Date, the last day of the calendar month immediately
preceding such Payment Date.
Monthly Payment: The scheduled monthly payment of principal and/or
interest required to be made by an Obligor on the related Home Loan, as set
forth in the related Debt Instrument.
Mortgage: The mortgage, deed of trust or other security instrument
creating a lien in accordance with applicable law on a Mortgaged Property to
secure the Debt Instrument which evidences a Home Loan.
Mortgaged Property: The real property encumbered by the Mortgage that
secures the Debt Instrument evidencing a Home Loan.
Mortgaged Property States: Each state in which any Mortgaged Property
securing a Home Loan is located
as set forth in the Home Loan Schedule.
Net Interest Rate: As to any Payment Date, the annualized percentage
derived from the fraction (which shall not be greater than 1), the numerator of
which is the positive difference, if any, between (x) the amount of all interest
due on the Home Loans during the related Due Period and (y) the Interest
Reduction Amount and the denominator of which is the aggregate principal amount
of the Notes immediately prior to such Payment Date.
Net Liquidation Proceeds: With respect to any Payment Date, Liquidation
Proceeds received during the related Due Period, net of any reimbursements to
the Servicer or the Master Servicer, as the case may be, made from such amounts
for the following: (i) any unreimbursed Servicing Compensation or Master
Servicing Compensation; and (ii) Servicing Advances (including Nonrecoverable
Servicing Advances) made, and (iii) Monthly Advances (including Nonrecoverable
Monthly Advances) made and any other fees and expenses paid in connection with
the foreclosure, conservation or liquidation of the related Liquidated Home Loan
or Foreclosure Property.
Net Loan Losses: With respect to any Defaulted Home Loan that is
subject to a modification, an amount equal to the portion of the Principal
Balance, if any, released in connection with such modification.
Nonrecoverable Monthly Advance: With respect to any Defaulted Home Loan
or any Foreclosure Property, any Monthly Advance previously made and not
reimbursed from late or other fee collections, Liquidation Proceeds, Property
Insurance Proceeds or the Released Mortgaged Property Proceeds following the
liquidation or disposition of such Defaulted Home Loan or Foreclosure Property,
as evidenced by an Officer's Certificate delivered to the Indenture Trustee [and
the Securities Insurer].
Nonrecoverable Servicing Advance: With respect to any Defaulted Home
Loan or any Foreclosure Property, any Servicing Advance previously made and not
reimbursed from late or other fee collections, Liquidation Proceeds, Property
Insurance Proceeds or the Released Mortgaged Property Proceeds following the
liquidation or disposition of such Defaulted Home Loan or Foreclosure Property,
as evidenced by an Officer's Certificate delivered to the Indenture Trustee, the
Master Servicer [and the Securities Insurer].
Note: Any of the Notes issued pursuant to the Indenture.
Note Factor: With respect to any date of determination, the Note
Principal Balance divided by the Original Note Principal Balance.
Note Interest Rate: As to any Payment Date, a per annum rate equal to
the lesser of (i) One-Month LIBOR plus _____ %, provided that on any Payment
Date after the Call Option Date, this rate shall be One-Month LIBOR plus _____
%; and (ii) the Net Interest Rate.
Note Payment Account: The Eligible Account established and maintained
pursuant to Section 5.01(a)(2) hereof.
Note Principal Balance: As of any date of determination, the Original
Note Principal Balance reduced by the sum of all amounts previously distributed
in respect of principal of such Notes on all previous Payment Dates.
Note Redemption Amount: As of any date of determination, an amount
without duplication equal to the sum of (i) the then outstanding Note Principal
Balance of all Notes plus all accrued and unpaid interest thereon including any
unpaid Noteholders Interest Carry-Forward Amount, (ii) any Trust Fees and
Expenses due and unpaid on such date, (iii) any Servicing Advance Reimbursement
Amount [and Monthly Advance Reimbursement Amount and (iv) any due and unpaid
Securities Insurer Reimbursement Amount].
Noteholder: A holder of a Note.
Noteholders' Interest Carry-Forward Amount: With respect to any Payment
Date, (A) if on the immediately preceding Payment Date the Note Interest Rate
was limited pursuant to clause (ii) of the definition of "Note Interest Rate,"
the excess, if any, of the amount of interest that would have accrued on the
Notes for the immediately preceding Payment Date pursuant to clause (i) of the
definition thereof, over the amount of interest that was due on the Notes for
the immediately preceding Payment Date pursuant to clause (ii) of the definition
thereof, plus (ii) any outstanding Noteholders' Interest Carry-Forward Amount
remaining unpaid from prior Payment Dates, together with interest thereon at the
Note Interest Rate (without regard to clause (ii) thereof).
Noteholders' Interest Payment Amount: With respect to any Payment Date,
the sum of the Noteholders' Monthly Interest Payment Amount for such Payment
Date and the Noteholders' Interest Shortfall Amount for such Payment Date.
Noteholders' Interest Shortfall Amount: With respect to any Payment
Date, the excess, if any, of (A) the Noteholders' Monthly Interest Payment
Amount for the preceding Payment Date plus any outstanding Noteholders' Interest
Shortfall Amount on such preceding Payment Date, over (B) the amount in respect
of interest that is actually deposited in the Note Payment Account on such
preceding Payment Date.
Noteholders' Monthly Interest Payment Amount: With respect to each
Payment Date and the Notes, the interest accrued during the related Accrual
Period at the Note Interest Rate on the Note Principal Balance of the Notes
immediately preceding such Payment Date (or, in the case of the first Payment
Date, beginning on the Closing Date) after giving effect to all payments of
principal to the holders of the Notes on or prior to such preceding Payment
Date.
Noteholders' Principal Deficiency Amount: (1) With respect to any
Payment Date (other than as set forth in (2) below), the excess, if any, of (a)
the Note Principal Balance as of such Payment Date (after giving effect to all
payments of principal on such Payment Date, but without giving effect to any
payments in respect of this Noteholders' Principal Deficiency Amount to be made
on such Payment Date), over (b) the Pool Principal Balance as of the end of the
related Due Period; and [(2) with respect to the Maturity Date of the Notes or
any Payment Date upon which the Securities Insurer has exercised its option to
accelerate the Notes under the Indenture, the excess of (a) the Note Principal
Balance (after giving effect to all payments of principal on such Payment Date,
but without giving effect to any payments in respect of this Noteholders'
Principal Deficiency Amount to be made on such Payment Date), over (b) the
Available Payment Amount remaining after the payment of the Noteholders'
Interest Payment Amount and the Regular Principal Payment Amount for such
Payment Date].
Obligor: Each obligor on a Debt Instrument.
OC Trigger Increase Event: With respect to any Payment Date, the
occurrence of any of the following: (1) the Six-Month Average Delinquency equals
or exceeds ______ %; (2) the Annual Loss Percentage exceeds ___ %; or (3)
cumulative Realized Losses as a percentage of the Original Pool Principal
Balance, equal or exceed the following percentages based on the month of
determination after the Closing Date:
------------------------- -----------------------
Month of Cumulative
Determination Realized Losses
------------------------- -----------------------
0 -12 _____ %
------------------------- -----------------------
13 - 24 _____ %
------------------------- -----------------------
25 - 36 _____ %
------------------------- -----------------------
37 - 48 _____ %
------------------------- -----------------------
49+ _____ %
------------------------- -----------------------
Officer's Certificate: A certificate delivered to the Indenture
Trustee, the Depositor, the Servicer, the Master Servicer, [the Securities
Insurer,] the Transferor or the Issuer signed by the President or a Vice
President or an Assistant Vice President or other officer of the Indenture
Trustee, the Depositor, the Servicer, the Master Servicer, [the Securities
Insurer,] the Issuer or the Transferor, in each case, as required by this
Agreement.
One-Month LIBOR: With respect to each Accrual Period, as determined by
the Indenture Trustee on the second Business Day preceding the beginning of such
Accrual Period, on the basis of the offered rates of the Reference Bank for
one-month U.S. dollar deposits as such rates appear on the Telerate Screen Page
3750 as of 11:00 a.m. (London time) on such LIBOR Determination Date. As used in
this paragraph, "business day" means a day on which banks are open for dealing
in foreign currency and exchange in London and New York City; and "Reference
Banks" means leading banks selected by the Indenture Trustee and engaged in
transactions in Eurodollar deposits in the international Eurocurrency market (i)
with an established place of business in London, (ii) whose quotations appear on
the Telerate Screen Page 3750 on the LIBOR Determination Date in question, (iii)
which have been designated as such by the Indenture Trustee and (iv) not
controlling, controlled by or under common control with the Issuer, the
Depositor or the Transferor.
On each LIBOR Determination Date, One-Month LIBOR will be established
by the Indenture Trustee as follows:
(a) If on such LIBOR Determination Date two or more Reference Banks
provide such offered quotations, One-Month LIBOR shall be the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.0625%) of such
offered quotations.
(b) If on such LIBOR Determination Date fewer than two Reference Banks
provide such offered quotations, One-Month LIBOR shall be the greater of (x)
One-Month LIBOR as determined on the previous LIBOR Determination Date and (y)
the Reserve Interest Rate. The "Reserve Interest Rate" shall be the rate per
annum that the Indenture Trustee determines to be either (i) the arithmetic mean
(rounded upwards if necessary to the nearest whole multiple of 0.0625%) of the
one-month U.S. dollar lending rates which New York City banks selected by the
Indenture Trustee are quoting on the relevant LIBOR Determination Date to the
principal London offices of leading banks in the London interbank market or, in
the event that the Indenture Trustee can determine no such arithmetic mean, (ii)
the lowest one-month U.S. dollar lending rate which New York City banks selected
by the Indenture Trustee are quoting on such LIBOR Determination Date to leading
European banks.
The establishment of One-Month LIBOR on each LIBOR Determination Date by the
Indenture Trustee and the Indenture Trustee's calculation of the Note Interest
Rate for the related Accrual Period shall (in the absence of manifest error) be
final and binding.
Opinion of Counsel: A written opinion of counsel issued by counsel (a)
who is acceptable to the Master Servicer, the Indenture Trustee, the Rating
Agencies [and the Securities Insurer], and (b) who may be employed or retained
by the Transferor, the Servicer, the Master Servicer, the Depositor, [the
Securities Insurer] or any of their respective Affiliates.
Original Note Principal Balance: $____________.
Original Pool Principal Balance: $_____________, which is the Pool
Principal Balance as of the Cut-Off ------------------------------- Date.
Outstanding: As defined in the Indenture.
[Overcollateralization Amount: With respect to any Payment Date, the
amount equal to the excess of (A) the Pool Principal Balance as of the end of
the preceding Due Period, over (B) the Note Principal Balance of the Notes
(after giving effect to the payments made on such date pursuant to Section
5.01(d) and (e) hereof). As of the Closing Date, the initial
Overcollateralization Amount attributable to such excess shall be equal to
zero.]
[Overcollateralization Deficiency Amount: With respect to any Payment
Date, the excess, if any, of the Overcollateralization Target Amount over the
Overcollateralization Amount prior to the application of Excess Spread on such
Payment Date.]
[Overcollateralization Reduction Amount: With respect to any Payment
Date that occurs on or after the Stepdown Date, the lesser of (1) the excess, if
any, of (a) the Overcollateralization Amount (assuming principal payments on the
Notes on such Payment Date are equal to the Regular Principal Payment Amount
without deduction of this Overcollateralization Reduction Amount), over (b) the
Overcollateralization Target Amount, and (2) the Regular Principal Payment
Amount (as determined without the deduction of this Overcollateralization
Reduction Amount therefrom) on such Payment Date. Prior to the occurrence of a
Stepdown Date, the Overcollateralization Reduction Amount shall be zero.]
[Overcollateralization Target Amount: With respect to any Payment Date,
an amount determined as follows:
(1) with respect to any Payment Date occurring prior to the Stepdown
Date or on which the Step Down Test is not satisfied, an amount equal to ______
% of the Original Pool Principal Balance plus the Spread Squeeze Amount, if any;
(2) with respect to any other Payment Date occurring on or after the
Stepdown Date and on which the Step Down Test is satisfied, an amount equal to
the greatest of (a) the Stepped Down Percentage of the Pool Principal Balance,
(b) ______ % of the Original Pool Principal Balance; and (c) the aggregate
Principal Balance of the three largest Home Loans then outstanding, plus, in the
case of (a), (b) and (c), the Spread Squeeze Amount, if any; and
(3) with respect to any Payment Date occurring on which an OC Trigger
Increase Event is occurring, notwithstanding any of the preceding clauses (1)
through (2), an amount equal to 100% of the Pool Principal Balance;
provided, however, with respect to any Payment Date, notwithstanding any of the
preceding clauses (1) through (3), the Overcollateralization Target Amount shall
not exceed the Note Principal Balance and may be modified by the Securities
Insurer, but shall not be reduced below, (1) with respect to any Payment Date
occurring prior to the Stepdown Date, ______ % of the Cut-Off Date Pool Balance
or (2) with respect to any Payment Date occurring on or after the Stepdown Date,
an amount equal to the greater of (a) ______ % of the Pool Principal Balance as
of the end of the related Due Period, (b) ______ % of the Cut-Off Date Pool
Principal Balance or (c) an amount equal to the aggregate Principal Balance of
the ________ largest Loans then outstanding.
Owner Trust Agreement: The Owner Trust Agreement, dated as of ________,
199__ , among the Depositor, __________, the Owner Trustee and
__________________________ , a national banking association.
Owner Trustee: ________________________ , as owner trustee under the
Owner Trust Agreement, and any successor owner trustee under the Owner Trust
Agreement.
Ownership Interest: As to any Note, any ownership or security interest
in such Note, including any interest in such Note as the holder thereof and any
other interest therein, whether direct or indirect, legal or beneficial, as
owner or as pledgee.
Payment Date: The ______ day of any month or if such ______ day is not
a Business Day, the first Business Day immediately following such day,
commencing in ________ 199__.
Payment Statement: As defined in Section 6.01 hereof.
Percentage Interest: As defined in the Owner Trust Agreement.
Permitted Investments: Each of the following:
(1)..direct obligations of, and obligations fully guaranteed by,
the United States of America, FHLMC, FNMA, the Federal Home Loan Banks or any
agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America;
(2)..(i) demand and time deposits in, certificates of deposit of,
bankers acceptances issued by, or federal funds sold by, any depository
institution or trust company (including the Indenture Trustee or its agent
acting in their respective commercial capacities) incorporated under the laws of
the United States of America or any state thereof and subject to supervision and
examination by federal or state authorities, so long as, at the time of such
investment or contractual commitment providing for such investment, such
depository institution or trust company or its ultimate parent has a short-term
unsecured debt rating in _____________ highest available rating categories of
___________ and the ___________ available rating category of Moody's and
provided that each such investment has an original maturity of no more than 365
days, and (ii) any other demand or time deposit or deposit which is fully
insured by the FDIC;
(3)..repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (a) above and entered into with a
depository institution or trust company (acting as principal) rated "A" or
higher by S&P and rated "A2" or higher by Moody's; provided, however, that
collateral transferred pursuant to such repurchase obligation must be of the
type described in clause (a) above and must (i) be valued daily at current
market price plus accrued interest, (ii) pursuant to such valuation, be equal,
at all times, to at least ______ % of the cash transferred by the Indenture
Trustee in exchange for such collateral, and (iii) be delivered to the Indenture
Trustee, or if the Indenture Trustee is supplying the collateral, an agent for
the Indenture Trustee, in such a manner as to accomplish perfection of a
security interest in the collateral by possession of certificated securities;
(4)..securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of America or
any state thereof which has a short-term unsecured debt rating in the highest
available rating category of each of the Rating Agencies at the time of such
investment;
(5)..commercial paper having an original maturity of less than 365
days and issued by an institution having a short-term unsecured debt rating in
the highest available rating category of each of the Rating Agencies at the time
of such investment;
(6)..a guaranteed investment contract approved by each of the
Rating Agencies [and the Securities Insurer] and issued by an insurance company
or other corporation having a short-term unsecured debt rating in the highest
available rating category of each of the Rating Agencies at the time of such
investment;
(7)..money market funds having one of the two highest available
rating categories of S&P and the highest available rating category of Moody's at
the time of such investment, which invests only in other Permitted Investments,
including any such money market funds for which the Master Servicer or the
Indenture Trustee or any affiliate of the Master Servicer or the Indenture
Trustee acts as the investment manager or advisor; provided that any such money
market funds which provide for demand withdrawals shall be conclusively deemed
to satisfy any maturity requirements for Permitted Investments set forth in this
Agreement; and
(8)..any investment approved in writing by the Securities Insurer
and for which the Ratings Confirmation have been obtained with respect to such
investment.
The Indenture Trustee may purchase from or sell to itself or an
affiliate, as principal or agent, the Permitted Investments listed above. All
Permitted Investments in a trust account under this Agreement shall be made in
the name of the Indenture Trustee for the benefit of the Securityholders and the
Securities Insurer; provided, that the Master Servicer shall be entitled to all
investment earnings from the Note Payment Account and the Collection Account as
part of its Master Servicer Compensation hereunder.
Person: Any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, estate,
national banking association, unincorporated organization or government or any
agency or political subdivision thereof.
Pool Principal Balance: With respect to any date of determination, the
aggregate Principal Balances of the Home Loans as of the end of the preceding
Due Period; provided, however, that the Pool Principal Balance on any Payment
Date on which the Termination Price is to be paid to Noteholders will be deemed
to have been equal to zero as of such date.
Preference Amount: Any amount previously distributed to the holder of
an Insured Security that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final,
non-appealable order of a court having jurisdiction.
[Premium Letter: The letter agreement dated ___________, 199__ between
the Securities Insurer and _____________ relating to the premiums due in respect
of the Guaranty Policy.]
Principal Balance: With respect to any Home Loan or related Foreclosure
Property, (i) at the Cut-Off Date, the outstanding unpaid principal balance of
the Home Loan as of the Cut-Off Date and (ii) with respect to any date of
determination, the outstanding unpaid principal balance of the Home Loan as of
the last day of the preceding Due Period (after giving effect to all payments
received thereon or Monthly Advances in respect of principal made with respect
thereto and the allocation of any Net Loan Losses with respect thereto which
relates to such Due Period), without giving effect to amounts received in
respect of such Home Loan or related Foreclosure Property after such Due Period;
provided, however, that any Liquidated Home Loan shall have a Principal Balance
of zero and with respect to the valuation of the Issuer's assets such Liquidated
Home Loan shall not accrue interest thereon.
Principal Prepayment: With respect to any Home Loan and any Due Period,
any principal amount received on a Home Loan in excess of the principal of the
Monthly Payment due in such Due Period and applied by the Servicer during such
Due Period in reduction of the Principal Balance of the Home Loan.
Property Insurance Proceeds: With respect to any Mortgaged Property,
all amounts collected in respect of any related insurance policy that insures
such Mortgaged Property or the related Obligor and not required to be applied to
the restoration of any such Mortgaged Property or paid to the related Obligor
(but excluding any Insured Payments).
Prospectus: The Depositor's final Prospectus dated __________, 199__ as
supplemented by the Prospectus Supplement.
Prospectus Supplement: The Prospectus Supplement dated ___________,
199__ prepared by the Depositor and Transferor in connection with the issuance
and sale of the Notes.
Purchase Price: With respect to a Defective Home Loan, the Principal
Balance thereof as of the date of purchase, plus all accrued and unpaid interest
on such Defective Home Loan from the Closing Date to but not including the date
of repurchase computed at the applicable Home Loan Interest Rate, plus the
amount of any unreimbursed Servicing Advances and Monthly Advances with respect
to such Defective Home Loan (after deducting therefrom any amounts received in
respect of such repurchased Defective Home Loan and being held in the Collection
Account for future distribution to the extent such amounts represent recoveries
of principal not yet applied to reduce the related Principal Balance or interest
(net of the Servicing Fee, Master Servicer Fee, Indenture Trustee Fee [and
Guaranty Insurance Premium] for such Defective Home Loan) for the period from
and after the date of repurchase).
Qualified Substitute Home Loan: A home loan or home loans substituted
for a Deleted Home Loan pursuant to Section 3.05 hereof, which satisfies the
following: (i) in the case of a fixed rate Home Loan, has or have a fixed
interest rate (a) no lower than the Home Loan Interest Rate for the Deleted Home
Loan, and (b) not more than 2.0 percentage points greater than the Home Loan
Interest Rate for the Deleted Home Loan; (ii) in the case of an adjustable rate
Home Loan has or have an adjustable rate and (a) has a current interest rate no
lower than the Home Loan Interest Rate for the Deleted Home Loan, (b) has a
gross margin not more than [2.0] percentage points different than the Home Loan
Interest Rate for the Deleted Home Loan, (c) has a lifetime interest rate cap
not more than [2.0] percentage points lower than the Home Loan Interest Rate for
the Deleted Home Loan, (d) has a lifetime interest rate floor not more than
[2.0] percentage points lower than the Home Loan Interest Rate for the Deleted
Home Loan, and (e) pays interest based on the same index as the Deleted Home
Loan; (iii) matures or mature not more than one year later than, and not more
than one year earlier, than the maturity date of Deleted Home Loan, has a
maturity date no later than ___________ , 20____ and an original term to
maturity of less than or equal to 30 years; (iv) has or have a principal balance
or principal balances (after application of all payments received on or prior to
the date of substitution) equal to or less than the Principal Balance or
Balances of the Deleted Home Loan or Loans as of such date; (v) has or have a
borrower or borrowers with a debt-to-income ratio no higher than the
debt-to-income ratio of the Obligor with respect to the Deleted Loan; (vi)
complies or comply as of the date of substitution with each representation and
warranty set forth in Section 3.04 hereof and is or are not more than 89 days
delinquent as of the date of substitution for such Deleted Home Loan or Loans;
(vii) has or have a lien priority no lower than the Deleted Loan; and [(viii) is
otherwise satisfactory to the Securities Insurer]. For purposes of determining
whether multiple mortgage loans proposed to be substituted for one or more
Deleted Home Loans pursuant to Section 3.05 hereof are in fact "Qualified
Substitute Home Loans" as provided above, the criteria specified in clauses (i),
(ii) and (iii) above may be considered on an aggregate or weighted average
basis, rather than on a loan-by-loan basis (i.e., so long as the weighted
average Home Loan Interest Rate of any loans proposed to be substituted is not
less than the Home Loan Interest Rate for the designated Deleted Home Loan or
Loans and not more than two percentage points greater than the Home Loan
Interest Rate for the designated Deleted Home Loan or Loans, the requirements of
clause (i) above would be deemed satisfied).
Rating Agencies: ___________ and________ . If no such organization or
successor is any longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable person designated
by the Master Servicer [and approved by the Securities Insurer], notice of which
designation shall have been given to the Indenture Trustee[, the Securities
Insurer], the Servicer and the Issuer.
Ratings: The ratings initially assigned to the Notes by the Rating
Agencies, as evidenced by letters from the Rating Agencies.
Ratings Confirmation: With respect to a contemplated action to be
undertaken or performed pursuant to this Agreement, a written confirmation from
each Rating Agency to the effect that such action will not result in or cause
the downgrading, withdrawal or qualification of the rating that would otherwise
be assigned by such Rating Agency to the Notes [without the benefit of the
Guaranty Policy provided by the Securities Insurer].
Realized Losses: As of any Payment Date, the sum of (1) with respect to
all Home Loans that have become Liquidated Home Loans during the related Due
Period, the difference between (a) the aggregate Principal Balances of such
Liquidated Home Loans and accrued and unpaid interest thereon, minus (b) the
aggregate Net Liquidation Proceeds collected during the related Due Period, and
(2) with respect to all Defaulted Home Loans, the aggregate Net Loan Losses that
occurred during the related Due Period.
Record Date: With respect to each Payment Date, the close of business
on the last Business Day of the month immediately preceding the month in which
such Payment Date occurs.
Regular Payment Amount: With respect to any Payment Date, the lesser of
(a) the Available Payment Amount and (b) the sum of (i) the Noteholders'
Interest Payment Amount and (ii) the Regular Principal Payment Amount.
Regular Principal Payment Amount: On each Payment Date, an amount equal
to the lesser of:
(A) the Note Principal Balance of the Notes immediately prior to such
Payment Date; and
(B) the sum of (i) each scheduled payment of principal collected by the
Servicer or advanced by the Master Servicer in respect of the related Due
Period, (ii) all Principal Prepayments applied by the Servicer during such
related Due Period, (iii) the principal portion of all Net Liquidation Proceeds,
Property Insurance Proceeds and Released Mortgaged Property Proceeds received
during the related Due Period, (iv) that portion of the Purchase Price of any
repurchased Home Loan which represents principal received prior to the related
Determination Date, (v) the principal portion of any Substitution Adjustments
required to be deposited in the Collection Account as of the related
Determination Date and (vi) on the Payment Date on which the Issuer is to be
terminated pursuant to Section 11.02 hereof, the Termination Price (net of any
accrued and unpaid interest, Trust Fees and Expenses due and unpaid on such date
and Servicing Advance Reimbursement Amounts and Monthly Advance Reimbursement
Amounts);
provided, however, that if such Payment Date is on or after a Stepdown Date,
then with respect to the payment of principal to the Noteholders the foregoing
amount will be reduced (but not less than zero) by the Overcollateralization
Reduction Amount, if any, for such Payment Date.
Released Mortgaged Property Proceeds: With respect to any Home Loan,
proceeds received by the Servicer in connection with (i) a taking of an entire
Mortgaged Property by exercise of the power of eminent domain or condemnation or
(ii) any release of part of the Mortgaged Property from the lien of the related
Mortgage, whether by partial condemnation, sale or otherwise; which proceeds in
either case are not released to the Obligor in accordance with applicable law,
Accepted Servicing Procedures and this Agreement.
Relief Act Shortfall: Any shortfall in an Obligor's Monthly Payment
caused by the application of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
Residual Interest: The meaning assigned thereto in the Owner Trust
Agreement.
Residual Interest Certificate: The meaning assigned thereto in the
Owner Trust Agreement.
Responsible Officer: When used with respect to the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Secretary, Assistant
Secretary or any other officer of the Indenture 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. When used with respect to the Issuer, any officer in the
Corporate Trust Administration Department of the Owner Trustee with direct
responsibility for the administration of the Owner Trust Agreement and this
Agreement on behalf of the Issuer. When used with respect to the Depositor, the
Servicer, the Master Servicer, the Transferor, the Servicer or any Custodian,
the President or any Vice President, Assistant Vice President, or any Secretary
or Assistant Secretary.
Securities: The Notes or Residual Interest Certificates.
[Securities Insurer: ., as issuer of the Guaranty Policy, and its
successors and assigns.]
[Securities Insurer Default: The existence and continuation of any of
the following:
(a) The Securities Insurer fails to make a payment required under the
Guaranty Policy in accordance with its terms;
(b) The Securities Insurer (1) files any petition or commences any case
or proceeding under any provision or chapter of the United States Bankruptcy
Code or any other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, (2) makes a general
assignment for the benefit of its creditors, or (3) has an order for relief
entered against it under the United States Bankruptcy Code or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and nonappealable; or
(c) A court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority enters a final and
nonappealable order, judgment or decree (1) appointing a custodian, trustee,
agent or receiver for the Securities Insurer or for all or any material portion
of its property or (2) authorizing the taking of possession by a custodian,
trustee, agent or receiver of the Securities Insurer (or the taking of
possession of all or any material portion of the property of the Securities
Insurer).]
[Securities Insurer Reimbursement Amount: At any time, an amount owed
to the Securities Insurer for any unreimbursed Insured Payments made under the
Guaranty Policy and any other amounts then owing to the Securities Insurer under
the Insurance Agreement, which have not previously been reimbursed, in each case
together with interest thereon at the rate specified in the Insurance
Agreement.]
Securityholder: Any Noteholder or Certificateholder.
Series or Series 199__-__: _____________ Home Loan Asset Backed Notes,
Series 199__-__.
[Servicer: One or more servicers that enter into a Servicing Agreement
with the Master Servicer, which initially will be__________________________ , a
_____________________ ________________________ _______________ for an interim
period, and thereafter will be ___________________, a Utah corporation.]
Servicer's Home Loan Files: In respect of each Home Loan, all documents
customarily included in the Servicer's loan file for the related type of Home
Loan as specifically set forth in Section 4.4 of the Servicing Agreement.
Servicer's Monthly Remittance Report: A report prepared and computed by
the Servicer in substantially the form of Exhibit B attached hereto.
Servicing Advance Reimbursement Amount: With respect to any date of
determination and with respect to the receipt of proceeds from or the
liquidation of a Home Loan for which any Servicing Advances have been made, the
amount of any such Servicing Advances that have not been reimbursed as of such
date, including Nonrecoverable Servicing Advances.
Servicing Advances: All reasonable, customary and necessary "out of
pocket" costs and expenses advanced or paid by the Servicer with respect to the
Home Loans in accordance with the performance by the Servicer of its servicing
obligations under Section 6.6 of the Servicing Agreement, including, but not
limited to, the costs and expenses for (i) the preservation, restoration and
protection of any related Mortgaged Property, including without limitation
advances in respect of real estate taxes and assessments, (ii) any collection,
enforcement or judicial proceedings, including without limitation foreclosures,
collections and liquidations , (iii) the conservation, management and sale or
other disposition of a Foreclosure Property, and (iv) the satisfaction,
cancellation, release or discharge of any Home Loan or any related Mortgage in
accordance with this Agreement; provided, however, that such Servicing Advances
(plus accrued interest thereon from the date of such advance to the date of
reimbursement and at the rate equal to the Servicer's cost of funds) are
reimbursable to the Servicer out of the expected late collections, Liquidation
Proceeds, Property Insurance Proceeds or Released Mortgaged Property Proceeds
from the related Home Loan, Obligor or Mortgaged Property.
Servicing Agreement: The servicing agreement, incorporating by
reference the Agreement Regarding Standard Servicing Terms, each dated as of the
date hereof each between _________ owner of the Home Loans and as the Master
Servicer and the Servicer, a form of which is attached hereto as Exhibit E.
Servicing Compensation: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to this Agreement and the Servicing Agreement.
On any Payment Date Servicing Compensation shall include any Servicing Fee
Recovery Amounts due and unpaid, to the extent of Master Servicer Compensation
available after allocations under Section 4.01(K) hereof on such Payment Date.
Servicing Fee: As to each Home Loan (including any Home Loan that has
been foreclosed and has become a Foreclosure Property, but excluding any
Liquidated Home Loan), the fee payable monthly to the Servicer on each Payment
Date, which shall equal the product of (a) one-twelfth (1/12) of _____ % (____
basis points) and (b) the Principal Balance of such Home Loan as of the
beginning of the immediately preceding Due Period (or as of the Cut-Off Date
with respect to the first Due Period).
Servicing Fee Recovery Amount: The amount of any Servicing Fee used to
pay Compensating Interest for which the Servicer has not received reimbursement.
Servicing Officer: Any officer of the Servicer or Master Servicer
involved in, or responsible for, the administration and servicing of the Home
Loans whose name and specimen signature appears on a list of servicing officers
annexed to an Officer's Certificate furnished by the Servicer or the Master
Servicer, respectively, to [the Securities Insurer,] the Master Servicer and the
Indenture Trustee, on behalf of the Securityholders [and the Securities
Insurer], as such list may from time to time be amended.
Six-Month Average Delinquency: With respect to any Payment Date, the
average for such Payment Date and the five preceding Payment Dates of the
respective ratios, expressed as a percentage, equal to (x) the aggregate
Principal Balances of all Home Loans that are 90 days or more Delinquent
(excluding any Liquidated Home Loans but including Foreclosed Loans and Home
Loans in foreclosure proceedings) as of the end of each of the related Due
Periods, divided by (y) the respective Pool Principal Balance as of the end of
the applicable Due Period.
Spread Squeeze Amount: For any Payment Date on or after the Payment
Date in _______ 200__ , an amount (not less than zero) equal to the product,
obtained by multiplying (i) _______ , (ii) the excess, if any, of _____ % (
___________________________ ) or ______ % (with respect to any Payment Date
after the 24th Payment Date) over the Spread Squeeze Percentage for such Payment
Date and (iii) the Original Pool Principal Balance.
Spread Squeeze Percentage: With respect to any Payment Date, the
percentage equivalent of a fraction, the numerator of which is the product of
_____ and the excess of the Excess Spread for such Payment Date [over the
Securities Insurer Reimbursement Amount] for such Payment Date, and the
denominator of which is the Pool Principal Balance for such Payment Date.
Stepdown Date: The first Payment Date occurring on the later of: (a)
the ___________ month after the month in which the Closing Date occurs; or (b)
the Payment Date on which the Pool Principal Balance as of the end of the
related Due Period has been reduced to an amount that is less than or equal to
____ % of the Original Pool Principal Balance.
Step Down Test: As of any Payment Date, each of the following
conditions:
(i) the most recent six month rolling 90 day and over average
delinquency rate (including foreclosures and REOs) is equal
to or less than _____ % of the Pool Principal Balance.
(ii) the cumulative losses through the given month is equal to or
less than the following percent of Principal Pool Original
Balance:
Cumulative Loss % of Original
Month Pool Balance
24 _____ %
36 _____ %
48 _____ %
60+ _____ %
and
(iii) the aggregate loss during the 12 months preceding a Payment
Date, as a percentage of the Pool Principal Balance as of the
first day of such 12 month period must be less than ____
basis points (_____ %).
Stepped Down Percentage: For any Payment Date on or after the Step Down
Date on which the Step Down Test is satisfied, a percentage equal to _____ %.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 3.05 hereof, the amount, if any, by which (a) the sum of the
aggregate principal balance (after application of principal payments received on
or before the date of substitution) of any Qualified Substitute Home Loans as of
the date of substitution, plus any accrued and unpaid interest thereon to the
date of substitution, is less than (b) the sum of the Principal Balance,
together with accrued and unpaid interest thereon to the date of substitution,
of the related Deleted Home Loans.
Tangible Net Worth: As defined in Section 10.01(a)(x) hereof.
Termination Price: As of any date of determination, an amount without
duplication equal to the greater of (A) the Note Redemption Amount and (B) the
sum of (i) the Principal Balance of each Home Loan as of the applicable Monthly
Cut-Off Date; (ii) all unpaid interest accrued on the Principal Balance of each
such Home Loan at the related Home Loan Interest Rate to such Monthly Cut-Off
Date; (iii) the aggregate fair market value of each Foreclosure Property on such
Monthly Cut-Off Date, as determined by an appraiser acceptable to [the Indenture
Trustee as of a date not more than 30 days prior to such Monthly Cut-Off Date;
and (iv) any due but unpaid Securities Insurer Reimbursement Amount].
Transaction Documents: This Agreement, the Servicing Agreement, the
Home Loan Purchase Agreement, the Owner Trust Agreement, the Custodial
Agreement, the Administration Agreement, the Indemnification and Contribution
Agreement, [the Insurance and Indemnity Agreement, the Premium Letter and the
Indemnification Agreement].
Transferor: __________ , in its capacity as the transferor hereunder.
Treasury Regulations: Regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
Trust: The Issuer.
Trust Account Property: The Trust Accounts, all amounts and investments
held from time to time in the Trust Accounts and all proceeds of the foregoing.
Trust Accounts: The Note Payment Account, the Certificate Distribution
Account, the Policy Payment Account or the Collection Account.
Trust Estate: The assets subject to this Agreement, the Owner Trust
Agreement and the Indenture and assigned and conveyed to the Trust, which assets
consist of: (i) such Home Loans as from time to time are subject to this
Agreement as listed in the Home Loan Schedule, as the same may be amended or
supplemented from time to time including by the removal of Deleted Home Loans
and the addition of Qualified Substitute Home Loans, together with the Home Loan
File relating thereto and all proceeds thereof, (ii) the Mortgages and security
interests in Mortgaged Properties, (iii) all payments in respect of interest due
with respect to the Home Loans on or after the Cut-Off Date and all payments in
respect of principal received after the Cut-Off Date, (iv) such assets as from
time to time are identified as Foreclosure Property, (v) such assets and funds
as are from time to time are deposited in the Collection Account, the Note
Payment Account and the Certificate Distribution Account, including amounts on
deposit in such accounts which are invested in Permitted Investments, (vi) the
Issuer's rights under all insurance policies with respect to the Home Loans and
any Property Insurance Proceeds, (vii) Net Liquidation Proceeds and Released
Mortgaged Property Proceeds, (viii) all right, title and interest of the
Depositor in and to the obligations of the Transferor under the Home Loan
Purchase Agreement pursuant to which the Depositor acquired the Home Loans from
the Transferor, and (ix) all right, title and interest of the Depositor in and
to the Servicing Agreement and all proceeds of any of the foregoing.
Trust Fees and Expenses: As of each Payment Date, an amount equal to
the Master Servicer Compensation (which includes the Master Servicer Fee), the
Servicing Compensation (which includes the Servicing Fee), [Guaranty Insurance
Premium] and the Indenture Trustee Fee and reimbursement of the reasonable
expenses of the Indenture Trustee.
UCC: The Uniform Commercial Code as in effect in the State of New York.
Section 1.02. Other Definitional Provisions.
-----------------------------
(a) Capitalized terms used herein and not otherwise defined herein have
the meanings assigned to them in the Indenture and the Owner Trust Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under GAAP. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under GAAP, the definitions contained in this Agreement
or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF THE HOME LOANS
----------------------------
Section 2.01. Conveyance of the Home Loans.
----------------------------
(a) As of the Closing Date, in consideration of the Issuer's delivery
of the Notes and the Residual Interest Certificates to the Depositor or its
designee, upon the order of the Depositor, the Depositor, as of the Closing Date
and concurrently with the execution and delivery hereof, does hereby sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse,
but subject to the other terms and provisions of this Agreement, all of the
right, title and interest of the Depositor in and to the Trust Estate. The
foregoing sale, transfer, assignment, set over and conveyance does not, and is
not intended to, result in a creation or an assumption by the Issuer of any
obligation of the Depositor, the Transferor or any other person in connection
with the Trust Estate or under any agreement or instrument relating thereto
except as specifically set forth herein.
(b) As of the Closing Date, the Issuer acknowledges the conveyance to
it of the Trust Estate, including all right, title and interest of the Depositor
in and to the Trust Estate, receipt of which is hereby acknowledged by the
Issuer. Concurrently with such delivery and in exchange therefor, the Issuer has
pledged the Trust Estate to the Indenture Trustee and executed the Notes, and
the Indenture Trustee, pursuant to the written instructions of the Issuer, has
caused the Notes to be authenticated and delivered to the Depositor or its
designee. In addition, concurrently with such delivery and in exchange therefor,
the Owner Trustee, pursuant to the instructions of the Depositor, has executed
(not in its individual capacity, but solely as Owner Trustee on behalf of the
Issuer) and caused the Residual Interest Certificates to be authenticated and
delivered to the Depositor or its designee, upon the order of the Depositor.
Section 2.02. Ownership and Possession of Home Loan Files.
-------------------------------------------
Upon the issuance of the Notes, with respect to the Home Loans, the
ownership of each Debt Instrument, the related Mortgage and the contents of the
related Servicer's Home Loan File and the Indenture Trustee's Home Loan File
shall be vested in the Trust and pledged to the Indenture Trustee for the
benefit of the Noteholders, although possession of the Servicer's Home Loan
Files (other than items required to be maintained in the Indenture Trustee's
Home Loan Files) on behalf of and for the benefit of the Securityholders shall
remain with the Servicer, and the Custodian shall take possession of the
Indenture Trustee's Home Loan Files as contemplated in Section 2.05 hereof.
Section 2.03. Books and Records.
-----------------
The sale of each Home Loan shall be reflected on the balance sheets and
other financial statements of the Depositor or the Transferor, as the case may
be, as a sale of assets by the Depositor or the Transferor, as the case may be,
under GAAP. Each of the Servicer and the Custodian shall be responsible for
maintaining, and shall maintain, a complete set of books and records for each
Home Loan which shall be clearly marked to reflect the ownership of each Home
Loan by the Owner Trustee and pledged to the Indenture Trustee for the benefit
of the Noteholders.
It is the intention of the parties hereto that the transfers and
assignments contemplated by this Agreement shall constitute a sale of the Home
Loans and the other property specified in Section 2.01(a) hereof from the
Depositor to the Trust. If the assignment and transfer of the Home Loans and the
other property specified in Section 2.01(a) hereof to the Trust pursuant to this
Agreement or the conveyance of the Home Loans or any of such other property to
the Trust is held or deemed not to be a sale or is held or deemed to be a pledge
of security for a loan, the Depositor intends that the rights and obligations of
the parties shall be established pursuant to the terms of this Agreement and
that in such event, (i) the Depositor shall be deemed to have granted and does
hereby grant to the Trust a first priority security interest in the entire
right, title and interest of the Depositor in and to the Home Loans and all
other property conveyed to the Trust pursuant to Section 2.01 hereof and all
proceeds thereof and (ii) this Agreement shall constitute a security agreement
under applicable law. Within ten (10) days of the Closing Date, the Depositor
shall cause to be filed UCC-1 financing statements naming the Trust as a
"secured party" and describing the Home Loans being sold by the Depositor to the
Trust with the office of the Secretary of State of the state in which the
Depositor is located.
Section 2.04. Delivery of Home Loan Documents.
-------------------------------
(a) With respect to each Home Loan, the Transferor and/or the
Depositor, as applicable, shall, on the Closing Date, deliver or caused to be
delivered to the Custodian, as the designated agent of the Indenture Trustee,
each of the following documents (collectively, the "Indenture Trustee's Home
Loan Files"):
(i)..The original Debt Instrument, endorsed by the Transferor in
blank or in the following form: "Pay to the order of
____________________________ as Trustee without recourse" with all prior and
intervening endorsements showing a complete chain or endorsement from
origination of the Home Loan to the Transferor, or a lost note affidavit
acceptable to the Indenture Trustee (not to exceed ___ Home Loans);
(ii)..The original Mortgage with evidence of recording thereon
(or, if the original Mortgage has not been returned from the applicable public
recording office or is not otherwise available, a copy of the Mortgage certified
by a Responsible Officer of the Transferor or by the closing attorney or by an
officer of the title insurer or agent of the title insurer which issued the
related title insurance policy, if any, or commitment therefor to be a true and
complete copy of the original Mortgage submitted for recording) and, if the
Mortgage was executed pursuant to a power of attorney, the original power of
attorney with evidence of recording thereon (or, if the original power of
attorney has not been returned from the applicable public recording office or is
not otherwise available, a copy of the power of attorney certified by a
Responsible Officer of the Transferor or by the closing attorney or by an
officer of the title insurer or agent of the title insurer which issued the
related title insurance policy, if any, or commitment, thereof, to be a true and
complete copy of the original power of attorney submitted for recording);
(iii)..The original executed Assignment of Mortgage, in blank or
in recordable form to "____________________ , as Trustee." The Assignment of
Mortgage may be a blanket assignment, to the extent such assignment is effective
under applicable law, for Mortgages covering Mortgaged Properties situated
within the same county. If the Assignment of Mortgage is in blanket form, an
Assignment of Mortgage need not be included in the individual Indenture
Trustee's Home Loan File;
(iv)..All original intervening assignments of mortgage, with
evidence of recording thereon, showing a complete chain of assignment from
origination of the Home Loan to the Transferor (or, if any such assignment of
mortgage has not been returned from the applicable public recording office or is
not otherwise available, a copy of such assignment of mortgage certified by a
Responsible Officer of the Transferor or by the closing attorney or by an
officer of the title insurer or agent of the title insurer which issued the
related title insurance policy, if any, or commitment therefor to be a true and
complete copy of the original assignment submitted for recording); provided that
the chain of intervening recorded assignments shall not be required to match the
chain of intervening endorsements of the Debt Instrument so long as the chain of
intervening recorded assignments, if applicable, evidences one or more
assignments of the Mortgage from the original mortgagee ultimately to the person
who has executed the Assignment of Mortgage;
(v)..The original, or a copy certified by the Transferor to be a
true and correct copy of the original, of each assumption, modification, written
assurance or substitute agreement, if any; and
(vi)..[The original policy of title insurance, including riders
and endorsements thereto, as 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.]
(b) With respect to each Home Loan, the Transferor and the Depositor
shall, on the Closing Date, deliver or caused to be delivered to the Servicer,
as the designated agent of the Indenture Trustee, the Servicer's Home Loan
Files.
(c) The Indenture Trustee shall cause the Custodian to take and
maintain continuous physical possession of the Indenture Trustee's Home Loan
Files in the State of _____________ and, in connection therewith, shall act
solely as agent for the Noteholders in accordance with the terms hereof and not
as agent for the Transferor or any other party.
(d) Within 60 days after the Closing Date, the Transferor, at its own
expense, shall record each Assignment of Mortgage (which may be a blanket
assignment if permitted by applicable law) in the appropriate real property or
other records; provided, however, that the Transferor need not record any such
Assignment of Mortgage which relates to a Home Loan in any jurisdiction under
the laws of which, as evidenced by an Opinion of Counsel delivered by the
Transferor (at the Transferor's expense) to the Indenture Trustee, the
Securities Insurer and the Rating Agencies, that recordation of such Assignment
of Mortgage is not necessary to protect the Indenture Trustee's and the
Noteholder's interest in the related Home Loan. With respect to any Assignment
of Mortgage as to which the related recording information is unavailable within
60 days following the Closing Date, such Assignment of Mortgage shall be
submitted for recording within 30 days after receipt of such information but in
no event later than 360 days after the Closing Date. The Indenture Trustee shall
be required to retain a copy of each Assignment of Mortgage submitted for
recording. In the event that any such Assignment of Mortgage is lost or returned
unrecorded because of a defect therein, the Transferor shall promptly prepare a
substitute Assignment of Mortgage or cure such defect, as the case may be, and
thereafter the Transferor shall be required to submit each such Assignment of
Mortgage for recording.
(e) All recordings required pursuant to this Section 2.04 shall be
accomplished by and at the expense of the Transferor.
Section 2.05. Acceptance by the Indenture Trustee of the Home Loans;
Certain Substitutions; Certification by the Custodian.
------------------------------------------------------
(a) The Indenture Trustee agrees to cause the Custodian to execute and
deliver on the Closing Date an acknowledgment of receipt of the Indenture
Trustee's Home Loan File for each Home Loan. The Indenture Trustee will cause
the Custodian to hold such documents and any amendments, replacements or
supplements thereto, as well as any other assets included in the Trust Estate
and delivered to the Custodian, in trust, upon and subject to the conditions set
forth herein. The Indenture Trustee agrees to cause the Custodian to review each
Indenture Trustee's Home Loan File within 45 days after the Closing Date (or,
with respect to any Qualified Substitute Home Loan, within 45 days after the
conveyance of the related Home Loan to the Trust) and to cause the Custodian to
deliver to the Transferor, the Depositor, the Servicer, the Indenture Trustee,
[and the Securities Insurer] a certification (the "Custodian's Initial
Certification") to the effect that, as to each Home Loan listed in the Home Loan
Schedule (other than any Home Loan paid in full or any Home Loan specifically
identified as an exception to such certification), (i) all documents required to
be delivered to the Indenture Trustee pursuant to this Agreement are in its
possession or in the possession of the Custodian on its behalf (other than as
expressly permitted by Section 2.04 hereof), (ii) such documents have been
reviewed by the Custodian and have not been mutilated or damaged and appear
regular on their face (handwritten additions, changes or corrections shall not
constitute irregularities if initialed by the Obligor) and relate to such Home
Loan, and (iii) based on the examination of the Custodian on behalf of the
Indenture Trustee, and only as to the foregoing documents, the information set
forth on the Home Loan Schedule accurately reflects the information set forth in
the Indenture Trustee's Home Loan File. Neither the Indenture Trustee nor the
Custodian shall be under any duty or obligation to make an independent
examination of any documents contained in each Indenture Trustee's Home Loan
File beyond the review listed herein. Neither the Custodian nor the Indenture
Trustee makes any representations as to: (i) the validity, legality,
sufficiency, enforceability, execution by a responsible officer or genuineness
of any of the documents contained in each Indenture Trustee's Home Loan File of
any of the Home Loans identified on the Home Loan Schedule relating to such Home
Loans, or (ii) the collectibility, insurability, effectiveness or suitability of
any such Home Loan, or (iii) the existence of any document specified in clause
(v) of Section 1(b) of the Custodial Agreement.
(b) The Servicer's Home Loan Files shall be held in the custody of the
Servicer for the benefit of, and as agent for, the Noteholders and the Indenture
Trustee for so long as the Indenture continues in full force and effect; after
the Indenture is terminated in accordance with the terms thereof, the Servicer's
Home Loan Files shall be held in the custody of the Servicer for the benefit of,
and as agent for, the Certificateholders. It is intended that, by the Servicer's
agreement pursuant to this Section 2.05(b), the Indenture Trustee shall be
deemed to have possession of the Servicer's Home Loan Files for purposes of
Section 9-305 of the Uniform Commercial Code of the state in which such
documents or instruments are located. The Servicer shall promptly report to the
Indenture Trustee any failure by it to hold the Servicer's Home Loan File as
herein provided and shall promptly take appropriate action to remedy any such
failure. In acting as custodian of such documents and instruments, the Servicer
agrees not to assert any legal or beneficial ownership interest in the Home
Loans or such documents or instruments. The Servicer agrees to indemnify the
Securityholders and the Indenture Trustee for any and all liabilities,
obligations, losses, damages, payments, costs or expenses of any kind whatsoever
which may be imposed on, incurred by or asserted against the Securityholders or
the Indenture Trustee as the result of any act or omission by the Servicer
relating to the maintenance and custody of such documents or instruments which
have been delivered to the Servicer; provided, however, that the Servicer will
not be liable for any portion of any such amount resulting from the negligence
or misconduct of any Securityholders or the Indenture Trustee; and provided,
further, that the Servicer will not be liable for any portion of any such amount
resulting from the Servicer's compliance with any instructions or directions
consistent with this Agreement issued to the Servicer by the Indenture Trustee.
The Indenture Trustee shall have no duty to monitor or otherwise oversee the
Servicer's performance as custodian hereunder.
(c) The Indenture Trustee agrees to cause the Custodian to review, for
the benefit of the Securityholders, each Indenture Trustee's Home Loan File
within 60 days after the date the Custodian delivered a Custodian's Initial
Certification and to deliver to the Transferor, the Depositor, the Servicer, the
Indenture Trustee [and the Securities Insurer] an updated certification (a
"Custodian's Updated Certification"), setting forth those exceptions listed on
the Custodian's Initial Certification which continue to exist on the date of
such Custodian's Updated Certification. With respect to any Home Loans which are
set forth as exceptions in the Custodian's Updated Certification because
recorded assignments or original or certified copies of Mortgages have not yet
been delivered to the Custodian, the Transferor shall cure such exceptions by
delivering such missing documents to the Custodian no later than 180 days after
the Closing Date.
The Indenture Trustee agrees to cause the Custodian to review for the
benefit of the Securityholders, each Indenture Trustee's Home Loan File within
180 days after the date it delivered a Custodian's Initial Certification and to
deliver to the Transferor, the Depositor, the Servicer, the Indenture Trustee,
[and the Securities Insurer] a final certification (a "Custodian's Final
Certification"), setting forth those exceptions listed on the Custodian's
Updated Certification which continue to exist on the date of such Custodian's
Final Certification.
In performing any such review, the Custodian may conclusively rely on
the Transferor as to the purported genuineness of any such document and any
signature thereon. Neither the Indenture Trustee nor the Custodian shall have
any responsibility for determining whether any document is valid and binding,
whether the text of any assignment or endorsement is in proper or recordable
form, whether any document has been recorded in accordance with the requirements
of any applicable jurisdiction or whether a blanket assignment is permitted in
any applicable jurisdiction. If a material defect in a document constituting
part of a Indenture Trustee's Home Loan File is discovered, then the Depositor
and Transferor shall comply with the cure, substitution and repurchase
provisions of Section 3.05 hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.01. Representations and Warranties of the Depositor.
-----------------------------------------------
The Depositor hereby represents and warrants to the Transferor, the
Master Servicer, the Servicer, the Indenture Trustee, the Owner Trustee[, the
Securities Insurer] and the Noteholders that as of the Closing Date:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has, and had at all
relevant times, full power to own its property, to carry on its business as
currently conducted, to enter into and perform its obligations under each
Transaction Document to which the Depositor is a party and to create the Trust
pursuant to the Owner Trust Agreement.
(b) The execution and delivery of each Transaction Document to which
the Depositor is a party by the Depositor and its performance of and compliance
with the terms of thereof will not violate the Depositor's certificate of
incorporation or by-laws 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 or acceleration of, any material contract, agreement or other instrument
to which the Depositor is a party or which may be applicable to the Depositor or
any of its assets.
(c) The Depositor has the full power and authority to enter into and
consummate the transactions contemplated by each Transaction Document to which
the Depositor is a party, has duly authorized the execution, delivery and
performance of each Transaction Document to which the Depositor is a party and
has duly executed and delivered each Transaction Document to which the Depositor
is a party. Each Transaction Document to which the Depositor is a party,
assuming due authorization, execution and delivery by each other party thereto,
constitutes a valid, legal and binding obligation of the Depositor, enforceable
against it in accordance with the terms thereof, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
(d) The Depositor is not in violation of, and the execution and
delivery of any Transaction Document by the Depositor and its performance and
compliance with the terms of any Transaction Document to which the Depositor is
a party will not constitute a violation with respect to, any order or decree of
any court or any order or regulation of any federal, state, municipal or
governmental agency having jurisdiction, which violation would materially and
adversely affect the condition (financial or otherwise) or operations of the
Depositor or its properties or materially and adversely affect the performance
of its duties hereunder or thereunder.
(e) There are no actions or proceedings against, or investigations of,
the Depositor currently pending with regard to which the Depositor has received
service of process and no action or proceeding against, or investigation of, the
Depositor is, to the knowledge of the Depositor, threatened or otherwise pending
before any court, administrative agency or other tribunal that (A) if determined
adversely, would prohibit its entering into any Transaction Document to which
the Depositor is a party or render the Notes invalid, (B) seek to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by any Transaction Document to which the Depositor is a party or
(C) if determined adversely, would prohibit or materially and adversely affect
the performance by the Depositor of its obligations under, or the validity or
enforceability of, any Transaction Document to which the Depositor is a party or
the Notes.
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, any
Transaction Document to which the Depositor is a party or the Notes, or for the
consummation of the transactions contemplated by any Transaction Document,
except for such consents, approvals, authorizations and orders, if any, that
have been obtained prior to the Closing Date.
(g) The Depositor is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by its execution and delivery of
any Transaction Document or its obligations hereunder; no petition of bankruptcy
(or similar insolvency proceeding) has been filed by or against the Depositor
prior to the date hereof.
(h) The Depositor did not sell the Home Loans to the Issuer, with any
intent to hinder, delay or defraud any of its creditors; the Depositor will not
be rendered insolvent as a result of the sale of the Home Loans to the Issuer.
(i) Immediately upon each transfer and assignment herein contemplated,
the Depositor will have delivered to the Issuer good title to, and the Issuer
will be the sole beneficial owner of, the Home Loans free and clear of any lien
or options in favor of, or claims of, any other Person.
(j) No Officers' Certificate, statement, report or other document
prepared by the Depositor and furnished or to be furnished by it pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact.
(k) The Depositor is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
Section 3.02. Representations and Warranties of the Transferor.
------------------------------------------------
The Transferor hereby represents and warrants to the Servicer, the
Indenture Trustee, the Owner Trustee[, the Securities Insurer], the Noteholders
and the Depositor that as of the Closing Date (except as otherwise specifically
provided herein):
(a) The Transferor is _______________________________duly organized,
validly existing and in good standing under the laws of the State of
__________________ and has and had at all relevant times, full corporate power
to originate or purchase the Home Loans, to own its property, to carry on its
business as presently conducted and to enter into and perform its obligations
under each Transaction Document to which it is a party.
(b) The execution and delivery of each Transaction Document to which it
is a party by the Transferor and its performance of and compliance with the
terms of each Transaction Document to which it is a party will not violate the
Transferor's certificate of incorporation or by-laws 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 or acceleration of, any material
contract, agreement or other instrument to which the Transferor is a party or
which may be applicable to the Transferor or any of its assets.
(c) The Transferor has the full power and authority to enter into and
consummate all transactions to be consummated by it, contemplated by each
Transaction Document to which it is a party has duly authorized the execution,
delivery and performance of each Transaction Document to which it is a party and
has duly executed and delivered each Transaction Document to which it is a
party. Each Transaction Document to which the Transferor is a party, assuming
due authorization, execution and delivery by the other parties thereto,
constitutes a valid, legal and binding obligation of the Transferor, enforceable
against it in accordance with the terms thereof, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
(d) The Transferor is not in violation of, and the execution and
delivery of any Transaction Documents by the Transferor and its performance and
compliance with the terms thereof will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or governmental agency having jurisdiction, which violation
would materially and adversely affect the condition (financial or otherwise) or
operations of the Transferor or its properties or materially and adversely
affect the performance of its duties hereunder or thereunder.
(e) There are no actions or proceedings against, or investigations of,
the Transferor currently pending with regard to which the Transferor has
received service of process and no action or proceeding against, or
investigation of, the Transferor is, to the knowledge of the Transferor,
threatened or otherwise pending, before any court, administrative agency or
other tribunal that (A) if determined adversely, would prohibit its entering
into this Agreement or render the Notes invalid, (B) seek to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement or (C) if determined adversely, would prohibit or
materially and adversely affect the sale of the Home Loans to the Depositor, the
performance by the Transferor of its obligations under, or the validity or
enforceability of, this Agreement or the Notes.
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for: (1) the execution, delivery and
performance by the Transferor of, or compliance by the Transferor with, this
Agreement, (2) the issuance of the Notes, (3) the sale of the Home Loans under
the Home Loan Purchase Agreement or (4) the consummation of the transactions
required of it by this Agreement, except such as shall have been obtained before
the Closing Date.
(g) The Transferor acquired title to the Home Loans in good faith,
without notice of any adverse claim.
(h) The collection practices used by the Transferor with respect to the
Home Loans have been, in all material respects, legal, proper, prudent and
customary in the servicing of loans of the same type as the Home Loans;
(i) No Officer's Certificate, statement, report or other document
prepared by the Transferor and furnished or to be furnished by it pursuant to
any Transaction Document or in connection with the transactions contemplated
hereby contains any untrue statement of material fact.
(j) The Transferor is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
any Transaction Document or by the performance of its obligations hereunder; no
petition of bankruptcy (or similar insolvency proceeding) has been filed by or
against the Transferor prior to the date hereof.
(k) The Prospectus Supplement does not contain an untrue statement of a
material fact and does not omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the Transferor makes no statement with
respect to: (1) the statements set forth in the final paragraph of the cover of
the Prospectus Supplement; and (2) statements set forth under the following
captions: (i) "SUMMARY - Tax Status", "-- ERISA Considerations", and "-- Legal
Investment"; (ii) "DESCRIPTION OF CREDIT ENHANCEMENT"; (iii) "FEDERAL INCOME TAX
CONSEQUENCES"; (iv) "ERISA CONSIDERATIONS"; (v) "LEGAL INVESTMENT MATTERS"; and
(vi) "UNDERWRITING".
(l) The Transferor has transferred the Home Loans without any intent to
hinder, delay or defraud any of its creditors.
(m) The origination and collection practices used with respect to each
Debt Instrument and Mortgage have been in all material respects legal, proper,
prudent and customary in the mortgage origination and servicing business and in
compliance with the Transferor's underwriting criteria as described in the
Prospectus Supplement.
(n) Upon the receipt of each Indenture Trustee's Home Loan File by the
Custodian, the Indenture Trustee will have a first priority security interest in
each Home Loan and such other items comprising the corpus of the Trust free and
clear of any lien, charge or encumbrance other than the lien of the Indenture.
(o) The transfer, assignment and conveyance of the Debt Instruments and
the Mortgages by the Transferor pursuant to this Agreement are not subject to
the bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Indenture Trustee's
Home Loan Files to the Custodian and shall inure to the benefit of the
Securityholders, the Securities Insurer, the Depositor, the Master Servicer, the
Servicer, the Indenture Trustee, the Owner Trustee and the Trust. Upon discovery
by any of the Transferor, [the Securities Insurer,] the Depositor, the Master
Servicer, the Servicer, the Indenture Trustee or the Owner Trustee of a breach
of any of the foregoing representations and warranties that materially and
adversely affects the value of any Home Loan, the party discovering such breach
shall give prompt written notice (but in no event later than two Business Days
following such discovery) to the other parties. The obligations of the
Transferor set forth in Section 3.05 hereof shall constitute the sole remedies
available hereunder to the Securityholders, the Depositor, the Master Servicer,
the Servicer, the Indenture Trustee or the Owner Trustee respecting a breach of
the representations and warranties contained in this Section 3.02.
Section 3.03. Representations, Warranties and Covenants
of the Master Servicer.
-----------------------------------------
The Master Servicer hereby represents and warrants to and covenants
with the Owner Trustee, the Indenture Trustee, [the Securities Insurer,] the
Noteholders, the Depositor, and the Transferor that as of the Closing Date or as
of such date specifically provided herein:
(a) The Master Servicer is a ______________________________ duly
organized, validly existing, and in good standing under the laws of the state of
_________________ and has all licenses necessary to carry on its business as now
being conducted and is licensed, qualified and in good standing in each state
where any property securing the Home Loans is located if the laws of such state
require licensing or qualification in order to conduct business of the type
conducted by the Master Servicer and perform its obligations as Master Servicer
hereunder and under the Servicing Agreement; the Master Servicer has the power
and authority to execute and deliver this Agreement and under the Servicing
Agreement and to perform its obligations in accordance herewith and therewith;
the execution, delivery and performance of this Agreement and under the
Servicing Agreement (including all instruments of transfer to be delivered
pursuant to this Agreement) by the Master Servicer and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary action; this Agreement and under the Servicing
Agreement evidences the valid, binding and enforceable obligation of the Master
Servicer; and all requisite action has been taken by the Master Servicer to make
this Agreement valid, binding and enforceable upon the Master Servicer in
accordance with its terms, subject to and under the Servicing Agreement the
effect of bankruptcy, insolvency, reorganization, moratorium and other, similar
laws relating to or affecting creditor's rights generally or the application of
equitable principles in any proceeding, whether at law or in equity.
(b) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency, that are necessary in connection with
the purchase and sale of the Notes and the execution and delivery by the Master
Servicer of the documents to which it is a party, have been duly taken, given or
obtained, as the case may be, are in full force and effect, are not subject to
any pending proceedings or appeals (administrative, judicial or otherwise) and
either the time within which any appeal therefrom may be taken or review thereof
may be obtained has expired or no review thereof may be obtained or appeal
therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other documents on the part
of the Master Servicer and the performance by the Master Servicer of its
obligations as Master Servicer under this Agreement and such other documents to
which it is a party.
(c) The consummation of the transaction contemplated by this Agreement
and the Servicing Agreement will not result in the breach of any terms or
provisions of the certificate of incorporation or by-laws of the Master Servicer
or result in the breach of any term or provision of, or conflict with or
constitute a default under or result in the acceleration for any obligation
under, any material agreement, indenture or loan or credit agreement or other
material instrument to which the Master Servicer or to its property is subject,
or result in the violation of any law, rule, regulation, order, judgment or
decree to which the Master Servicer or its property is subject;
(d) Neither this Agreement nor any report or other document prepared by
the Master Servicer and furnished or to be furnished pursuant to this Agreement
or in connection with the transactions contemplated hereby contains any untrue
statement of material fact; and the statements set forth in the Prospectus
Supplement under the caption "THE MASTER SERVICER" do not contain an untrue
statement of a material fact and do not omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(e) There is no action, suit, proceeding or investigation pending or,
to the best of the Master Servicer's knowledge, threatened against the Master
Servicer which, either in any one instance or in the aggregate, may result in
any material adverse change in the business, operations, financial condition,
properties or assets of the Master Servicer or in any material impairment of the
right or ability of the Master Servicer to carry on its business substantially
as now conducted, or in any material liability on the part of the Master
Servicer or which would draw into question the validity of this Agreement, the
Servicing Agreement or the Home Loans or of any action taken or to be taken in
connection with the obligations of the Master Servicer contemplated herein, or
which would be likely to impair the ability of the Master Servicer to perform
under the terms of this Agreement or the Servicing Agreement.
(f) The Master Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Master Servicer or its properties or might have consequences
that would adversely affect its performance hereunder or under the Servicing
Agreement.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.03 shall survive delivery of the
respective Home Loan Files to the Indenture Trustee and shall inure to the
benefit of the Depositor, the Noteholders, the Owner Trustee[, the Securities
Insurer], and the Indenture Trustee. Upon discovery by any of the Transferor,
the Depositor, the Indenture Trustee[, the Securities Insurer] or the Owner
Trustee of a breach of any of the foregoing representations, warranties and
covenants that materially and adversely affects the value of any Home Loan or
the interests of such Person therein, the party discovering such breach shall
give prompt written notice (but in no event later than _______ Business Days
following such discovery) to the other parties.
Section 3.04. Representations and Warranties
Regarding Individual Home Loans.
-------------------------------
The Transferor hereby represents and warrants to the Depositor, the
Issuer, the Indenture Trustee, the Owner Trustee[, the Securities Insurer], the
Master Servicer and the Noteholders, with respect to each Home Loan as of the
Closing Date, except as otherwise expressly stated:
(a) Home Loan Schedule. The information with respect to each Home Loan
set forth in the Home Loan Schedule is complete, true and correct as of the
Cut-off-Date;
(b) Delivery of Home Loan File. All of the original or certified
documentation required to be delivered by the Transferor on the Closing Date or
as otherwise provided herein has or will be so delivered as provided; The Home
Loan File contains each of the documents and instruments specified to be
included therein duly executed and in due and proper form, and each such
document or instrument is in a form generally acceptable to prudent home loan
lenders that regularly originate or purchase mortgage loans comparable to the
Home Loans for sale to prudent investors in the secondary market that invest in
mortgage loans such as the Home Loans;
(c) Nature of Property. Each Mortgaged Property consists of a single
parcel of residential real property, separately assessed for tax purposes, owned
by the related Obligor in fee simple absolute and is improved by a
one-to-four-family residential dwelling, which does not include condominiums,
cooperatives, units in a planned urban development, town houses, or mobile homes
and does not constitute other than real property under the state law. No
Mortgage Property is a manufactured housing unit, as defined in the ▇▇▇▇▇▇
▇▇▇/▇▇▇▇▇▇▇ Mac Seller-Servicer's Guide;
(d) Servicing. Each Home Loan is being serviced by the Master Servicer;
(e) Fixed Interest Rate. The Debt Instrument related to approximately
______ % of the Home Loans bear a fixed Home Loan Interest Rate. The Home Loan
Interest Rate on the fixed rate Home Loans is not less than _____ % nor more
than _______ % and as of the Cut-Off-Date, the weighted average Home Loan
Interest Rate on the fixed rate Home Loans is approximately ________ %;
(f) Adjustable Home Loan Interest Rates. The Debt Instrument related to
approximately ______ % of the Home Loans bear an adjustable Home Loan Interest
Rate ("ARMs"). All of the terms of the Mortgage pertaining to interest rate
adjustments, payment adjustments and adjustments of the principal balance with
respect to the ARMs are enforceable, all such adjustments have been correctly
made in accordance with the terms of the related Debt Instrument and such
adjustments will not affect the priority of the Mortgage lien; all ARMs have an
index and there is no provision which would permit the Obligor to convert to a
fixed interest rate; as of the Cut-off Date, the weighted average margin on the
ARMs was approximately ________ %; the ARMs have a weighted average contractual
maximum interest rate equal to approximately _______ %; the ARMs have a weighted
average contractual minimum interest rate equal to approximately ________ %;
approximately ________ % of the ARMS are 2/28's and have a subsequent adjustment
frequency of six months, approximately _______ % of the ARMs are 3/27's and have
a subsequent adjustment frequency of six months and the remaining approximately
8.34% of the ARMs adjust every 6 months;
(g) Priority of Lien. Each Mortgage is a valid and subsisting first
lien of record on a single parcel of real estate constituting the Mortgaged
Property, subject in all cases to the exceptions to title set forth in the title
insurance policy, with respect to the related Home Loan, which exceptions are
generally acceptable to mortgage lending companies, and such other exceptions to
which similar properties are commonly subject and which do not individually, or
in the aggregate, materially and adversely affect the benefits of the security
intended to be provided by such Mortgage;
(h) Title. Except with respect to liens released immediately prior to
the transfer herein contemplated, immediately prior to the transfer and
assignment herein contemplated the Transferor held good and indefeasible title
to, and was the sole owner of, each Home Loan, subject to no liens, charges,
mortgages, encumbrances or rights of others; and immediately upon the transfer
and assignment herein contemplated, the Owner Trust will hold good and
indefeasible title to, and be the sole owner of, each Home Loan, subject to no
liens, charges, mortgages, encumbrances or rights of others;
(i) Delinquencies. As of the Cut-Off Date, _____ Home Loans are 30 or
more days delinquent; ___ Home Loans are over 60 days delinquent; and _____ Home
Loan has ever been 89 or more days delinquent;
(j) Tax Liens; Status of Property. There is no delinquent tax or
assessment lien on any Mortgaged Property, and each Mortgaged Property is free
of material damage and is in good repair;
(k) No Defenses. The Home Loan is not subject to any right of
rescission, set-off, counterclaim or defense, including the defense of usury,
nor will the operation of any of the terms of the Debt Instrument or the
Mortgage, or the exercise of any right thereunder, render either the Debt
Instrument or the 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;
(l) No Mechanics Lien. There is no mechanic's lien or claim for work,
labor or material affecting any Mortgaged Property which is or may be a lien
prior to, or equal to or on a parity with, the lien of such Mortgage except
those which are insured against by the title insurance policy referred to in
Section (n) below;
(m) Origination in Compliance with Laws. Each Home Loan complies, at
the time it was made complied and at all times has complied in all material
respects with applicable local, state and federal laws and regulations,
including, without limitation, usury, truth-in-lending, real estate settlement
procedure, consumer credit protection, equal credit opportunity, disclosure and
recording laws and the Transferor has and shall maintain in its possession
available for inspection and shall deliver upon demand, evidence of compliance
with all such requirements; and, to the Transferor's knowledge, no fraud or
misrepresentation was committed by any person or entity in connection with the
origination of each Home Loan;
(n) Title Insurance. With respect to each Home Loan, a written
commitment for a lender's title insurance policy, issued in standard American
Land Title Association or California Land Title Association form, or other form
acceptable in a particular jurisdiction, by a title insurance company authorized
to transact business in the state in which the related Mortgaged Property is
situated, together with a condominium endorsement, if applicable, in an amount
at least equal to the original Principal Balance of such Home Loan insuring the
mortgagee's interest under the related Home Loan as the holder of a valid first
mortgage lien of record on the real property described in the Mortgage, subject
only to exceptions of the character referred to in paragraph (g) above, was
effective on the date of the origination of such Home Loan, and, as of the
Closing Date, such commitment will be valid and thereafter the policy issued
pursuant to such commitment shall continue in full force and effect. The
originator is the sole named insured of such mortgage title insurance policy,
the assignment to the Owner Trust, and the pledge to the Indenture Trustee, of
the originator's interest in such mortgage title insurance policy does not
require the consent of or notification to the insurer, and such mortgage title
insurance policy is in full force and effect and will be in full force and
effect and inure to the benefit of the Owner Trust upon the consummation of the
transactions contemplated by this Agreement. No claims have been made under such
mortgage title insurance policy and no prior holder of the related Mortgage,
including the originator, has done, by act or omission, anything that would
impair the coverage of such mortgage title insurance policy;
(o) Hazard Insurance. The improvements upon each Mortgaged Property are
covered by a valid and existing hazard insurance policy with a generally
acceptable carrier that provides for fire and extended coverage representing
coverage not less than the least of (1) the outstanding principal balance of the
related Mortgage, (2) the minimum amount required to compensate for damage or
loss on a replacement cost basis or (3) the full insurable value of the
Mortgaged Property. All individual insurance policies (collectively, the "Hazard
insurance policy") are the valid and binding obligation of the insurer and
contain a standard mortgagee clause naming the originator, its successors and
assigns, as mortgagee. All premiums thereon have been paid. The Mortgage
obligated the Obligor thereunder to maintain all such insurance at the Obligor's
cost and expense, and upon the Obligor's failure to do so, authorizes the holder
of the Mortgage to obtain and maintain such insurance at the Obligor's cost and
expense and to seek reimbursement therefor from the Obligor;
(p) Flood Insurance. If any Mortgaged Property is in an area identified
in the Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Federal Insurance Administration
is in effect with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage not less than the least of (A) the
outstanding principal balance of the related Home Loan, (B) the minimum amount
required to compensate for damage or loss on a replacement cost basis or (C) the
maximum amount of insurance that is available under the National Flood Insurance
Act of 1968, as amended; The Mortgage obligated the Obligor thereunder to
maintain all such insurance at the Obligor's cost and expense, and upon the
Obligor's failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at the Obligor's cost and expense and to seek
reimbursement therefor from the Obligor;
(q) Enforceability. Each Mortgage and Debt Instrument is genuine and is
the legal, valid and binding obligation of the maker thereof and is enforceable
in accordance with its terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
principles of equity (whether considered in a proceeding or action in equity or
at law), and all parties to each Home Loan had full legal capacity to execute
all Home Loan documents and convey the estate therein purported to be conveyed
and the Mortgage and Debt Instrument have been duly and properly executed by
such parties; the Obligor is a natural person who is a party to the Debt
Instrument and the Mortgage in an individual capacity and not in the capacity of
a trustee or otherwise.
(r) Notice to Insurers. The Transferor has caused or will cause to be
performed any and all acts required to be performed to preserve the rights and
remedies of the Indenture Trustee in any insurance policies applicable to the
Home Loans including, without limitation, any necessary notifications of
insurers, assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Indenture
Trustee;
(s) Geographic Concentration. No more than approximately _____ % of the
Original Pool Principal Balance is secured by Mortgaged Properties located
within any single zip code area; no more than _____ % of the Original Pool
Principal Balance is located within any single state, except as follows
______________, _____________, ______________, or___________;
(t) Primary Residence. At least approximately ________ % of the
Original Pool Principal Balance is secured by Mortgaged Properties that are
maintained by the Obligors as primary residence;
(u) No Modification. The terms of the Debt Instrument and the Mortgage
have not been impaired, altered or modified in any material respect, except by a
written instrument which has been recorded or is in the process of being
recorded, if necessary, to protect the interest of the Securityholders and which
has been or will be delivered to the Trustee or the Custodian. The substance of
any such alteration or modification is reflected on the Home Loan Schedule.
(v) Recordation. Each original Mortgage was recorded, and all
subsequent assignments of the original Mortgage have been recorded in the
appropriate jurisdictions wherein such recordation is necessary to perfect the
lien thereof as against creditors of the Transferor (or, subject to Section
2.04(d) hereof, are in the process of being recorded);
(w) No Waiver. No instrument or release or waiver has been executed in
connection with the Home Loan, and no Obligor has been released, in whole or in
part;
(x) Taxes and Insurance. All taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground rents
which previously became due and owing have been paid, or an escrow of funds has
been established in an amount sufficient to pay for every such item which
remains unpaid and which has been assessed but is not yet due and payable.
(y) No Advances. Except for payments in the nature of escrow payments,
including without limitation, taxes and insurance payments, the Master Servicer
has not advanced funds, or induced, solicited or knowingly received any advance
of funds by a party other than the Obligor, directly or indirectly, for the
payment of any amount required by the Mortgage, except for interest accruing
from the date of the Debt Instrument or date of disbursement of the Mortgage
proceeds, whichever is greater, to the day which precedes by one month the Due
Date of the first installment of principal and interest;
(z) Condemnation; Damage. There is no proceeding pending or threatened
for the total or partial condemnation of the Mortgaged Property, nor is such a
proceeding currently occurring. No Mortgaged Property is damaged by waste, fire,
earthquake or earth movement, windstorm, flood, tornado or other casualty, so as
to affect adversely the value of the Mortgaged Property as security for the Home
Loan or the use for which the premises were intended;
(aa) No Encroachments. All of the improvements which were included for
the purpose of determining the appraised value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of such property,
and no improvements on adjoining properties encroach upon the Mortgaged
Property;
(bb) Property in Compliance with Law. No improvement located on or
being part of the Mortgaged Property is in violation of any applicable zoning
law or regulation. 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 and the Mortgaged
Property is lawfully occupied under applicable law;
(cc) No Future Advances. The proceeds of the Home Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee or any person
to make, or option on the part of the mortgagor to request, future advances
thereunder. 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
satisfied. All costs, fees and expenses incurred in making or closing or
recording the Home Loans were paid;
(dd) Mortgage as Sole Security. The related Debt Instrument is not and
has not been secured by any collateral, pledged account or other security except
the lien of the corresponding Mortgage;
(ee) No-Buy-Down Loans. No Home Loan was originated under a buydown
plan.
(ff) No Originator Payment Obligations. There is no obligation on the
part of the Master Servicer or any other party to make payments in addition to
those made by the Obligor;
(gg) Deeds of Trust. With respect to each Mortgage constituting a deed
of trust, a trustee, duly qualified under applicable law to serve as such, has
been properly designated and currently so serves and is named in such Mortgage,
and no fees or expenses are or will become payable by the Noteholders or the
Trust to the trustee under the deed of trust, except in connection with a
trustee's sale after default by the Obligor;
(hh) No Shared Appreciation. No Home Loan has a shared appreciation
feature, or other contingent interest feature;
(ii) State Qualification. All parties which have had any interest in
the Home Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were) (1) in
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (2)(A) organized under the
laws of such state, or (B) qualified to do business in such state, or (C)
federal savings and loans associations or national banks having principal
offices in such state or (D) not doing business in such state so as to require
qualification or licensing;
(jj) Due on Sale. The Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the Home Loan in
the event the related Mortgage Property is sold without the prior consent of the
mortgagee thereunder;
(kk) Obligor Bankruptcy. No Obligor is a debtor in any state or federal
insolvency or bankruptcy proceeding.
(ll) Enforcement Rights. The related Mortgage contains customary and
enforceable provisions which render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of the
benefits of the security, including, (i) in the case of a Mortgage designated as
a deed of trust, by trustee's sale, and (ii) otherwise by judicial foreclosure.
There is no homestead or other exemption available to the Mortgagor which would
materially interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose upon the related Mortgage;
(mm) No Default. Other than delinquent Home Loans set forth in clause
(i) of this Section 3.04, there is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Debt Instrument 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 of
acceleration; and neither the Master Servicer nor the Transferor has waived any
default, breach, violation or event of acceleration;
(nn) Deposit of Payments. All amounts received on and after the Cut-Off
Date with respect to the Home Loans to which the Transferor is not entitled to
have been deposited into the Collection Account and are, as of the Closing Date,
in the Collection Account;
(oo) Underwriting. All of the Home Loans were originated and
underwritten by the Transferor, or purchased and re-underwritten by the
Transferor, in each case in accordance with the underwriting criteria set forth
in the Prospectus Supplement;
(pp) Conformity to Prospectus. Each Home Loan conforms, and all such
Home Loans in the aggregate conform, to the description thereof set forth in the
Prospectus and the Prospectus Supplement;
(qq) No Adverse Selection. The Home Loans were not selected by the
Transferor for inclusion in the Trust on any basis intended to adversely affect
the Trust;
(rr) Appraisal. A full appraisal on forms approved by FNMA or FHLMC was
performed in connection with the origination of the related Home Loan. Each
appraisal meets guidelines that would be generally acceptable to prudent
mortgage lenders that regularly originate or purchase mortgage loans comparable
to the Home Loan for sale to prudent investors in the secondary market that
invest in loans such as the Home Loans;
(ss) Loan-To-Value. As of the Cut-Off Date, no Home Loan had a
Loan-To-Value Ratio in excess of 90.00% and as of the Cut-off Date, the weighted
average Loan-To-Value Ratio is _________ %;
(tt) Environmental Matters. To the best of the Transferor's knowledge,
(i) no Mortgaged Property was, as of the Cut-Off Date, (A) located within a
one-mile radius of any site containing environmental or hazardous waste risks,
and (B) in violation of any environmental law or regulation; and (ii) no
Mortgaged Property contained any environmentally hazardous material, substance
or waste; and
(uu) Status of Originators. Each Home Loan was either (i) originated by
a savings and loan association, savings bank, commercial bank, credit union,
insurance company, or similar institution which is supervised and examined by a
federal or state authority, or by a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the National
Housing Act or (ii) such Home Loan was underwritten in accordance with standards
established by the Transferor, using application forms and related credit
documents approved by the Transferor; the Transferor approved each application
and the related credit documents before a commitment by the originator was
issued, and no such commitment was issued until the Transferor agreed to fund
such Home Loan; the closing documents for such Home Loan were prepared on forms
approved by the Transferor; and such Home Loan was actually funded by the
Transferor and was purchased by the Transferor at closing or soon thereafter.
(vv) Term. No Home Loan has a remaining term in excess of 360 months.
(ww) Monthly Payments. Each Debt Instrument will provide for a schedule
of substantially equal Monthly Payments which are, if timely made, sufficient to
fully amortize the principal balance of such Debt Instrument on or before its
maturity date.
Section 3.05. Purchase and Substitution.
-------------------------
(a) Repurchase and Substitution of Defective Home Loans. It is
understood and agreed that the representations and warranties set forth in
Section 3.02 and Section 3.04 hereof shall survive the conveyance of the Home
Loans from the Transferor to the Depositor and from the Depositor to the Issuer,
the pledge of the Home Loans to the Indenture Trustee and the delivery of the
Notes to the Noteholders. Upon discovery by the Depositor, the Master Servicer,
the Servicer, the Transferor, any Custodian, the Issuer, the Indenture Trustee,
the Owner Trustee, the Securities Insurer or any Securityholder of a breach of
any of the representations and warranties set forth in Section 3.02 and Section
3.04 which materially and adversely affects the value of the Home Loans or the
interests of the Owner Trustee, the Securities Insurer or the Indenture Trustee
in the related Home Loan (notwithstanding that such representation and warranty
was made to the Transferor's best knowledge), the party discovering such breach
shall give prompt written notice to the others. The Transferor shall, within 60
days of the earlier of its discovery or its receipt of notice of any breach of a
representation or warranty, promptly cure such breach in all material respects.
If within 60 days after the earlier of the Transferor's discovery of such breach
or the Transferor's receiving notice thereof such breach has not been remedied
by the Transferor or waived by the Securities Insurer and such breach materially
and adversely affects the interests of the Owner Trustee or the Indenture
Trustee in, or the value of, the related Home Loan (the "Defective Home Loan"),
the Transferor shall on or before the Determination Date next succeeding the end
of such 60-day period either (i) remove such Defective Home Loan from the Trust
(in which case it shall become a Deleted Home Loan) and substitute one or more
Qualified Substitute Home Loans in the manner and subject to the conditions set
forth in this Section 3.05 or (ii) purchase such Defective Home Loan at a
purchase price equal to the Purchase Price by depositing such Purchase Price in
the Collection Account. The Transferor shall provide the Master Servicer, the
Servicer, the Indenture Trustee, the Securities Insurer and the Owner Trustee
with a certification of a Responsible Officer on the Determination Date next
succeeding the end of such 60-day period indicating whether the Transferor is
purchasing the Defective Home Loan or substituting in lieu of such Defective
Home Loan a Qualified Substitute Home Loan.
Any substitution of Home Loans pursuant to this Section 3.05(a) shall
be accompanied by payment by the Transferor of the Substitution Adjustment, if
any, to be deposited in the Collection Account. For purposes of calculating the
Available Collection Amount for any Payment Date, amounts paid by the Transferor
pursuant to this Section 3.05 in connection with the repurchase or substitution
of any Defective Home Loan that are on deposit in the Collection Account as of
the Determination Date for such Payment Date shall be deemed to have been paid
during the related Due Period and shall be transferred to the Note Payment
Account as part of the Available Collection Amount to be retained therein or
transferred to the Certificate Distribution Account, if applicable, pursuant to
Section 5.01(c) hereof.
In addition to such cure, repurchase or substitution obligation, the
Transferor shall indemnify the Issuer, the Depositor, the Master Servicer, the
Indenture Trustee, the Securities Insurer and the Securityholders against any
losses, damages, penalties, fines, forfeitures, reasonable and necessary legal
fees and related costs, judgments, and other costs and expenses resulting from
any claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach by the Transferor of any of it representations and warranties
contained in Section 3.02 and Section 3.04.
(b) Repurchase of Defaulted Home Loans. In addition to the preceding
repurchase obligations, each of the Transferor and Master Servicer shall have
the option, exercisable in its sole discretion at any time, to repurchase from
the Owner Trustee any Home Loan that is delinquent 91 or more days (in which
case such Home Loan shall become a Deleted Home Loan); provided, however, that
any such repurchase of a Home Loan pursuant to this Subsection shall be
conducted in the same manner as the repurchase of a Defective Home Loan pursuant
to this Section 3.05. If the Home Loans repurchased pursuant to this Subsection
3.05(b) are in excess of _______ % of the Original Pool Principal Balance, then
such repurchases of Home Loans that exceed ________ % of the Original Pool
Principal Balance may be affected only with the consent of the Securities
Insurer and shall be included as Realized Losses for purposes of determining the
Realized Losses under the OC Trigger Increase Event (but not with respect to the
determination of a Master Servicer Event of Default under Section 10.01(a)
hereof).
(c) Substitutions. As to any Deleted Home Loan for which the Transferor
substitutes a Qualified Substitute Home Loan(s), the Transferor shall effect
such substitution by delivering to the Indenture Trustee, the Master Servicer
and Owner Trustee (i) a certification executed by a Responsible Officer of the
Transferor to the effect that the Substitution Adjustment has been credited to
the Collection Account and (ii) the documents constituting the Indenture
Trustee's Home Loan File for such Qualified Substitute Home Loan(s).
In accordance with Section 5.01(b)(1) hereof, the Master Servicer shall
cause the Servicer to deposit in the Collection Account all payments received in
connection with such Qualified Substitute Home Loan(s) after the date of such
substitution. Monthly Payments received with respect to Qualified Substitute
Home Loans on or before the date of substitution will be retained by the
Transferor. The Indenture Trustee will be entitled to all payments received on
the Deleted Home Loan on or before the date of substitution and the Transferor
shall thereafter be entitled to retain all amounts subsequently received in
respect of such Deleted Home Loan. The Transferor shall give written notice to
the Owner Trustee, the Master Servicer, the Servicer (if the Transferor is not
then acting as such), the Indenture Trustee[, the Securities Insurer] and Owner
Trustee that such substitution has taken place and the Servicer shall amend the
Home Loan Schedule pursuant to Subsection (g) below. Upon such substitution,
such Qualified Substitute Home Loan(s) shall be subject to the terms of this
Agreement in all respects, and the Transferor shall be deemed to have made with
respect to such Qualified Substitute Home Loan(s), as of the date of
substitution, the covenants, representations and warranties set forth in Section
3.02 and Section 3.04 hereof. On the date of such substitution, the Transferor
will deposit into the Collection Account an amount equal to the related
Substitution Adjustment, if any.
(d) Reassignment of Defective Home Loans. With respect to all Defective
Home Loans or other Home Loans repurchased by the Transferor pursuant to this
Agreement, upon the deposit of the Purchase Price therefor into the Collection
Account, the Owner Trustee shall assign to the Transferor, without recourse,
representation or warranty, all the Owner Trustee's right, title and interest in
and to such Defective Home Loans or other Home Loans, which right, title and
interest were conveyed to the Owner Trustee pursuant to the Home Loan Purchase
Agreement. The Owner Trustee shall take any actions as shall be reasonably
requested by the Transferor to effect the repurchase of any such Home Loans.
(e) Sole Remedies Against Transferor. It is understood and agreed that
the obligations of the Transferor to cure or to repurchase or substitute any
such Home Loan, and to indemnify for any breach of any representation or
warranty with respect thereto, pursuant to this Section 3.05 shall constitute
the sole remedies against it with respect to such breach of the foregoing
representations or warranties or the existence of the foregoing conditions. Any
cause of action against the Transferor relating to or arising out of a defect in
an Indenture Trustee's Home Loan File as or against the Transferor relating to
or arising out of a breach of any representations and warranties made in Section
3.02 and Section 3.04 hereof shall accrue as to any Home Loan upon (i) discovery
of such defect or breach by any party and notice thereof to the Transferor or
notice thereof by the Transferor to the Indenture Trustee, (ii) failure by the
Transferor to cure such defect or breach or purchase or substitute such Home
Loan as specified above, and (iii) demand upon the Transferor, as applicable, by
the Owner Trustee for all amounts payable in respect of such Home Loan.
(f) No Duty to Investigate. Neither [the Securities Insurer,] the
Master Servicer, the Owner Trustee nor the Indenture Trustee shall have any duty
to conduct any affirmative investigation other than as specifically set forth in
this Agreement as to the occurrence of any condition requiring the repurchase or
substitution of any Home Loan pursuant to this Section or the eligibility of any
Home Loan for purposes of this Agreement.
(g) Amendment of Home Loan Schedule. In connection with a repurchase or
substitution of any Home Loan pursuant to this Section 3.05, the Master Servicer
shall cause the Servicer shall amend the Home Loan Schedule to reflect (i) the
removal of the applicable Deleted Home Loan from the terms of this Agreement,
and (ii) if applicable, the substitution of the applicable Qualified Substitute
Home Loan. In connection with its monthly reporting here under, the Master
Servicer shall cause the Servicer shall deliver a copy of the amended Home Loan
Schedule to [the Securities Insurer,] the Master Servicer, the Indenture
Trustee, and the Transferor.
ARTICLE IV
ADMINISTRATION AND SERVICING OF THE HOME LOANS
----------------------------------------------
Section 4.01. Appointment and Duties of the Master Servicer.
---------------------------------------------
(a) Appointment and Compensation of Master Servicer. The Issuer, the
Securityholders and the Indenture Trustee hereby assign and appoint the Master
Servicer to act as the Master Servicer for the Home Loans (including all of the
duties, obligations and rights of the Master Servicer) under this Agreement. The
Master Servicer hereby accepts its appointment as the Master Servicer hereunder.
The Master Servicer hereby undertakes to enter into the Servicing Agreement with
an Eligible Servicer. The Master Servicer may remove and replace the Servicer
under the terms of the Servicing Agreement, provided that the Securities Insurer
consents to such termination and such Servicer is replaced with an Eligible
Servicer. The Master Servicer shall not consent to any amendment or modification
of any Servicing Agreement [without the consent of the Securities Insurer]. The
Master Servicer shall not consent to any material amendment, modification or
waiver of the servicing provisions of this Agreement, without the consent of
[the Securities Insurer and] the Indenture Trustee. The Issuer, the
Securityholders and the Indenture Trustee hereby assign and appoint the Master
Servicer to act on behalf of the Issuer as "Owner" under the Servicing
Agreement.
As compensation for its services hereunder, the Master Servicer shall
be entitled to receive from the Note Payment Account the Master Servicer Fee. In
addition to the Master Servicer Fee, additional compensation attributable to
prepayment penalties, 20% of any late charges collected on the Home Loans,
investment earnings from the Collection Account and the Note Payment Account
shall be part of the Master Servicer Compensation payable to the Master Servicer
pursuant to Section 5.01(c) hereof. Master Servicing Compensation shall be
reduced by the amount of any due and unpaid Servicing Fee Recovery Amounts. The
Master Servicer shall be required to pay all expenses incurred by it in
connection with its Master Servicer duties and activities hereunder and shall
not be entitled to reimbursement therefor except as specifically provided for
herein.
(b) Master Servicer Assumes Servicing Responsibility. If a Servicer
Termination Event occurs, then the Master Servicer shall be obligated (1) if
instructed by the Securities Insurer, to select a successor Servicer, [that is
acceptable to the Securities Insurer,] or (2) to act as the Servicer of the Home
Loans hereunder [unless the Securities Insurer directs otherwise].
(c) Monitoring of Servicing. The Master Servicer shall: (i) review the
servicing reports and loan level information prepared by the Servicer (1) to
determine whether such reports are inaccurate or incomplete, in any material
respect, and (2) to ascertain that the Servicer is in compliance, in all
material respects, with its duties and obligations with respect to such reports
under this Agreement; (ii) otherwise monitor the performance by the Servicer of
its duties and obligations hereunder and notify the Indenture Trustee [and the
Securities Insurer] of any Servicer Event of Default of which it has received
notice or has actual knowledge; and (iii) be obligated to verify that the
Servicer has deposited all payments and proceeds required to be deposited into
the Collection Account pursuant to Section 5.01(b)(1) hereof. On the 19th
calendar day of each month (or the next Business Day, if the 19th is not a
Business Day), the Master Servicer shall provide the Indenture Trustee with an
Officer's Certificate to the effect that the Master Servicer has performed its
obligations under this Subsection 4.01(c) with respect to the servicing
information for such month.
(d) Successor Servicer. The Master Servicer agrees that it shall at all
times be prepared [(and shall take all steps reasonably required by the
Securities Insurer to ensure such preparation)], to perform the duties and
obligations of the Servicer and become the successor servicer, if the Servicer
fails to perform its duties and obligations hereunder.
(e) Servicer Termination or Non-Renewal. At the direction of [the
Securities Insurer, or] the Master Servicer [(with the prior consent of the
Securities Insurer)] or the Majority Noteholders [(with the prior consent of the
Securities Insurer)], the Master Servicer, on behalf of the Issuer and the
Securityholders, shall terminate the Servicer upon the occurrence and
continuance of a Servicer Event of Default. [The Securities Insurer will
instruct the Master Servicer not to renew the term of the Servicer and appoint a
replacement servicer (which shall be an Eligible Servicer) approved by the
Securities Insurer at the request of the Master Servicer.]
(f) Resignation of Master Servicer. The Master Servicer shall resign as
Master Servicer hereunder if it determines that its duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it and cannot be cured,
provided that such determination shall be evidenced by an Opinion of Counsel
(which shall be Independent) to such effect delivered to the Owner Trustee, the
Indenture Trustee and the Securities Insurer. In addition, the Master Servicer
may resign for any reason with 30 day's prior written notice to the Owner
Trustee, the Indenture Trustee and the Securities Insurer. No resignation of the
Master Servicer shall become effective until a successor master servicer
acceptable to the Securities Insurer shall have assumed the obligations of the
Master Servicer hereunder.
(g) Limitation on Liability of the Depositor and the Master Servicer.
Except as set forth in Section 9.01 herein, neither the Depositor nor the Master
Servicer nor any of the directors, officers, employees or agents of the
Depositor or the Master Servicer shall be under any liability to the Owner
Trustee, the Indenture Trustee, the Servicer, the Securities Insurer, the
Noteholders or any other Person for any action taken or for refraining from the
taking of any action at the direction of the Securities Insurer or any action in
good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Depositor or the the Master
Servicer or any such Person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in its
performance of its duties or by reason of reckless disregard for its obligations
and duties under this Agreement. The Depositor or the Master Servicer and any
directors, officer, employee or agent of the Depositor or the 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.
(h) Monthly Advances. If any Obligor fails to make all or any portion
of its Monthly Payment for any Due Period by the related Determination Date, the
Master Servicer shall deposit such shortfall (net of the Servicing Fee and the
Master Servicer Fee in respect thereof) into the Collection Account on or before
such Determination Date, unless the Master Servicer, in its reasonable judgment,
determines that any such Monthly Advance would be non-recoverable from future
proceeds from the related Home Loan. The Indenture Trustee shall make any
Monthly Advance that the Master Servicer fails to make. The Indenture Trustee
shall be reimbursed for funds so advanced out of Master Servicing Compensation
on subsequent Payment Dates.
(i) Three Month Renewal of Master Servicer Term. The Master Servicer
hereby covenants and agrees to act as master servicer under this Agreement for
an initial term commencing on the Closing Date and expiring on _______, 199_
(the "Initial Term"). Thereafter, the Initial Term shall be extendible in the
sole discretion of the Securities Insurer by written notice (each, a "Master
Servicer Renewal Notice") of the Securities Insurer (or the Indenture Trustee if
a Securities Insurer Default is then occurring) for successive three month
terms. Each such Master Servicer Renewal Notice (if any) shall be delivered by
the Securities Insurer to the other parties to this Agreement. The Master
Servicer hereby agrees that, as of the date hereof and upon its receipt of any
Master Servicer Renewal Notice, the Master Servicer shall be bound for the
duration of the Initial Term and the term covered by any such Master Servicer
Renewal Notice to act as the Master Servicer, subject to and in accordance with
the other provisions of this Agreement. The Master Servicer agrees that if, as
of the last day of the calendar month preceding the last day of any such
servicing term, the Master Servicer shall not have received a Master Servicer
Renewal Notice from the Securities Insurer, the Master Servicer shall, within
five days thereafter, give written notice of such non-receipt to the Securities
Insurer and the Indenture Trustee. The failure of the Securities Insurer to
deliver a Master Servicer Renewable Notice by the end of any such three-month
term shall result in the automatic termination of the Master Servicer.
(j) Non-renewal or Termination. Upon any non-renewal or termination of
the Master Servicer pursuant to this Section 4.01, the master servicing of the
Home Loans hereunder shall be transferred to a successor master servicer in
accordance with the terms hereof.
(k) Compensating Interest. If Compensating Interest is owing with
respect to such Payment Date, then the Master Servicer shall cause the Servicer
to direct Compensating Interest, up to the amount of the sum of the Master
Servicer Fee and the Servicing Fee for such Payment Date, into the Collection
Account on or before the related Determination Date. The Master Servicer shall
fund the payment of Compensating Interest on any Payment Date first out of its
Master Servicer Compensation for the related Payment Date, and if and only if
such amount is not sufficient, shall cause any remaining amounts to be paid out
of the Servicing Fee for the related Payment Date. Any Servicing Fees used to
pay Compensating Interest hereunder shall be repaid to the Servicer through the
payment of Servicing Fee Recovery Amounts.
Section 4.02. Interim Servicer.
----------------
Until the transfer of servicing to the initial Servicer on the
"servicing transfer date" as specified in the Servicing Agreement, the Master
Servicer agrees, and the Issuer, Securityholders, the Security Insurer and the
Indenture Trustee hereby assign and appoint the Master Servicer as the Servicer
of the Home Loans. The Master Servicer shall be obligated to act as the Servicer
of the Home Loans and agrees to service the Home Loans in accordance with
Accepted Servicing Procedures until the transfer of servicing to the Servicer.
During the period in which the Master Servicer is acting as servicer, it shall
be entitled to any Servicing Fee earned during such period.
Section 4.03. Powers of Attorney.
------------------
The Indenture Trustee shall execute, at the written direction of the
Servicer or the Master Servicer, any limited or special powers of attorney and
other documents reasonably acceptable to the Indenture Trustee to enable the
Servicer or the Master Servicer to carry out their servicing and administrative
duties hereunder, including, without limitation, limited or special powers of
attorney with respect to any Foreclosure Property, and the Indenture Trustee
shall not be accountable for the actions of the Servicer or the Master Servicer
under such powers of attorney and shall be indemnified by the Master Servicer in
accordance with Section 9.01 hereof.
Section 4.04. Filing of Continuation Statements.
---------------------------------
On or before the fifth (or twelfth, as appropriate) anniversary of the
filing of any financing statements by the Transferor and the Depositor,
respectively, with respect to the assets conveyed to the Owner Trustee or to the
Owner Trust, the Transferor and the Depositor shall prepare, have executed by
the necessary parties and file in the proper jurisdictions at their expense all
financing and continuation statements necessary to maintain the liens, security
interests and priorities of such liens and security interests that have been
granted by the Transferor and the Depositor, respectively, the Transferor and
the Depositor shall continue to file on or before each fifth (or twelfth)
anniversary of the filing of any financing and continuation statements such
additional financing and continuation statements until the Trust has terminated
pursuant to Section 9.1 of the Owner Trust Agreement. The Indenture Trustee and
Owner Trustee agree to cooperate with the Transferor and the Depositor in
preparing, executing and filing such statements. The filing of any such
statement with respect to the Transferor and the Depositor shall not be
construed as any indication of an intent of any party contrary to the expressed
intent set forth in Section 2.03 hereof and Section 2.04 of the Home Loan
Purchase Agreement. If the Transferor or the Depositor has ceased to do business
whenever any such financing and continuation statements must be filed or the
Transferor or the Depositor fails to file any such financing statements or
continuation statements at least one month prior to the expiration thereof, each
of the Transferor and the Depositor does hereby make, constitute and appoint the
Owner Trustee its attorney-in-fact, with full power and authority, to execute
and file in its name and on its behalf any such financing statements or
continuation statements required under this Section 4.04 relating to assets
conveyed to the Owner Trustee and the Depositor does hereby make, constitute and
appoint the Indenture Trustee its attorney-in-fact, with full power and
authority, to execute and file in its name and on its behalf any such financing
statements or continuation statements required under this Section 4.04 relating
to assets conveyed to the Owner Trust.
Section 4.05. Reports to the Securities and Exchange Commission.
-------------------------------------------------
The Indenture Trustee shall, on behalf of the Issuer, cause to be filed
with the Securities and Exchange Commission all monthly reports on Form 8-K and
annual reports on Form 10-K by ▇▇▇▇▇ electronic format (or any successor format)
required to be filed under the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder. The Indenture Trustee shall obtain on behalf of the
Issuer, ▇▇▇▇▇ access codes (or any successor codes) on behalf of the Issuer
required for filing with the Securities and Exchange Commission. Upon the
request of the Indenture Trustee, each of the Servicer, the Master Servicer and
the Transferor shall cooperate with the Indenture Trustee in the preparation of
any such report and shall provide to the Indenture Trustee in a timely manner
all such information or documentation as the Indenture Trustee may reasonably
request in connection with the performance of its duties and obligations under
this Section 4.05.
ARTICLE V
ESTABLISHMENT OF TRUST ACCOUNTS
-------------------------------
Section 5.01. Collection Account and Note Payment Account.
-------------------------------------------
(a) (1)..Establishment of Collection Account. The Master Servicer, for
the benefit of the Securityholders, the Indenture Trustee and the Securities
Insurer, shall cause to be established and maintained by the Indenture Trustee
one or more Collection Accounts (collectively, the "Collection Account"), which
shall be separate Eligible Accounts and may be interest-bearing, and which shall
be entitled "Collection Account of _______________, as Indenture Trustee, in
trust for the _______ Home Loan Asset Backed Notes, Series 199_-_". The
Collection Account may be maintained with the Indenture Trustee or any other
depository institution, which satisfies the requirements set forth in the
definition of Eligible Account. The creation of any Collection Account other
than one maintained with the Indenture Trustee shall be evidenced by a letter
agreement between the Servicer and the depository institution acceptable to the
Indenture Trustee and the Securities Insurer. A copy of such letter agreement
shall be furnished to the Securities Insurer and the Indenture Trustee. Funds in
the Collection Account shall be invested in accordance with Section 5.03 hereof.
The Collection Account shall be established, as of the Closing Date,
with ________________ as an Eligible Account pursuant to the definition thereof.
The Collection Account may, upon written notice to the Indenture Trustee, and
upon the written consent of the Securities Insurer, be transferred to a
different depository institution so long as such transfer is to an Eligible
Account acceptable to the Securities Insurer.
(2)..Establishment of Note Payment Account. No later than the
Closing Date, the Indenture Trustee, for the benefit of the Noteholders and the
Securities Insurer, shall cause to be established and maintained with the
Indenture Trustee one or more Note Payment Accounts (collectively, the "Note
Payment Account"), which shall be separate Eligible Accounts and may be
interest-bearing, and which shall be entitled "Note Payment Account of
________________, as Indenture Trustee, in trust for the _______ Home Loan Asset
Backed Notes, Series 199_-_". Funds in the Note Payment Account shall be
invested in accordance with Section 5.03 hereof.
(b) (1)..Deposits to Collection Account. The Servicer shall use its
best efforts to deposit or cause to be deposited (without duplication), within
one (1) Business Day after receipt thereof, into the Collection Account and
retain therein in trust for the benefit of the Noteholders and the Securities
Insurer:
(i)..all payments of principal and interest on the Home Loans
collected after the Cut-Off Date;
(ii)..all Net Liquidation Proceeds;
(iii)..all Property Insurance Proceeds;
(iv)..all Released Mortgaged Property Proceeds;
(v)..any amounts payable in connection with the repurchase of any
Home Loan and the amount of any Substitution Adjustment pursuant to Section 3.05
hereof;
(vi)..the deposit of the Termination Price under Section 11.01
hereof;
(vii)..interest and gains on funds held in the Collection
Account;
(viii)..Monthly Advances pursuant to Section 4.02(h) hereof; and
(ix)..Compensating Interest pursuant to Section 4.02 (k) hereof.
The Servicer shall be entitled to retain and not deposit into the
Collection Account any amounts received with respect to a Home Loan that
constitute additional servicing compensation pursuant to Section 7.03 hereof.
(2)..Deposits to Note Payment Account. By the close of business on
the fourth Business Day prior to each Payment Date, the Master Servicer shall
cause the Servicer to withdraw from the Collection Account the Available
Collection Amount and deposit such into the Note Payment Account for such
Payment Date.
(3)..Withdrawals from Collection Account. The Master Servicer
shall cause the Servicer to also make the following withdrawals from the
Collection Account, in no particular order of priority:
(i)..to withdraw any amount not required to be deposited in the
Collection Account or deposited therein in error;
(ii)..to withdraw any Servicing Advance Reimbursement Amounts and
Monthly Advance Reimbursement Amounts; and
(iii)..to clear and terminate the Collection Account in connection
with the termination of this Agreement.
(c) Initial Withdrawals from Note Payment Account. To the extent funds
are available in the Note Payment Account, the Indenture Trustee (based on the
information provided by the Servicer contained in the Servicer's Monthly
Remittance Report for such Payment Date) shall make withdrawals therefrom by
9:00 a.m. (New York City time) on each Payment Date, for application in the
following order of priority:
(i)..to distribute on such Payment Date the following amounts
related to such Payment Date pursuant to the Indenture in the following order;
(1) to the Indenture Trustee, an amount equal to the Indenture Trustee Fee and
all unpaid Indenture Trustee Fees from prior Payment Dates; (2) to the Servicer
an amount equal to the Servicing Compensation (net of the sum of any amounts
retained prior to deposit into the Collection Account pursuant to subsection
(b)(1) above) and all unpaid Servicing Compensation from prior Payment Dates;
(3) to the Master Servicer an amount equal to the Master Servicer Compensation
and all unpaid Master Servicer Compensation from prior Payment Dates; and (4) to
the Securities Insurer, an amount equal to the Guaranty Insurance Premium and
all unpaid Guaranty Insurance Premiums from prior Payment Dates; and
(ii)..subject to the priority of payments in Subsections 5.01(d)
and (e) below, to deposit into the Certificate Distribution Account the
applicable portions of the Available Payment Amount payable to the holders of
the Residual Interest Certificates as calculated pursuant to Subsection 5.01(e)
below on such Payment Date.
(d) Regular Payment Amount Withdrawals from Note Payment Account. On
each Payment Date, the Indenture Trustee (based on the information provided by
the Servicer contained in the Servicer's Monthly Remittance Report for such
Payment Date) shall distribute the Regular Payment Amount and any Deficiency
Amount paid by the Securities Insurer in respect of such Payment Date from the
Note Payment Account (in the case of all amounts distributable to Noteholders)
and from the Certificate Distribution Account (in the case of all amounts
distributable to Certificateholders), in the following order of priority:
(i)..to pay the holders of the Notes the Noteholders' Interest
Payment Amount for such Payment Date;
(ii)..to pay the holders of the Notes principal thereof in an
amount up to the sum of the Regular Principal Payment Amount and the
Noteholders' Principal Deficiency Amount, until the Note Principal Balances
thereof are reduced to zero;
(iii)..to apply any remaining amount together with Excess Spread
in the manner specified in Subsection (e) below.
(e) Excess Spread Withdrawals from Note Payment Account. On each
Payment Date, the Indenture Trustee (based on the information provided by the
Servicer contained in the Servicer's Monthly Remittance Report for such Payment
Date) shall distribute the Excess Spread, if any, in the following order of
priority (in each case after giving effect to all payments specified in Section
5.01(d) hereof):
(i)..to pay the Securities Insurer in an amount up to the
Securities Insurer Reimbursement Amount;
(ii)..to pay the holders of the Notes, as principal thereof, any
remaining Excess Spread in an amount up to any Overcollateralization Deficiency
Amount (after giving effect to payments made pursuant to subsection (d) above),
until the Note Principal Balances thereof are reduced to zero;
(iii)..to pay the holder of the Notes, pro rata, the Noteholders'
Interest Carry-Forward Amount due and unpaid, if any; and
(iv)..to pay any remaining Excess Spread (A) first, concurrently
to the Servicer in an amount equal to any outstanding Nonrecoverable Servicing
Advances and to the Master Servicer in an amount equal to any outstanding
Nonrecoverable Monthly Advances, (B) second, to repay the Servicer the Servicing
Fee Recovery Amount, if any and (C) then, for deposit into the Certificate
Distribution Account for payment to the holders of the Residual Interest
Certificates any amount remaining after the preceding clauses (A) and (B).
(f) All payments made on the Notes on each Payment Date will be made on
a pro rata basis among the Noteholders of record of such Notes on the next
preceding Record Date, without preference or priority of any kind, and, except
as otherwise provided in the next sentence, shall be made by wire transfer of
immediately available funds to the account of such Noteholder, if such
Noteholder shall own of record Notes in original Denominations aggregating at
least $250,000 and shall have so notified the Indenture Trustee, and otherwise
by check mailed to the address of such Noteholder appearing in the Notes
Register. The final payment on each Note will be made in like manner, but only
upon presentment and surrender of such Note at the location specified in the
notice to Noteholders of such final payment.
Section 5.01A. Claims Under Guaranty Policy.
----------------------------
(a) If, on the second Business Day prior to the related Payment Date a
Deficiency Amount exists, the Indenture Trustee shall give notice to the
Securities Insurer and to its direction by telephone or telecopy of the amount
of such deficiency by 12:00 noon, New York City time, on such Business Day.
(b) At the time of the execution and delivery of this Agreement, and
for the purposes of this Agreement, the Indenture Trustee shall establish a
separate special purpose trust account for the benefit of the Noteholders called
the "Policy Payments Account" and over which the Indenture Trustee shall have
exclusive control and sole right of withdrawal. The Indenture Trustee shall
deposit any amount paid under the Guaranty Policy in the Policy Payments Account
and distribute such amount only for purposes of making the Insured Payments for
which a claim was made. Such amounts shall be disbursed by the Indenture Trustee
to Noteholders in the same manner as principal and interest payments are to be
made with respect to the Notes under Sections regarding payment of Notes hereof.
It shall not be necessary for such payments to be made by checks or wire
transfers separate from the check or wire transfer used to pay Insured Payments
with other funds available to make such payments. However, the amount of any
payment of principal of or interest on the Notes to be paid from the Policy
Payments Account shall be noted as provided in (d) below in the Payment
Statement to be furnished to Noteholders. Funds held in the Policy Payments
Account shall not be invested by the Indenture Trustee.
(c) Any funds received by the Indenture Trustee as a result of any
claim under the Guaranty Policy shall be applied by the Indenture Trustee,
subject to Section 3.03 of the Indenture, together with the funds, if any, to be
withdrawn from the Note Payment Account, directly to the payment in full of the
Insured Payments due on the Notes (including Notes held for the Indenture
Trustee's own account). Funds received by the Indenture Trustee as a result of
any claim under the Guaranty Policy shall be deposited by the Indenture Trustee
in the Policy Payments Account and used solely for payment to the Noteholders
and may not be applied to satisfy any costs, expenses or liabilities of the
Indenture Trustee. Any funds remaining in the Policy Payments Account following
a Payment Date shall promptly be remitted to the Securities Insurer except for
funds held for the payment of Noteholders pursuant to Section 3.03 of the
Indenture.
(d) The Indenture Trustee shall keep a complete and accurate record of
all funds deposited by the Securities Insurer into the Policy Payments Account
and the allocation of such funds to payment of interest on and principal paid in
respect of any Note. The Securities Insurer shall have the right to inspect such
records at reasonable times upon one Business Day's prior notice to the
Indenture Trustee.
(e) Subject to and conditioned upon payment of any interest or
principal with respect to the Notes by or on behalf of the Securities Insurer,
the Indenture Trustee shall assign to the Securities Insurer all rights to the
payment of interest or principal on the Notes which are then due to the extent
of all payments made by the Securities Insurer and the Securities Insurer may
exercise any option, vote, right, power or the like with respect to the Notes to
the extent it has made a principal payment pursuant to the Guaranty Policy. The
Indenture Trustee agrees that the Securities Insurer shall be subrogated to all
of the rights to payment of the Noteholders or in relation thereto to the extent
that any payment of principal or interest was made to such Holders with payments
made under the Guaranty Policy by the Securities Insurer.
(f) In the event that the Indenture Trustee has received a certified
copy of an order of the appropriate court that any scheduled payment of
principal of or interest on a Note has been voided in whole or in part as a
Preference Amount, the Indenture Trustee shall so notify the Securities Insurer,
shall comply with the provisions of the Guaranty Policy to obtain payment by the
Securities Insurer of such voided scheduled payment, and shall, at the time it
provides notice to the Securities Insurer, notify, by mail to Noteholders that,
in the event that any Noteholder's scheduled payment is so recovered, such
Noteholders will be entitled to payment pursuant to the terms of the Guaranty
Policy, a copy of which shall be made available through the Indenture Trustee,
the Securities Insurer or the fiscal agent, if any, and the Indenture Trustee
shall furnish to the Securities Insurer or its fiscal agent, if any, its records
evidencing the payments of principal of and interest on the Notes, if any, which
have been made by the Indenture Trustee and subsequently recovered from
Noteholders, and the dates on which such payments were made.
(g) The Indenture Trustee shall promptly notify the Securities Insurer
of either of the following as to which it has actual knowledge: (i) the
commencement of any proceeding by or against the Depositor or the Issuer
commenced under the United States Bankruptcy Code or any other applicable
bankruptcy, insolvency, receivership, rehabilitation or similar law (an
"Insolvency Proceeding") and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of, or interest on, the Notes.
Each Noteholder, by its purchase of Notes, and the Indenture Trustee hereby
agree that, so long as a Securities Insurer Default shall not have occurred and
be continuing, the Securities Insurer may at any time during the continuation of
any Insolvency Proceeding direct all matters relating to such Insolvency
Proceeding, including, without limitation, (i) all matters relating to any
Preference Claim, (ii) the direction of any appeal of any order relating to any
Preference Claim at the expense of the Securities Insurer but subject to
reimbursement as provided in the Insurance Agreement and (iii) the posting of
any surety, supersedes or performance bond pending any such appeal. In addition,
and without limitation of the foregoing, as set forth (i) hereinbelow, the
Securities Insurer shall be subrogated to, and each Noteholder and the Indenture
Trustee hereby delegate and assign, to the fullest extent permitted by law the
rights of the Indenture Trustee and each Noteholder in the conduct of any
Insolvency Proceeding, including, without limitation, all rights of any party to
an adversary proceeding action with respect to any court under issued in
connection with any such Insolvency Proceeding.
(h) The Indenture Trustee shall furnish to the Securities Insurer or
its fiscal agent its records evidencing the payments of principal of and
interest on the Notes which have been made by the Indenture Trustee and
subsequently recovered from Noteholders, and the dates on which such payments
were made.
(i) Anything herein to the contrary notwithstanding, any payment with
respect to the principal of or interest on the Notes which is made with moneys
received pursuant to the terms of the Guaranty Policy shall not be considered
payment by the Issuer, shall not discharge the Issuer in respect of its
obligation to make such payment and shall not result in the payment of or the
provision for the payment of the principal of or interest on the Notes within
the meaning of Section 4.01 of the Indenture. The Issuer and the Indenture
Trustee acknowledge that without the need for any further action on the part of
the Securities Insurer, the Issuer, or the Indenture Trustee (i) to the extent
the Securities Insurer makes payments, directly or indirectly, on account of
principal of or interest on the Notes to the Noteholders, the Securities Insurer
will be fully subrogated to the rights of such Noteholders to receive such
principal and interest from the Issuer, and (ii) Noteholders shall be paid such
principal and interest in their capacity as Noteholders but only from the
sources and in the manner provided herein for the payment of such principal and
interest.
Section 5.02. Certificate Distribution Account.
--------------------------------
(a) Establishment of Certificate Distribution Account. No later than
the Closing Date, the Master Servicer, for the benefit of the
Certificateholders, shall cause to be established and maintained with the
Indenture Trustee for the benefit of the Owner Trustee, on behalf of the Issuer
and the Certificateholders, one or more Certificate Distribution Accounts
(collectively, the "Certificate Distribution Account"), which shall be separate
Eligible Accounts and may be interest-bearing, entitled "Certificate
Distribution Account, __________________, as Indenture Trustee, in trust for the
_______ Home Loan Owner Trust Series 199_-_". Funds in the Certificate
Distribution Account shall be invested in accordance with Section 5.03 hereof.
(b) Deposits to and Distributions from Certificate Distribution
Account. On each Payment Date the Indenture Trustee shall withdraw from the Note
Payment Account all amounts required to be deposited into the Certificate
Distribution Account with respect to such Payment Date pursuant to Section
5.01(c)(ii) hereof and, on behalf of the Owner Trustee, shall deposit such
amounts into the Certificate Distribution Account. The Indenture Trustee shall
make payments of all remaining amounts on deposit in the Note Payment Account to
the holders of the Notes to the extent of amounts due and unpaid on the Notes
for principal thereof and interest thereon in accordance with Section 5.01(d)
and (e) hereof. The Indenture Trustee, on behalf of the Owner Trustee, shall
distribute all amounts on deposit in the Certificate Distribution Account to the
holders of the Residual Interest Certificates. The Indenture Trustee, on behalf
of the Owner Trustee, also shall withdraw from the Certificate Distribution
Account any amount not required to be deposited in the Certificate Distribution
Account or deposited therein in error.
(c) Distributions on the Residual Interest Certificates. All
distributions made on the Residual Interest Certificates on each Payment Date
will be made pro rata among the holders of the Residual Interest Certificates of
record on the next preceding Record Date based on their percentage holdings in
the Residual Interest, without preference or priority of any kind, and, except
as otherwise provided in the next succeeding sentence, shall be made by wire
transfer of immediately available funds to the account of each such holder, if
such holder shall own of record a Residual Interest Certificate in an original
denomination aggregating at least a 50% holding of the Residual Interest and
shall have so notified the Indenture Trustee at least 5 Business Days prior
thereto, and otherwise by check mailed to the address of such Residual Interest
holder appearing in the Certificate Register. The final distribution on each
Residual Interest Certificate will be made in like manner, but only upon
presentment and surrender of such Residual Interest Certificate at the location
specified in the notice to holders of the Residual Interest Certificates of such
final distribution. Any amount distributed to the holders of the Residual
Interest Certificates on any Payment Date shall not be subject to any claim or
interest of holders of the other Notes.
Section 5.03. Trust Accounts; Trust Account Property.
--------------------------------------
(a) Control of Trust Accounts. Each of the Trust Accounts (or interests
therein) established hereunder has been pledged by the Issuer to the Indenture
Trustee under the Indenture and shall be subject to the lien of the Indenture.
In addition to the provisions hereunder, each of the Trust Accounts shall also
be established and maintained pursuant to the Indenture. Amounts distributed
from each Trust Account in accordance with the Indenture and this Agreement
shall be released from the lien of the Indenture upon such distribution
thereunder or hereunder. Subject to Sections 5.01 and 5.02 hereof, the Indenture
Trustee shall possess all right, title and interest in and to all funds on
deposit from time to time in the Trust Accounts (other than the Certificate
Distribution Account) and in all proceeds thereof (including all income thereon)
and all such funds, investments, proceeds and income shall be part of the Trust
Account Property and the Trust Estate. If, at any time, any Trust Account ceases
to be an Eligible Account, the Indenture Trustee (or the Servicer on its behalf)
shall, within ten Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency and the Securities Insurer may
consent) (i) establish a new Trust Account as an Eligible Account, (ii)
terminate the ineligible Trust Account, and (iii) transfer any cash and
investments from such ineligible Trust Account to such new Trust Account.
With respect to the Trust Accounts (other than the Certificate
Distribution Account), the Indenture Trustee agrees, by its acceptance hereof,
that each such Trust Account shall be subject to the sole and exclusive custody
and control of the Indenture Trustee for the benefit of the Securityholders, the
Securities Insurer and the Issuer, as the case may be, and the Indenture Trustee
shall have sole signature and withdrawal authority with respect thereto.
In addition to this Agreement and the Indenture, the Certificate
Distribution Account established hereunder shall also be subject to and
established and maintained in accordance with the Owner Trust Agreement. Subject
to rights of the Indenture Trustee, the Noteholders and the Securities Insurer
hereunder and under the Indenture, the Owner Trustee shall possess for the
benefit of the Certificateholders and the Securities Insurer all right, title
and interest in all funds on deposit from time to time in the Certificate
Distribution Account and in all proceeds thereof (including all income thereon)
and all such funds, investments, proceeds and income shall be part of the Trust
Account Property and the Trust Estate. Subject to the rights of the Indenture
Trustee, the Noteholders and the Securities Insurer, the Owner Trustee agrees,
by its acceptance hereof, that such Certificate Distribution Account shall be
subject to the sole and exclusive custody and control of the Owner Trustee for
the benefit of the Issuer and the parties entitled to payments and distributions
therefrom, including, without limitation, the Certificateholders and the
Securities Insurer, and the Owner Trustee shall have sole signature and
withdrawal authority with respect to the Certificate Distribution Account.
Notwithstanding the preceding, the distribution of amounts from the Certificate
Distribution Account in accordance with Section 5.01(c)(ii) hereof shall also be
made for the benefit of the Indenture Trustee (including without limitation with
respect to its duties under the Indenture and this Agreement relating to the
Trust Estate), and the Indenture Trustee (in its capacity as Indenture Trustee)
shall have the right, but not the obligation, to take custody and control of the
Certificate Distribution Account and to cause the distribution of amounts
therefrom in the event that the Owner Trustee fails to distribute such amounts
in accordance with subsections (b) and (c) of Section 5.02.
In accordance with Section 5.01 and 5.02 hereof, the Servicer or the
Master Servicer shall have the power, revocable by the Indenture Trustee or by
the Owner Trustee with the consent of the Indenture Trustee, to instruct the
Indenture Trustee or Owner Trustee to make withdrawals and payments from the
Trust Accounts for the purpose of permitting the Servicer, the Master Servicer
or the Issuer to carry out their respective duties hereunder or permitting the
Indenture Trustee or Owner Trustee to carry out their respective duties herein
or under the Indenture or the Owner Trust Agreement, as applicable.
(1)..Investment of Funds. So long as no Master Servicer Event of
Default shall have occurred and be continuing, the funds held in any Trust
Account may be invested (to the extent practicable) in Permitted Investments, as
directed by the Master Servicer. Any directions for investment of funds in any
Trust Account shall be made in writing or by telephone or facsimile transmission
with confirmation in writing. In any case, funds in any Trust Account must be
available for withdrawal without penalty, and any Permitted Investments must
mature or otherwise be available for withdrawal, not later than the Business Day
immediately preceding the Payment Date next following the date of such
investment and shall not be sold or disposed of prior to its maturity subject to
subsection (a)(2) of this Section. All interest and any other investment
earnings on amounts or investments held in any Trust Account shall be deposited
into such Trust Account immediately upon receipt by the Indenture Trustee. All
Permitted Investments in which funds in any Trust Account (other than the
Certificate Distribution Account) are invested must be held by or registered in
the name of ______________, as Indenture Trustee, in trust for the _________
Home Loan Asset Backed Notes, Series 199_-_. While the Indenture Trustee holds
the Certificate Distribution Account, on behalf of the Owner Trustee, all
Permitted Investments in which funds in the Certificate Distribution Account are
invested shall be held by or registered in the name First Union National Bank,
on behalf of the Owner Trustee, in trust for the _________ Home Loan Asset
Backed Notes, Series 199_-_.
(2)..Insufficiency and Losses in Trust Accounts. If any amounts are
needed for disbursement from any Trust Account held by or on behalf of the
Indenture Trustee and sufficient uninvested funds are not available to make such
disbursement, the Indenture Trustee shall cause to be sold or otherwise
converted to cash a sufficient amount of the investments in such Trust Account.
The Indenture Trustee shall not be liable for any investment loss or other
charge resulting therefrom, unless such loss or charge is caused by the failure
of the Indenture Trustee or Owner Trustee, respectively, to perform in
accordance with this Section 5.03 hereof or the Indenture Trustee is the obligor
under the Permitted Investment and has defaulted thereon.
If any losses are realized in connection with any investment in any
Trust Account pursuant to this Agreement and the Indenture, then the Master
Servicer shall deposit the amount of such losses (to the extent not offset by
income from other investments in such Trust Account) into such Trust Account
immediately upon the realization of such loss. All interest and any other
investment earnings on amounts held in any Trust Account shall be the income of
the Issuer (or, when there is a single beneficial owner of a Residual Interest
Certificate, such owner), and for federal and state income tax purposes the
Issuer (or such single beneficial owner) shall be the owner (or beneficial owner
in the case of the Collection Account).
(b) No Liability for Losses. Subject to Section 6.01 of the Indenture,
the Indenture Trustee shall not in any way be held liable by reason of any
insufficiency in any Trust Account held by the Indenture Trustee resulting from
any investment loss on any Permitted Investment included therein (except to the
extent that the Indenture Trustee is the obligor and has defaulted thereon).
(c) Delivery of Trust Account Property. With respect to the Trust
Account Property, the Indenture Trustee acknowledges and agrees that:
(1)..any Trust Account Property that is held in deposit accounts
shall be held solely in the Eligible Accounts; and each such Eligible Account
shall be subject to the sole and exclusive dominion, custody and control of the
Indenture Trustee; [and, without limitation on the foregoing, the Indenture
Trustee shall have sole signature authority with respect thereto;]
(2)..any Trust Account Property that constitutes property within
clause (a) of the definition of "Delivery" in Section 1.1 hereof shall be
delivered to and maintained by the Indenture Trustee in accordance with the
definition of "Delivery" in Section 1.1 hereof and shall be held, pending
maturity or disposition, solely by or on behalf of the Indenture Trustee; and
(3)..any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to federal book-entry regulations
shall be delivered to and maintained by the Indenture Trustee in accordance with
the definition of "Delivery" in Section 1.1 hereof.
Section 5.04. Allocation of Losses.
--------------------
In the event that Net Liquidation Proceeds, Property Insurance Proceeds
or Released Mortgaged Property Proceeds on a Liquidated Home Loan are less than
the related Principal Balance plus accrued interest thereon, or any Obligor
makes a partial payment of any Monthly Payment due on a Home Loan, such Net
Liquidation Proceeds, Property Insurance Proceeds, Released Mortgaged Property
Proceeds or partial payment shall be applied to payment of the related Debt
Instrument, first, to interest accrued at the Home Loan Interest Rate and, then,
to principal.
ARTICLE VI
STATEMENTS AND REPORTS; WITHHOLDING
-----------------------------------
Section 6.01. Statements.
----------
(a) No later than each Determination Date, the Master Servicer shall
cause the Servicer to deliver to the Indenture Trustee and the Master Servicer
by facsimile, the receipt and legibility of which shall be confirmed by
telephone, and with hard copy thereof to be delivered no later than one (1)
Business Day after such Determination Date, the Servicer's Monthly Remittance
Report, setting forth the date of such Report (day, month and year), the name of
the Issuer (i.e. "________ Home Loan Owner Trust 199_-_"), the Series
designation of the Notes (i.e. "Series 199_-_") and the date of this Agreement,
all in substantially the form set out in Exhibit B hereto. Furthermore, Master
Servicer shall cause the Servicer to deliver to the Master Servicer and the
Indenture Trustee no later than each Determination Date, a magnetic tape or
computer disk providing such information regarding the Servicer's activities in
servicing the Home Loans during the related Due Period as the Indenture Trustee
or the Master Servicer may reasonably require. The Master Servicer shall also
cause the Servicer to deliver any Loan Liquidation Reports pursuant to Section
4.10(a) hereof.
(b) On each Payment Date, Indenture Trustee shall distribute, based on
information provided by the Servicer, a monthly statement (the "Payment
Statement") to the Depositor, the Securities Insurer, the Master Servicer, the
Securityholders and the Rating Agencies, stating the date of original issuance
of the Notes (day, month and year), the name of the Issuer (i.e. "_______ Home
Loan Owner Trust 199_-_"), the Series designation of the Notes (i.e., "Series
199_-_"), the date of this Agreement and the following information:
(1)..the Available Collection Amount, Available Payment Amount,
the Regular Payment Amount and the Excess Spread for the related Payment Date;
(2)..the Note Principal Balance of the Notes before and after
giving effect to payments made to the holders of such Notes on such Payment
Date, and the Pool Principal Balance as of the first and last day of the related
Due Period;
(3)..the Note Factor with respect to the Notes then outstanding;
(4)..the amount of principal, if any, and interest to be
distributed to the Notes on the related Payment Date;
(5)..the Note Interest Rate and Noteholders' Interest
Carry-Forward Amount, if any, on the related Payment Date;
(6)..as of such Payment Date, the Overcollateralization Amount,
the Overcollateralization Target Amount and any Overcollateralization Deficiency
Amount or any Overcollateralization Reduction Amount, and any such amount to be
distributed to the Noteholders or the holders of the Residual Interest on such
Payment Date;
(7)..the Master Servicer Compensation, the Servicing Compensation,
the Indenture Trustee Fee, and the Guaranty Insurance Premium, for such Payment
Date;
(8)..as of such Payment Date, the Net Loan Losses incurred during
the related Due Period, the cumulative Net Loan Losses as of such Payment Date;
(9)..the weighted average maturity of the Home Loans and the
weighted average Home Loan Interest Rate of the Home Loans;
(10)..the number of and aggregate Principal Balance of all Home
Loans in foreclosure proceedings and the percent of the aggregate Principal
Balances of such Home Loans to the aggregate Principal Balances of all Home
Loans, all as of the close of business on the last day of the related Due
Period;
(11)..the number of and the aggregate Principal Balance of the
Home Loans in bankruptcy proceedings and the percent of the aggregate Principal
Balances of such Home Loans to the aggregate Principal Balances of all Home
Loans, all as of the close of business on the last day of the related Due
Period;
(12)..the number of Foreclosure Properties, the aggregate
Principal Balance of the related Home Loans, the book value of such Foreclosure
Properties and the percent of the aggregate Principal Balances of such Home
Loans to the aggregate Principal Balances of all Home Loans, all as of the close
of business on the last day of the related Due Period;
(13)..during the related Due Period (and cumulatively, from the
Closing Date through the most current Due Period), the number and aggregate
Principal Balance of Home Loans for each of the following: (A) that became
Defaulted Home Loans, (B) that became Liquidated Home Loans, (C) that became
Deleted Home Loans pursuant to Section 3.05 hereof as a result of such Deleted
Home Loans being Defective Home Loans, and (D) that became Deleted Home loans
pursuant to Section 3.05 hereof as a result of such Deleted Home Loans being
Defaulted Home Loans or a Home Loan in default or imminent default;
(14)..the scheduled principal payments and the principal
prepayments received with respect to the Home Loans during the Due Period;
(15)..the number and aggregate Principal Balance of Home Loans
that were 30, 60 or 90 days Delinquent as of the close of business on the last
day of the related Due Period and the Six Month Average Delinquency, the
Three-Month Average Annualized Losses and the cumulative Realized Losses;
(16)..the amount of any Insured Payment included in the amounts
distributed to the Noteholders on such Payment Date; and
(17)..the amount of any Securities Insurer Reimbursement Amount to
be paid to the Securities Insurer on such Payment Date and the amount of any
Securities Insurer Reimbursement Amount remaining unsatisfied following such
payment.
In the case of information furnished to Noteholders pursuant to
subclause (b)(4) of this Section 6.01, the amounts shall be expressed as a
dollar amount per Note with a $1,000 Denomination.
All reports prepared by the Indenture Trustee of the withdrawals from
and deposits in the Collection Account will be based in whole or in part upon
the information provided to the Indenture Trustee by the Servicer, and the
Indenture Trustee may fully rely upon and shall have no liability with respect
to such information provided by the Servicer. In no event shall the Indenture
Trustee be obligated to provide information required pursuant to this Section
6.01(b) if it has not timely received the necessary information form the
Servicer to provide such information.
(c) Within a reasonable period of time after the end of each calendar
year, the Indenture Trustee shall prepare and distribute to each Person who at
any time during the calendar year was a Noteholder such information as is
reasonably necessary to provide to such Person a statement containing the
information set forth in subclause (b) of this Section 6.01, aggregated for such
calendar year or applicable portion thereof during which such Person was a
Noteholder.
(d) On each Payment Date, the Indenture Trustee shall forward to The
Depository Trust Company and to the holders of the Residual Interest
Certificates a copy of the Payment Statement in respect of such Payment Date and
a statement setting forth the amounts actually distributed to such holders of
the Residual Interest Certificates on such Payment Date, together with such
other information as the Indenture Trustee deems necessary or appropriate.
(e) Within a reasonable period of time after the end of each calendar
year, the Indenture Trustee shall prepare and distribute to each Person who at
any time during the calendar year was a holder of Residual Interest
Certificates, if requested in writing by such Person, a statement containing the
information provided pursuant to the previous paragraph aggregated for such
calendar year or applicable portion thereof during which such Person was a
holder of Residual Interest Certificates.
(f) The Indenture Trustee shall forward to each Noteholder and each
holder of a Residual Interest Certificate, during the term of this Agreement,
such periodic, special or other reports, including information tax returns or
reports required with respect to the Notes and the Residual Interest
Certificates, as shall be necessary, reasonable, or appropriate with respect to
the Noteholders or the holders of Residual Interest Certificates, or otherwise
with respect to the purposes of this Agreement, all such reports or information
in the case of the Residual Interest Certificates to be provided by and in
accordance with such applicable instructions and directions as the Majority
Residual Interestholders may reasonably require.
(g) The Master Servicer promptly shall notify each Rating Agency if the
Securities Insurer waives or changes the Overcollateralization Target Amount,
the OC Trigger Increase Event, the Spread Squeeze Amount or the Step Down Test.
(h) Reports and computer tapes furnished by the Servicer and the
Indenture Trustee, to the Master Servicer and the Securities Insurer pursuant to
this Agreement shall be deemed confidential and of a proprietary nature and
shall not be copied or distributed except in connection with the purposes and
requirements of this Agreement. No Person entitled to receive copies of such
reports or tapes shall use the information therein for the purpose of soliciting
the customers of the Transferor or the Servicer or for any other purpose except
as set forth in this Agreement.
Section 6.02. Withholding.
-----------
The Indenture Trustee shall comply with all requirements of the Code,
and applicable state and local laws, with respect to the withholding from any
payments made to any Noteholder of any applicable withholding taxes imposed
thereon and with respect to any applicable reporting requirements in connection
therewith, giving due effect to any applicable exemptions from such withholding
and effective certifications or forms provided by the recipient. Any amounts
withheld pursuant to this Section 6.02 shall be deemed to have been paid to the
Noteholders for all purposes of this Agreement or the Indenture.
ARTICLE VII
GENERAL SERVICING PROCEDURES
----------------------------
Section 7.01. Servicing Advances. The Master Servicer shall cause the
Servicer to make Servicing Advances under Section 6.7 of the Servicing
Agreement. The Indenture Trustee shall make any Servicing Advance that the
Servicer fails to make. The Indenture Trustee shall be reimbursed for funds so
advanced out of Servicing Compensation on subsequent Payment Dates.
Section 7.02. Release of Home Loan Files.
--------------------------
(a) If with respect to any Home Loan:
(i)..the outstanding Principal Balance of such Home Loan plus all
interest accrued thereon shall have been paid;
(ii)..the Servicer shall have received, in escrow, payment in full
of such Home Loan in a manner customary for such purposes;
(iii)..such Home Loan has become a Defective Loan and has been
repurchased or a Qualified Substitute Home Loan has been conveyed to the Owner
Trustee pursuant to Section 3.05 hereof;
(iv)..such Home Loan or the related Foreclosure Property has been
sold in connection with the termination of the Issuer pursuant to Section 11.01
hereof; or
(v)..such Home Loan is a Defaulted Home Loan or a Liquidated Home
Loan that is liquidated or disposed of or the related Foreclosure Property has
been sold ;
then in each such case, an Officer's Certificate of the Servicer pursuant to
Section 4.5 of the Servicing Agreement to the effect that the Servicer has
complied with all of its obligations under this Agreement and the Servicing
Agreement with respect to such Home Loan and requesting that the Custodian
release to the Servicer the related Indenture Trustee's Home Loan File. Upon the
receipt of such Officer's Certificate, the Custodian shall, within five Business
Days or such shorter period as may be required by applicable law, release, or
cause the applicable Custodian to release (unless such Indenture Trustee's Home
Loan File has previously been released), the related Indenture Trustee's Home
Loan File to the Servicer and execute and deliver such instruments of transfer
or assignment, in each case without recourse, as shall be necessary to vest
ownership of such Home Loan in the Servicer or such other Person as may be
specified in such certificate, the forms of any such instrument to be appended
to such certificate.
(b) If a temporary release of the Indenture Trustee's Home Loan File is
necessary or appropriate for the servicing (which may include any modification
or foreclosure) of any Home Loan, then upon the request of the Servicer pursuant
to Section 3(b) of the Custodial Agreement the Custodian shall release the
related Indenture Trustee's Home Loan File (or any requested portion thereof) to
the Servicer.
Section 7.03. Servicing Compensation.
----------------------
As compensation for its services under the Servicing Agreement, the
Servicer shall be entitled to receive from the Collection Account the Servicing
Fee, out of which the Servicer shall pay any subservicing fees to any
subservicer. Additional servicing compensation in the form of assumption fees,
80% of late charges collected, modification fees, and other administrative fees,
insufficient funds charges shall be part of the Servicing Compensation payable
to the Servicer hereunder and under Section 8.1 of the Servicing Agreement and
shall be paid either by the Servicer retaining such additional servicing
compensation prior to deposit in the Collection Account pursuant to Section
5.01(b)(1) hereof or, if deposited in the Collection Account, as part of the
Servicing Compensation withdrawn from the Collection Account or Note Payment
Account.
The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and under the Servicing
Agreement and shall not be entitled to reimbursement therefor except as
specifically provided for herein or in Section 8.1 thereof.
Section 7.04. Statement as to Compliance and Financial Statements.
---------------------------------------------------
The Master Servicer will deliver or cause to be delivered to the
Indenture Trustee, the Owner Trustee, the Depositor, the Securities Insurer, the
Master Servicer and the Rating Agencies not later than 90 days following the end
of each fiscal year of the Servicer (beginning with the fiscal year 199_), an
Officer's Certificate, required under Section 7.2 of the Servicing Agreement,
stating that (i) a review of the activities of the Servicer during the preceding
year and of performance under this Agreement and the Servicing Agreement has
been made under such officer's supervision and (ii) to the best of such
officer's knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement and the Servicing Agreement throughout such
year, or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof and what action the Servicer proposes to take with respect thereto.
Contemporaneously with the submission of the Officer's Certificate
required by the preceding paragraph, the Master Servicer shall deliver or cause
to be delivered to the Indenture Trustee, the Securities Insurer, the Master
Servicer and the Owner Trustee a copy of the Servicer's annual audited financial
statements prepared in the ordinary course of business. The Master Servicer
shall, upon the request of the Depositor, deliver to such party any unaudited
quarterly financial statements of the Servicer.
The Master Servicer shall also cause the Servicer to furnish and
certify to the requesting party such other information as to (i) the Servicer's
organization, activities and personnel relating to the performance of the
obligations of the Servicer hereunder, (ii) the Servicer's financial condition,
(iii) the Home Loans and (iv) the performance of the obligations of any
subservicer under the any subservicing agreements, in each case as the Indenture
Trustee, the Owner Trustee, the Master Servicer, the Securities Insurer or the
Depositor may reasonably request from time to time.
Section 7.05. Independent Public Accountants' Servicing Report.
------------------------------------------------
Not later than 90 days following the end of each fiscal year of the
Servicer (beginning with fiscal year 199_), the Master Servicer shall require
that the Servicer comply with Section 7.3 of the Servicing Agreement and cause
any nationally recognized firm of Independent Certified Public Accountants
(which may also render other services to the Servicer) to furnish a statement to
the Indenture Trustee, the Owner Trustee, the Rating Agencies, the Securities
Insurer, the Master Servicer and the Depositor to the effect that such firm has
examined certain documents and records relating to the servicing of the Home
Loans under this Agreement, the Servicing Agreement or of mortgage loans under
pooling or sale and servicing agreements (including the Home Loans and this
Agreement) substantially similar to one another (such statement to have attached
thereto a schedule setting forth the pooling or sale and servicing agreements
covered thereby) and that, on the basis of such examination conducted
substantially in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or the Audit Program for Mortgages serviced for FHLMC, such
firm confirms that such servicing has been conducted in compliance with such
pooling or sale and servicing agreements except for such significant exceptions
or errors in records that, in the opinion of such firm, the Uniform Single
Attestation Program for Mortgage Bankers or the Attestation Program for
Mortgages serviced for FHLMC requires it to report, each of which errors and
omissions shall be specified in such statement. In rendering such statement,
such firm may rely, as to matters relating to direct servicing of mortgage loans
by subservicers, 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 subservicer.
Section 7.06. Reports to the Indenture Trustee;
Collection Account Statements.
---------------------------------
If the Collection Account is not maintained with the Indenture Trustee,
then not later than 25 days after each Record Date, the Master Servicer shall
cause the Servicer to forward to the Indenture Trustee, the Securities Insurer
and the Master Servicer, a statement, certified by a Servicing Officer, setting
forth the status of the Collection Account as of the close of business on the
preceding Record Date and showing, for the period covered by such statement, the
aggregate of deposits into the Collection Account for each category of deposit
specified in Section 5.01(b)(1) hereof, the aggregate of withdrawals from the
Collection Account for each category of withdrawal specified in Section
5.01(b)(2) and (3) hereof, in each case, for the related Due Period.
Section 7.07. Financial Statements and Records of Servicer.
--------------------------------------------
The Master Servicer shall require that the Servicer agree to provide
the books, records or information, and/or access thereto, of the types required
of the Master Servicer in Sections 9.07 and 9.08 herein, to the Indenture
Trustee, the Owner Trustee, the Depositor, the Securities Insurer and each of
their respective agents, upon terms substantially similar to the terms set forth
in Sections 9.07 and 9.08.
ARTICLE VIII
(RESERVED)
----------
ARTICLE IX
THE MASTER SERVICER
-------------------
Section 9.01. Indemnification; Third Party Claims.
-----------------------------------
(a) The Master Servicer shall indemnify the Transferor, the Owner
Trustee, the Issuer, the Depositor, the Securities Insurer and the Indenture
Trustee (each an "Indemnified Party") and hold harmless each of them against any
and all claims, losses, damages, penalties, fines, forfeitures, reasonable legal
fees and related costs, judgments, and other costs and expenses resulting from
any claim, demand, defense or assertion based on or grounded upon, or resulting
from, a breach of any of the Master Servicer's representations and warranties
and covenants contained in this Agreement or in any way relating to the failure
of the Master Servicer to perform its duties and service the Home Loans in
compliance with the terms of this Agreement.
(b) The Transferor, the Depositor, the Owner Trustee, the Securities
Insurer or the Indenture Trustee, as the case may be, shall promptly notify the
Master Servicer if a claim is made by a third party with respect to a breach of
any of the Master Servicer's representations and warranties and covenants
contained in this Agreement or in any way relating to the failure of the Master
Servicer to perform its duties and service the Home Loans in compliance with the
terms of this Agreement. The Master Servicer shall promptly notify the Indenture
Trustee, the Owner Trustee, the Securities Insurer and the Depositor of any
claim of which it has been notified pursuant to this Section 9.01 by a Person
other than the Depositor, and, in any event, shall promptly notify the Depositor
of its intended course of action with respect to any claim.
(c) The Master Servicer shall be entitled to participate in and, upon
notice to the Indemnified Party, assume the defense of any such action or claim
in reasonable cooperation with, and with the reasonable cooperation of, the
Indemnified Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to the counsel of the Master Servicer,
but the fees and expenses of such counsel will be at the expense of such
Indemnified Party, unless (i) the employment of counsel by the Indemnified Party
at its expense has been authorized in writing by the Master Servicer, (ii) the
Master Servicer has not in fact employed counsel to assume the defense of such
action within a reasonable time after receiving notice of the commencement of
the action, or (iii) the named parties to any such action or proceeding
(including any impleaded parties) include both the Master Servicer and one or
more Indemnified Parties, and the Indemnified Parties shall have been advised by
counsel that there may be one or more legal defenses available to them which are
different from or additional to those available to the Master Servicer. The
Master Servicer shall not be liable for any settlement of any such claim or
action unless the Master Servicer shall have consented thereto or be in default
on its obligations hereunder. Any failure by an Indemnified Party to comply with
the provisions of this Section 9.01 shall relieve the Master Servicer of
liability only if such failure is materially prejudicial to the position of the
Master Servicer and then only to the extent of such prejudice.
(d) The provisions of this Section 9.01 shall survive the replacement
of the Master Servicer; provided, that no successor master servicer shall be
liable for (or required to indemnify any party for) any act or omission of any
predecessor master servicer.
Section 9.02. Merger or Consolidation of the Master Servicer..
----------------------------------------------
The Master Servicer shall keep in full effect its existence, rights and
franchises as a corporation, and will obtain and preserve its authorization or
qualification to do business as a foreign corporation and maintain, or cause an
affiliate approved by the other parties hereto to maintain, such other licenses
and permits in each jurisdiction necessary to protect the validity and
enforceability of this Agreement or any of the Home Loans and to perform its
duties under this Agreement; provided, however, that the Master Servicer may
merge or consolidate with any other corporation upon the satisfaction of the
conditions set forth in the following paragraph.
With the consent of the Securities Insurer, any Person into which the
Master Servicer may be merged or consolidated, or any corporation resulting from
any merger, conversion or consolidation to which the Master Servicer shall be a
party, or any Person succeeding to the business of the Master Servicer, shall be
an Eligible Servicer and shall be the successor of the Master Servicer, as
applicable 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. The Master Servicer shall send notice of any such
merger, conversion, consolidation or succession to the Indenture Trustee, the
Owner Trustee, the Securities Insurer, the Servicer and the Issuer.
Section 9.03. Limitation on Liability of the
Master Servicer and Others.
------------------------------
The Master Servicer and any director, officer, employee or agent of the
Master Servicer may rely on any document of any kind which it in good faith
reasonably believes to be genuine and to have been adopted or signed by the
proper authorities respecting any matters arising hereunder. Subject to the
terms of Section 9.01 hereof, the Master Servicer shall have no obligation to
appear with respect to, prosecute or defend any legal action which is not
incidental to the Master Servicer's duty to service the Home Loans in accordance
with this Agreement.
Section 9.04. Master Servicer Not to Resign; Assignment.
-----------------------------------------
The Master Servicer shall not resign from the obligations and duties
hereby imposed on it except (a) with the consent of the Owner Trustee, the
Securities Insurer and Indenture Trustee or (b) upon determination that its
duties hereunder are no longer permissible under applicable law. Any such
determination pursuant to clause (b) of the preceding sentence permitting the
resignation of the Master Servicer shall be evidenced by an independent opinion
of counsel to such effect delivered (at the expense of the Master Servicer) to
the Owner Trustee, the Securities Insurer and the Indenture Trustee. No
resignation of the Master Servicer shall become effective until a successor
master servicer appointed by the Depositor and acceptable to the Rating
Agencies, the Securities Insurer and the Indenture Trustee shall have assumed
the Master Servicer's responsibilities, duties, liabilities (other than those
liabilities arising prior to the appointment of such successor) and obligations
under this Agreement.
Except as expressly provided herein, the Master Servicer shall not
assign or transfer any of its rights, benefits or privileges hereunder to any
other Person, or delegate to or subcontract with, or authorize or appoint any
other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder and any agreement, instrument or act
purporting to effect any such assignment, transfer, delegation or appointment
shall be void.
The Master Servicer agrees to cooperate with any successor master
servicer in effecting the transfer of the Master Servicer's servicing
responsibilities and rights hereunder pursuant to the first paragraph of this
Section 9.04.
Section 9.05. [Reserved.]
-----------
Section 9.06. Relationship of Master Servicer
to the Issuer and the Indenture Trustee.
---------------------------------------
The relationship of the Master Servicer (and of any successor to the
Master Servicer as master servicer under this Agreement) to the Issuer and the
Indenture Trustee under this Agreement is intended by the parties hereto to be
that of an independent contractor and not of a joint venturer, agent or partner
of the Issuer or the Indenture Trustee.
Section 9.07. Master Servicer May Own Securities.
----------------------------------
Each of the Master Servicer and any Affiliate of the Master Servicer
may in its individual or any other capacity become the owner or pledgee of
Securities with the same rights as it would have if it were not the Master
Servicer or an Affiliate thereof except as otherwise specifically provided
herein. Securities so owned by or pledged to the Master Servicer or such
Affiliate shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority, or distinction as among all of the
Securities; provided, however, that any Securities owned by the Master Servicer
or any Affiliate thereof, during the time such Securities are owned by them,
shall be without voting rights for any purpose set forth in this Agreement. The
Master Servicer shall notify the Indenture Trustee and the Securities Insurer
promptly after it or any of its Affiliates becomes the owner or pledgee of a
Security.
Section 9.08. Right to Examine Master Servicer Records.
----------------------------------------
The Indenture Trustee, the Owner Trustee, the Depositor, the Securities
Insurer and each of their respective agents shall have the right upon reasonable
prior notice, during normal business hours and as often as reasonably required,
to examine, audit and copy, at the expense of the Person making such
examination, any and all of the books, records or other information of the
Master Servicer (including, without limitation, the Servicer), whether held by
the Master Servicer or by another on behalf of the Master Servicer, which may be
relevant to the performance or observance by the Master Servicer of the terms,
covenants or conditions of this Agreement. In the case of the supervisory agents
and examiners of the Issuer, the Indenture Trustee, the Owner Trustee, the
Securities Insurer and the Securityholders, access to the documentation
regarding the Home Loans required by applicable state and federal regulations
shall be afforded without charge but only upon reasonable request and during
normal business hours at the offices of the Master Servicer designated by it.
The Master Servicer also agrees to make available on a reasonable basis
to the Depositor, the Securityholders or any prospective Securityholder a
knowledgeable financial or accounting officer for the purpose of answering
reasonable questions respecting recent developments affecting the Servicer or
the financial statements of the Servicer and to permit the Depositor, the
Securityholders and any prospective Securityholder to inspect the Servicer's
servicing facilities during normal business hours for the purpose of satisfying
that the Servicer has the ability to service the Home Loans in accordance with
this Agreement.
Each Securityholder, the Indenture Trustee, the Securities Insurer, the
Master Servicer and the Owner Trustee agree that any information obtained
pursuant to the terms of this Agreement shall be held confidential.
Section 9.09. Financial Statements.
--------------------
The Master Servicer understands that, in connection with the transfer
of the Notes, Noteholders and the Securities Insurer may request that the Master
Servicer make available to the Noteholders and to prospective Noteholders annual
audited financial statements of the Servicer for one or more of the most
recently completed five fiscal years for which such statements are available,
which request shall not be unreasonably denied.
ARTICLE X
DEFAULT
-------
Section 10.01. Master Service Events of Default.
--------------------------------
(a) Master Servicer Event of Default. A Master Servicer Event of
Default shall include the occurrence and continuation of one or more of the
following:
(i)..(1) Any failure by the Servicer to deposit in the Collection
Account in accordance with Section 5.01(b) hereof any payments in respect of the
Home Loans received by the Servicer no later than the second Business Day
following the day on which such payments were received; (2) any failure of the
Servicer to pay when due any amount payable by it under the Servicing Agreement
or this Agreement; or (3) the occurrence and continuance of any other Servicer
Event of Default (as defined in Exhibit E hereto) which Servicer Event of
Default continues unremedied for a period of 30 days after the date on which a
Notice of Default requiring such failure to be remedied shall have been given
(a) to the Servicer and the Master Servicer by the Indenture Trustee, or the
Securities Insurer, or (b) to the Servicer, the Master Servicer, the Indenture
Trustee, the Owner Trustee and the Securities Insurer by the Majority
Noteholders.
(ii)..The failure by the Master Servicer duly to observe or
perform, in any material respect, any other covenants, obligations or agreements
of the Master Servicer as set forth in this Agreement, which failure continues
unremedied for a period of 30 days after the date on which a Notice of Default
requiring such failure to be remedied shall have been given (a) to the Master
Servicer by the Indenture Trustee, the Owner Trustee or the Securities Insurer,
or (b) to the Master Servicer, the Indenture Trustee, the Owner Trustee and the
Securities Insurer by the Majority Noteholders.
(iii)..A decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or receiver
or liquidator in any insolvency, readjustment of debt, marshaling 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
days.
(iv)..The Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
the Master Servicer or of or relating to all or substantially all of the Master
Servicer's property; or
(v)..The Master Servicer shall admit in writing its inability to
pay its debts as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(vi)..The Majority Noteholders and the Securities Insurer,
collectively, or the Securities Insurer, individually, shall determine, in their
reasonable judgment and based upon published reports (including wire services),
which they reasonably believe in good faith to be reliable, and shall give the
Master Servicer a Notice of Default, that:
(1)..the Master Servicer or Servicer has experienced a material
adverse change in its business, assets, liabilities, operations, condition
(financial or otherwise) or prospects; or
(2)..the Master Servicer or Servicer or any of their subsidiaries
or parent has defaulted on any of its material obligations; or
(3)..the Master Servicer is no longer able to discharge its duties
under this Agreement or the Servicer is no longer able to discharge its duties
under the Servicing Agreement; or
(4)..the Master Servicer has ceased to conduct its business in the
ordinary course;
provided, however, that the Master Servicer shall have five Business Days from
the receipt of such Notice of Default to cure such Master Servicer Event of
Default by providing the foregoing parties with written assurances that, in a
reasonable and good faith manner, substantiate the financial and operational
well-being of the Master Servicer or Servicer, as appropriate, and adequately
refute the occurrence of a material adverse change, including, without
limitation, information, reports or written assurances obtained from certain of
its lenders or lenders to the Servicer.
(vii)..An event of default has occurred and is continuing under
the Indemnification Agreement.
(b) Remedies. If a Servicer Event of Default (as defined in Exhibit E
hereto) shall occur and be continuing or the Servicer's term of service has not
been renewed pursuant to Section 3 of the Servicing Agreement, then, and in each
and every such case, so long as such Servicer Event of Default shall not have
been remedied, the Securities Insurer or the Indenture Trustee, the Owner
Trustee or the Majority Noteholders, by a Notice of Default to the Master
Servicer may, in addition to whatever rights such Person may have at law or in
equity to damages, including injunctive relief and specific performance, with
the consent of the Securities Insurer may require the Master Servicer to
terminate all the rights and obligations of the Servicer under the Servicing
Agreement and in and to the Home Loans and the proceeds thereof, as servicer
under the Servicing Agreement. Upon termination of the Servicer following such
Notice of Default, all authority and power of the Servicer under the Servicing
Agreement, whether with respect to the Home Loans or otherwise, shall, at the
direction of the Securities Insurer, pass to, be transferred to, and be vested
in either: (1) a successor servicer acceptable to the Securities Insurer; or (2)
the Master Servicer, or (3) the Indenture Trustee. If a Master Servicer Event of
Default shall occur and be continuing, then, and in each and every such case, so
long as a Master Servicer Event of Default shall not have been remedied, the
Securities Insurer or the Indenture Trustee, or the Majority Noteholders, by a
Notice of Default to the Master Servicer may, in addition to whatever rights
such Person may have at law or in equity to damages, including injunctive relief
and specific performance, with the consent of the Securities Insurer, may
terminate all the rights and obligations of the Master Servicer under this
Agreement and in and to the Home Loans and the proceeds thereof, as Master
Servicer under this Agreement. Upon termination of the Master Servicer following
such Notice of Default, all authority and power of the Master Servicer under
this Agreement, whether with respect to the Home Loans or otherwise, shall, at
the direction of the Securities Insurer pass to, be transferred to, and be
vested in either: (1) a successor master servicer reasonably acceptable to the
Securities Insurer; or (2) the Indenture Trustee.
Upon the termination of the Master Servicer and transfer to a
successor, master servicer, the Indenture Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including, but not limited
to, the transfer and endorsement or assignment of the Home Loans and related
documents. The Master Servicer agrees to cooperate with the successor master
servicer in effecting the termination of the Master Servicer's responsibilities
and rights hereunder.
Section 10.02. [Reserved].
----------
Section 10.03. Waiver of Defaults.
------------------
The Securities Insurer, and the Majority Noteholders may with prior
consent of the Securities Insurer, on behalf of all Noteholders, waive any
events permitting removal of the Servicer or Master Servicer pursuant to this
Article X; provided, however, that the Majority Noteholders may not waive a
default in making a required payment on a Note or distribution on a Residual
Interest Certificate without the consent of the related Noteholder or holder of
the Residual Interest Certificate. Upon any waiver of a past default, such
default shall cease to exist and any Master Servicer Event of Default arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto except to the extent expressly so waived.
Section 10.04. Accounting Upon Termination of Master Servicer.
----------------------------------------------
Upon termination of the Master Servicer under this Article X, the
Master Servicer shall, at its own expense execute and deliver such instruments
and perform all acts reasonably requested in order to effect the orderly and
efficient transfer of master servicing of the Home Loans to its successor and to
more fully and definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Master Servicer under this
Agreement.
ARTICLE XI
TERMINATION
-----------
Section 11.01. Termination.
-----------
This Agreement shall terminate upon notice to the Indenture Trustee of
either:
(a) the later of (i) the satisfaction and discharge of the Indenture
and the provisions thereof, or (ii) the disposition of all funds with respect to
the last Home Loan and the remittance of all funds due hereunder and the payment
of all amounts due and payable to the Servicer, the Indenture Trustee, the Owner
Trustee, the Issuer, the Master Servicer, the Securities Insurer and any
Custodian; or
(b) the mutual consent of the Servicer, the Master Servicer, the
Depositor, the Transferor, the Securities Insurer and all Securityholders in
writing.
Section 11.02. Optional Termination.
--------------------
On or after any Payment Date on which the Pool Principal Balance
declines to 10% or less of the Original Pool Principal Balance, then the
Majority Residual Interestholders may, at their option, effect an early
termination of the Issuer. On or after any Payment Date on which the Pool
Principal Balance declines to 5% or less of the Original Pool Principal Balance,
then the Securities Insurer or the Master Servicer may, at their respective
options, effect an early termination of the Issuer. The Majority Residual
Interestholders, the Securities Insurer or the Master Servicer, as applicable,
shall effect such early termination by providing prior notice thereof to the
Servicer, the Indenture Trustee, the Master Servicer, the Securities Insurer and
Owner Trustee and by purchasing all of the Home Loans from the Issuer at a
purchase price, payable in cash, equal to or greater than the Termination Price.
The expense of any Independent appraiser required under this Section 11.02 shall
be a nonreimbursable expense of Majority Residual Interestholders, the
Securities Insurer or the Master Servicer, as applicable.
Any such early termination by the Majority Residual Interestholders,
the Securities Insurer or the Master Servicer, as applicable, shall be
accomplished by depositing into the Collection Account on the third Business Day
prior to the Payment Date on which the purchase is to occur the amount of the
Termination Price to be paid. The Termination Price and any amounts then on
deposit in the Collection Account (other than any amounts not required to have
been deposited therein pursuant to Section 5.01(b)(1) hereof and any amounts
withdrawn therefrom by the Indenture Trustee pursuant to Section 5.01(b)(3)
hereof) shall be transferred to the Note Payment Account pursuant to Section
5.01(b)(2) hereof for payment to Noteholders and the Securities Insurer on the
succeeding Payment Date; and any amounts received with respect to the Home Loans
and Foreclosure Properties subsequent to the Due Period immediately preceding
such final Payment Date shall belong to the purchaser thereof or the Securities
Insurer, as applicable. For purposes of calculating the Available Payment Amount
for such final Payment Date, amounts transferred to the Note Payment Account
immediately preceding such final Payment Date shall in all cases be deemed to
have been received during the related Due Period, and amounts so transferred
shall be applied pursuant to Section 5.01(d) and (e) hereof.
Section 11.03. Notice of Termination.
---------------------
Notice of termination of this Agreement or of early redemption and
termination of the Issuer shall be sent (i) by the Indenture Trustee to the
Noteholders and the Securities Insurer in accordance with section 10.02 of the
Indenture and (ii) by the Owner Trustee to the Certificateholders in accordance
with section 9.1(d) of the Owner Trust Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
------------------------
Section 12.01. Acts of Noteholders.
-------------------
Except as otherwise specifically provided herein, whenever action,
consent or approval of the Noteholders is required under this Agreement, such
action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Noteholders if the Majority
Noteholders agree to take such action or give such consent or approval.
Section 12.02. Amendment.
---------
(a) This Agreement may be amended from time to time by the Depositor,
the Master Servicer, the Transferor, the Indenture Trustee and the Issuer by
written agreement with notice thereof to the Securityholders, without the
consent of any of the Securityholders, but with the consent of the Securities
Insurer, to cure any error or ambiguity, to correct or supplement any provisions
hereof which may be defective or inconsistent with any other provisions hereof
or to add any other provisions with respect to matters or questions arising
under this Agreement; provided, however, that such action will not adversely
affect in any material respect the interests of the Noteholders. An amendment
described above shall be deemed not to adversely affect in any material respect
the interests of the Noteholders if either (i) an Opinion of Counsel is obtained
to such effect or (ii) the party requesting the amendment obtains the Ratings
Confirmation with respect to such amendment.
(b) This Agreement may also be amended from time to time by the
Depositor, the Master Servicer, the Transferor, the Indenture Trustee and the
Issuer by written agreement, with the prior written consent of the Majority
Noteholders and the Securities Insurer, 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 Noteholders;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, or delay the timing of, collections of payments on Home Loans or
distributions which are required to be made on any Note, without the consent of
the holders of 100% of the Notes affected thereby and the Securities Insurer,
(ii) adversely affect in any material respect the interests of the holders of
any of the Notes or the Securities Insurer in any manner other than as described
in clause (i), without the consent of the holders of 100% of such Notes or the
Securities Insurer, or (iii) reduce the percentage of any of the Notes, the
consent of which is required for any such amendment, without the consent of the
holders of 100% of such Notes and the Securities Insurer.
(c) It shall not be necessary for the consent of Noteholders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Issuer
and the Indenture Trustee shall be entitled to receive and rely upon an Opinion
of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. The Issuer and the Indenture Trustee may, but shall
not be obligated to, enter into any such amendment which affects the Issuer's
own rights, duties or immunities of the Issuer or the Indenture Trustee, as the
case may be, under this Agreement.
Section 12.03. Recordation of Agreement.
------------------------
To the extent permitted by applicable law, this Agreement, or a
memorandum thereof if permitted under applicable law, is subject to recordation
in all appropriate public offices for real property records in all of the
counties or other comparable jurisdictions in which any or all of the Mortgaged
Properties are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the Noteholders'
expense on direction of the Majority Noteholders or the Securities Insurer, but
only when accompanied by an Opinion of Counsel to the effect that such
recordation materially and beneficially affects the interests of the Noteholders
or is necessary for the administration or servicing of the Home Loans.
Section 12.04. Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until terminated
as herein provided.
Section 12.05. 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, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
Section 12.06. Notices.
-------
All demands, notices and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered at or mailed
by overnight mail, certified mail or registered mail, postage prepaid, to:
(a) in the case of the Depositor, PaineWebber Mortgage Acceptance
Corporation IV, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ ▇▇▇▇▇▇, Esq., or such other addresses as may hereafter be
furnished to the Securityholders and the other parties hereto in writing by the
Depositor;
(b) in the case of the Issuer, at ________ Home Loan Owner Trust
199_-_, c/o Wilmington Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or such other
address as may hereafter be furnished to the Securityholders and the other
parties hereto;
(c) in the case of the Transferor and Master Servicer, _________
_________, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇▇▇▇▇▇, or such other address as may hereafter be furnished to the
Securityholders and the other parties hereto in writing by the Servicer or the
Transferor;
(d) in the case of the Indenture Trustee, _______,____________________
__________________________;
(e) in the case of the Securityholders, as set forth in the applicable
Note Register;
(f) [in the case of a claim under the Guaranty Policy, _______________
____________________________, or such other address as may be furnished to the
Securityholders and the other parties hereto in writing by the Securities
Insurer];
(g) [in the case of the Securities Insurer, ______________________,
Attention: [ ] (_________ Home Loan Asset Backed Notes, Series 199_-_);] or
(h) in the case of the Servicer, to _________________________________
_______________, Attention: _____________, _________ Series 199_-_; provided
that during the period that the Master Servicer is acting as Servicer, notices
shall be sent to the Master Servicer.
Any such notices shall be deemed to be effective with respect to any
party hereto upon the receipt of such notice by such party, except that notices
to the Securityholders shall be effective upon mailing or personal delivery.
Section 12.07. Severability of Provisions.
--------------------------
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 12.08. No Partnership.
--------------
Nothing herein contained shall be deemed or construed to create any
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor.
Section 12.09. Counterparts.
------------
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.
Section 12.10. Successors and Assigns.
----------------------
This Agreement shall inure to the benefit of and be binding upon the
Servicer, the Transferor, the Depositor, the Indenture Trustee, the Issuer, the
Noteholders, the Securities Insurer, the Master Servicer and their respective
successors and permitted assigns.
Section 12.11. Headings.
--------
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
Section 12.12. Actions of Securityholders.
--------------------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Securityholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders in person or by agent
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Depositor, the Servicer, the Indenture Trustee or the Issuer.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Agreement and conclusive in
favor of the Depositor, the Servicer, the Indenture Trustee and the Issuer if
made in the manner provided in this Section 12.12.
(b) The fact and date of the execution by any Securityholder of any
such instrument or writing may be proved in any reasonable manner, which the
Depositor, the Servicer, the Indenture Trustee or the Issuer deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Securityholder shall bind every holder of every
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Depositor, the Servicer, the Indenture Trustee, the Securities Insurer or
the Issuer in reliance thereon, whether or not notation of such action is made
upon such Security.
(d) The Depositor, the Servicer, the Indenture Trustee or the Issuer
may require additional proof of any matter referred to in this Section 12.12 as
it shall deem necessary.
Section 12.13. Reports to Rating Agencies.
--------------------------
(a) The Indenture Trustee shall provide to each Rating Agency copies of
statements, reports and notices, to the extent received or prepared in
connection herewith, as follows:
(i)..copies of amendments to this Agreement;
(ii)..notice of any substitution or repurchase of any Home Loans;
(iii)..notice of any termination, replacement, succession, merger
or consolidation of the Servicer, the Master Servicer, any Custodian or the
Issuer;
(iv)..notice of final payment on the Notes;
(v)..any Notice of Default;
(vi)..copies of the annual independent accountants' report
delivered pursuant to Section 7.05 hereof, and copies of any compliance reports
delivered by the Servicer including under Section 7.04 hereof; and
(vii)..copies of any Payment Date Statement pursuant to Section
6.01(b) hereof.
(b) With respect to the requirement of the Indenture Trustee to provide
statements, reports and notices to the Rating Agencies, such statements, reports
and notices shall be delivered to the Rating Agencies at the following
addresses: (i) if to Standard & Poor's Ratings Services, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: Residential Mortgage Group; and (ii) if to ▇▇▇▇▇'▇
Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ Department - ▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage Monitoring Department.
Section 12.14. Holders of the Residual Interest Certificates.
---------------------------------------------
(a) Any sums to be distributed or otherwise paid hereunder or under the
Owner Trust Agreement to the holders of the Residual Interest Certificates shall
be paid to such holders pro rata based on their percentage holdings in the
Residual Interest;
(b) Where any act or event hereunder is expressed to be subject to the
consent or approval of the holders of the Residual Interest Certificates, such
consent or approval shall be capable of being given by the holder or holders of
not less than 51% of the Residual Interest in aggregate.
Section 12.15. Year 2000 Compliance.
--------------------
Each of the Servicer, the Master Sevicer and the Indenture Trustee
shall assure that their respective computer systems are year 2000 compliant by
December 31, 199_.
Section 12.16. [Grant of Noteholder Rights to Securities Insurer.
--------------------------------------------------
In consideration for the guarantee of the Insured Securities by the
Securities Insurer pursuant to the Guaranty Policy, and by acceptance of an
Insured Security, the Noteholders hereby grant to the Securities Insurer the
right to act as the holder of 100% of the outstanding Insured Securities for the
purpose of exercising the rights of the holders of the Insured Securities under
this Agreement, without the consent of any such Noteholders, including the
voting rights of such holders, but excluding those rights requiring the consent
of all such holders under Section 12.02(b), and any rights of such holders to
payments under Section 5.01 (d) and (e) hereof and under section 8.02(c) of the
Indenture; provided that the preceding grant of rights to the Securities Insurer
by the Noteholders shall be subject to Section 12.18 hereof. The rights of the
Securities Insurer to direct certain actions and consent to certain actions of
the Majority Noteholders hereunder will terminate at such time as the Principal
Balance of Insured Securities have been reduced to zero and the Securities
Insurer has been paid the Securities Insurer Reimbursement Amount in full and
all other amounts owed under the Guaranty Policy and Insurance Agreement and the
Securities Insurer has no further obligation under the Guaranty Policy.]
Section 12.17. Third Party Beneficiary.
-----------------------
The parties hereto acknowledge that the Securities Insurer is an
express third party beneficiary hereof entitled to enforce any rights reserved
to it hereunder as if it were actually a party hereto.
Section 12.18. [Suspension and Termination of
Securities Insurer's Rights.
------------------------------
(a) During the continuation of a Securities Insurer Default, the rights
granted or reserved to the Securities Insurer hereunder shall vest instead in
the Majority Noteholders; provided, however, that the Securities Insurer shall
be entitled to any payments of the Securities Insurer Reimbursement Amount, and
the Securities Insurer shall retain those rights under Section 11.01 to consent
to the termination of this Agreement and Section 12.02 to consent to any
amendment of this Agreement.
(b) At such time as either (i) the Principal Balances of the Insured
Securities have been reduced to zero or (ii) the Guaranty Policy has been
terminated, and in either case of (i) or (ii) the Securities Insurer has been
paid the Securities Insurer Reimbursement Amount in full and all other amounts
owed under the Guaranty Policy and the Insurance Agreement (and the Securities
Insurer no longer has any obligation under the Guaranty Policy, except for
breach thereof by the Securities Insurer), then the rights and benefits granted
or reserved to the Securities Insurer hereunder (including the rights to direct
certain actions and receive certain notices) shall terminate and the Noteholders
(including in certain instances the Majority Noteholders) shall be entitled to
the exercise of such rights and to receive such benefits of the Securities
Insurer following such termination to the extent that such rights and benefits
are applicable to the Noteholders (including the Majority Noteholders).]
IN WITNESS WHEREOF, the Issuer, the Depositor, the Transferor, the
Servicer, the Master Servicer and the Indenture Trustee have caused their names
to be signed by their respective officers thereunto duly authorized, as of the
day and year first above written, to this Sale and Servicing Agreement.
_________ HOME LOAN OWNER TRUST SERIES
199_-_, as Issuer
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee
By: _________________________________
Name:
Title:
PAINEWEBBER MORTGAGE ACCEPTANCE
CORPORATION IV, as Depositor
By: _______________________________________
Name:
Title:
_________ _________, as Transferor and Master
Servicer
By: _______________________________________
Name:
Title:
_________, not in its individual capacity but
solely as Indenture Trustee
By: _______________________________________
Name:
Title:
THE STATE OF ___________...)
)
COUNTY OF ______________...)
BEFORE ME, the undersigned authority, a Notary Public, on this _____
day of _______ 199_, personally appeared _______________, known to me to be a
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said WILMINGTON TRUST
COMPANY, not in its individual capacity but in its capacity as Owner Trustee of
_________ HOME LOAN OWNER TRUST 199_-_ as Issuer, and that she executed the same
as the act of such corporation for the purpose and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF WILMINGTON TRUST COMPANY, this the ____
day of ______, 199_.
Notary Public, State of ___________
THE STATE OF [_________]...)
)
COUNTY OF [____________]...)
BEFORE ME, the undersigned authority, a Notary Public, on this _____
day of _______ 199_, personally appeared _______________, known to me to be a
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said PAINEWEBBER MORTGAGE
ACCEPTANCE CORPORATION IV, as the Depositor, and that he/she executed the same
as the act of such corporation for the purpose and consideration therein
expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF PAINEWEBBER MORTGAGE ACCEPTANCE
CORPORATION IV, this the ____ day of ________, 199_.
Notary Public, State of ...
THE STATE OF ___________...)
)
COUNTY OF ______________...)
BEFORE ME, the undersigned authority, a Notary Public, on this __ day
of ______ 199_, personally appeared _______________________, known to me to be
the person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said _________ _________, as
the Transferor and Master Servicer, and that he executed the same as the act of
such corporation for the purposes and consideration therein expressed, and in
the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF _________ _________, this the ____ day
of _______ 199_.
Notary Public, State of_________
THE STATE OF ___________..)
)
COUNTY OF ______________..)
BEFORE ME, the undersigned authority, a Notary Public, on this __ day
of _______ 199_, personally appeared ____________________, known to me to be the
person and officer whose name is subscribed to the foregoing instrument and
acknowledged to me that the same was the act of the said _________, not in its
individual capacity, but in its capacity as Indenture Trustee, and that she
executed the same as the act of such entity for the purposes and consideration
therein expressed, and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL, this the __ day of _______ 199_.
Notary Public, State of___________
EXHIBIT A
HOME LOAN SCHEDULE
EXHIBIT B
Form of Servicer's Monthly Remittance Report to Indenture Trustee
EXHIBIT C
Form of Loan Liquidation Report
Customer Name:
Account No.:
Original Principal Balance:
1. Type of Liquidation (REO disposition/charge-off/short pay-off) ___________
Date last paid ___________
Foreclosure
Date of Foreclosure ___________
Date of REO ___________
Date of REO Disposition ___________
Property Sale Price/Estimated Market Value at disposition $__________
Settlement (short pay-off and collection actions)
Date of Settlement Payment ___________
Defaulted Loan Sale
Date of Sale ___________
Charge-off or Bankruptcy
Date of Charge-off or Bankruptcy Discharge ___________
2. Liquidation Proceeds
Principal Prepayment $__________
Property Sale Proceeds $__________
Insurance Proceeds $__________
Settlement Payment Loan Sale Proceeds $__________
Other (Itemize) $__________
Total Proceeds $__________
Liquidation Expenses
Servicing Advances $__________
Servicing Fees $__________
Other Servicing Compensation $__________
Collection Agent or Attorney's Fees $__________
Total Advances $__________
4. Net Liquidation Proceeds $__________
(Item 2 minus Item 3)
5. Principal Balance of Mortgage Loan $__________
6. Loss, if any (Item 5 minus Item 4) $__________
EXHIBIT D
Form of Master Servicer Renewal Notice
[MASTER SERVICER]
Re: _________ Home Loan Asset Backed Notes, Series 199_-_
Dear Ladies and Gentlemen:
Reference is hereby made to the Sale and Servicing Agreement dated
as of _______ 1, 199_ (the "Agreement") among _________ Home Loan Owner
Trust 199_-_, as Issuer, PaineWebber Mortgage Acceptance Corporation IV, as
Depositor, _________ _________, as Transferor, Master Servicer, and as Servicer,
and _________, as Indenture Trustee. [The Indenture Trustee has not received
notification from _________________, as the Securities Insurer, that instructs
the Indenture Trustee not to renew the term of ______________ as the Master
Servicer under the Agreement.] Therefore, pursuant to Section 9.05 of the
Agreement, the Indenture Trustee hereby notifies ________________________ that
its term as Master Servicer has been extended for a successive three calendar
month period beginning with the month of __________, _____.
___________________________________,
as Indenture Trustee
By:________________________________
Name:________________________
Title:_______________________
cc: [Securities Insurer]
PaineWebber Mortgage Acceptance Corporation IV
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
_________ Home Loan Owner Trust 199_-_
c/o Wilmington Trust Company
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EXHIBIT E