EXECUTION
MASTER SERVICING AGREEMENT
Dated as of April 1, 1999
among
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-1, Issuer,
and
ADVANTA MORTGAGE CORP. USA, Master Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, Trustee
Relating to the Mortgage Loans
Pledged as Collateral for the Issuer's
Mortgage-Backed LIBOR Notes, Class A, Series 1999-1
in the Aggregate Initial
Principal Amount of $229,000,000
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT
Section 1. Defined Terms.................................................
Section 2. Mortgage Documents............................................
(a) Trustee to Retain Possession of Documents through
Custodians. .............................................
(b) Trustee and Custodians to Cooperate; Release of Trustee
Mortgage Files...........................................
(c) Representations and Warranties of the Master Servicer,
AmREIT and the Issuer....................................
Section 3. General Duties of the Master Servicer.........................
(a) Master Servicer to Service Mortgage Loans................
(b) Servicing Agreements Between the Master Servicer
and Subservicers.........................................
(c) Master Servicer Authorization............................
(d) Access to Certain Documentation..........................
(e) Rights of the Issuer and the Trustee in Respect of the
Master Servicer..........................................
(f) Trustee to Act as Master Servicer........................
(g) Collection of Mortgage Loan Payments; Collection
Account; Note Payment Account............................
(h) Master Servicer Monthly Data.............................
(i) Payment of Taxes, Insurance and Other Charges............
(j) Maintenance of Casualty Insurance........................
(k) Reserved.................................................
(l) Fidelity Bond; Errors and Omissions Policy...............
(m) Collection of Taxes, Assessments and Other Items;
Servicing Account........................................
(n) Periodic Filings with the Securities and Exchange
Commission; Additional Information.......................
(o) Enforcement of Due-on-Sale Clauses; Assumption
Agreements ..............................................
(p) Realization Upon Defaulted Mortgage Loans................
(q) Trustee to Cooperate; Release of Mortgage Files..........
(r) Reports to the Master Servicer; Collection Account
Statement. ..............................................
(s) Annual Statement as to Compliance........................
(t) Annual Independent Public Accountants' Servicing Report..
(u) Liquidation Report.......................................
(v) Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans...................................
(w) Maintenance of Corporate Existence and Licenses..........
(x) Optional Purchase of Defaulted Mortgage Loans............
(y) No Solicitation..........................................
Section 4. Monthly Advances..............................................
Section 5. Master Servicing Compensation and Expenses....................
Section 6. Master Servicer...............................................
(a) Liabilities of the Master Servicer.......................
(b) Merger or Consolidation of the Master Servicer...........
(c) Resignation of Master Servicer; Termination
Without Cause ...........................................
(d) Assignment or Delegation of Duties by the
Master Servicer .........................................
(e) Limitation on Liability of the Master
Servicer and Others .....................................
Section 7. Master Servicing Default; Termination and Liabilities.........
(a) Master Servicing Default.................................
(b) Trustee to Act; Appointment of Successor.................
(c) Waivers by FSA...........................................
(d) Notification to Noteholders..............................
(e) Term of Service Appointment..............................
Section 8. Miscellaneous.................................................
(a) Term of Master Servicing Agreement.......................
(b) Assignment...............................................
(c) Notices..................................................
(d) Governing Law............................................
(e) Amendments...............................................
(f) Severability.............................................
(g) No Joint Venture.........................................
(h) Execution in Counterparts................................
(i) Limitation of Liability of Wilmington Trust Company......
(j) Noncompetition Covenants.................................
(k) Third-Party Beneficiary..................................
(l) Trust Estate and Accounts Held for Benefit of FSA........
SCHEDULE I - Schedule of Mortgage Loans
SCHEDULE II - Representations and Warranties of the Master Servicer
SCHEDULE III - Representations and Warranties as to the Mortgage Loans
SCHEDULE IV - Representations and Warranties of the Issuer
SCHEDULE V - Purchase and Sale Agreements
SCHEDULE VI - List of Insurance Policies and Related Premiums and
Mortgage Loans
MASTER SERVICING AGREEMENT
THIS MASTER SERVICING AGREEMENT is made and entered into as of April 1,
1999, by and among American Residential Eagle Bond Trust 1999-1, a statutory
business trust formed under the laws of the State of Delaware (the "Issuer"),
Advanta Mortgage Corp. USA, a Delaware corporation (the "Master Servicer"),
and Norwest Bank Minnesota, National Association ("Norwest"), a national
banking association (the "Trustee ") (in its capacity as indenture trustee
under the Indenture referred to below, the "Trustee").
PRELIMINARY STATEMENT
The Issuer was formed for the purpose of issuing notes secured by
mortgage collateral. The Issuer has entered into a trust indenture, dated as
of April 1, 1999 (the "Indenture"), between the Issuer and the Trustee,
pursuant to which the Issuer intends to issue its Mortgage-Backed LIBOR Notes,
Class A, Series 1999-1, in the aggregate initial principal amount of
$229,000,000 (the "Notes"). Pursuant to the Indenture, as security for the
indebtedness represented by such Notes, the Issuer is and will be pledging to
the Trustee, or granting the Trustee a security interest in, among other
things, certain Mortgage Loans, its rights under this Agreement, the Initial
Mortgage Loan Purchase Agreement, the Mortgage Loan Purchase Agreement, the
Purchase and Sale Agreements, the Collection Account, the Note Payment Account
and certain Insurance Policies (as each such term is defined herein).
The parties desire to enter into this Agreement to provide, among other
things, for the master servicing of the Mortgage Loans by the Master Servicer.
The Master Servicer also agrees to perform the servicing functions set forth
herein as to the Mortgage Loans designated in Schedule I hereto. The Master
Servicer may enter into as herein provided one or more Subservicing Agreements
to perform the servicing functions set forth herein. The Master Servicer
acknowledges that, in order further to secure the Notes, the Issuer is and
will be granting to the Trustee a security interest in, among other things,
its rights under this Agreement, and the Master Servicer agrees that all
covenants and agreements made by the Master Servicer herein with respect to
the Mortgage Loans shall also be for the benefit and security of the Trustee
and Holders of the Notes and FSA.
The Issuer will enter into a Management Agreement, dated as of the date
hereof, with American Residential Investment Trust, Inc. (in such capacity,
the "Manager"), pursuant to which the Manager will conduct certain operations
of the Issuer. Actions by or required of the Issuer hereunder may be performed
on its behalf by the Manager or any sub-manager appointed to act for the
Issuer.
1. Defined Terms.
Except as otherwise specified or as the context may otherwise require,
the following terms have the respective meanings set forth below for all
purposes of this Agreement, and the definitions of such terms are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms. Capitalized terms
that are used but not defined in this Agreement and which are defined in the
Indenture have the meanings assigned to them therein.
"Accepted Servicing Practices" means servicing practices which in general
conform to the mortgage servicing practices of prudent mortgage lending
institutions which service for their own account mortgage loans of the same
type as the Mortgage Loans in the jurisdictions in which the related Mortgaged
Properties are located.
"Adjusted Net Mortgage Rate" means, as to each Mortgage Loan and at any
time, the per annum rate equal to the Mortgage Rate less the Master Servicing
Fee Rate.
"Adjustable Rate Mortgage Loan" means any Mortgage Loan which provides
for adjustment of the Mortgage Rate payable in respect thereto in accordance
with the Index and other factors set forth in such Note.
"Adjustment Date" means, as to any Adjustable Rate Mortgage Loan, a date
on which the related Mortgage Rate adjusts pursuant to the terms thereof.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"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 meanings correlative to the
foregoing.
"Agreement" means this Master Servicing Agreement, as the same may be
amended or supplemented from time to time.
"Amount Held for Future Distribution" means, as to any Payment Date, the
aggregate amount held in the Collection Account which is not required to be
distributed with respect to the related Payment Date.
"AmREIT" means American Residential Investment Trust, Inc., a Maryland
corporation, and its successors and assigns.
"Annual Loss Percentage" has the meaning set forth in the Indenture.
"Appraised Value" means (i) with respect to a Mortgage Loan other than a
Refinancing Mortgage Loan, the lesser of (a) the value of the Mortgaged
Property based upon the appraisal made at the time of the origination of such
Mortgage Loan and (b) the sales price of the Mortgaged Property at the time of
the origination of such Mortgage Loan; or (ii) with respect to a Refinancing
Mortgage Loan, the value of the Mortgaged Property based upon the appraisal
made at the time of the origination of such Refinancing Mortgage Loan.
"Bankruptcy Code" means the United States Bankruptcy Reform Act of 1978,
as amended from time to time.
"BSABS" means Bear ▇▇▇▇▇▇▇ Asset-Backed Securities, Inc., a Delaware
corporation, and its successors and assigns.
"Business Day" means any day other than (i) a Saturday or a Sunday, or
(ii) a day on which banking institutions in the States of Maryland or
Minnesota or The City of New York or the city in which the Corporate Trust
Office (as defined in the Indenture) is located are authorized or obligated by
law or executive order to be closed.
"Certificate Paying Agent" means the Person acting in such capacity
pursuant to the Deposit Trust Agreement which shall initially be the Trustee.
"Certificateholder" means the holder of the Investor Certificate.
"Class A Notes" means the Notes issued under the Indenture.
"Closing Date" means April 15, 1999.
"Code" means the Internal Revenue Code of 1986, including any successor
or amendatory provisions.
"Collection Account" means, with respect to the Notes, the separate
Eligible Account created and maintained by the Master Servicer pursuant to
Section 3(g) with a depository institution in the name of the Trustee on
behalf of the Noteholders and FSA and designated "Collection Account -Norwest
Bank Minnesota, National Association, in trust for the registered holders of
Mortgage-Backed LIBOR Notes, Class A, Series 1999-1 and FSA."
"Collection Period" means, with respect to any Payment Date, the calendar
month preceding the month in which such Payment Date occurs.
"Compensating Interest" means that which is defined in Section 3(v)
hereof.
"Curtailment" means, with respect to a Mortgage Loan, any payments or
collection of principal received during a Due Period that is in excess of the
amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
"Custodial Agreement" means the agreement between the Trustee, the Issuer
and the Custodian.
"Custodian" means Bankers Trust Company of California, N.A., as custodian
under the Custodial Agreement, or any successor custodian thereunder.
"Cut-off Date" means, with respect to the Mortgage Loans, April 1, 1999.
"Cut-off Date Principal Balance" means, as to any Mortgage Loan, the
Stated Principal Balance thereof as of the close of business on the Cut-off
Date.
"Debt Service Reduction" means, with respect to any Mortgage Loan, a
reduction in the Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code which became
final and non-appealable, except such a reduction resulting from a Deficient
Valuation or any reduction that results in a permanent forgiveness of
principal.
"Deficient Valuation" means, with respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Mortgage Loan, or
any reduction in the amount of principal to be paid in connection with any
Monthly Payment that results in a permanent forgiveness of principal, which
valuation or reduction results from an order of such court which is final and
non-appealable in a proceeding under the Bankruptcy Code.
"Deleted Mortgage Loan" has the meaning ascribed thereto in Section
2(c)(iv) hereof.
"Delinquent" means, as to any Mortgage Loan, if any payment due thereon
is not made by the close of business on the day such payment by the related
Mortgagor is scheduled to be due. A Mortgage Loan is "30 days Delinquent" if
such payment has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month) then on the last day of such immediately succeeding month.
Similarly for "60 days Delinquent," "90 days Delinquent" and so on.
"Deposit Trust Agreement" means the Deposit Trust Agreement, dated as of
April 1, 1999, between BSABS and the Owner Trustee, as such Deposit Trust
Agreement may be amended or supplemented from time to time.
"Due Date" means, with respect to each Payment Date, the date on which
the monthly payment of principal and interest on such Mortgage Loan became due
during the related Due Period.
"Due Period" means, with respect to each Payment Date, the period
beginning on the opening of business on the second day of the calendar month
preceding the calendar month in which such Payment Date occurs, and ending at
the close of business on the first day of the calendar month in which such
Payment Date occurs.
"Eligible Account" means any of (i) a segregated account or accounts
maintained with a federal or state chartered depository institution or trust
company the short-term unsecured debt obligations of which (or, in the case of
a depository institution or trust company that is the principal subsidiary of
a holding company, the debt obligations of such holding company, but only if
▇▇▇▇▇'▇ is not a Rating Agency) have the highest short-term ratings of each
Rating Agency at the time any amounts are held on deposit therein and the long
term debt obligations of which shall be rated AA or higher by S&P and Aa or
higher by Moody's, or (ii) a segregated trust account or accounts maintained
with the trust department of a federal or state chartered depository
institution or trust company, acting in its fiduciary capacity acceptable to
each Rating Agency and FSA, having capital and surplus not less than
$100,000,000 or (iii) any other account acceptable to each Rating Agency and
FSA. Eligible Accounts may bear interest, and may include, if otherwise
qualified under this definition, accounts maintained with the Master Servicer
or the Trustee.
"Expense Fee Rate" means the sum of (i) the Master Servicing Fee Rate,
and (ii) the Mortgage Insurance Premium Rate.
"FDIC" means the Federal Deposit Insurance Corporation, or any successor
thereto.
"FHLMC" means ▇▇▇▇▇▇▇ Mac, formerly known as the Federal Home Loan
Mortgage Corporation, a corporate instrumentality of the United States created
and existing under Title III of the Emergency Home Finance Act of 1970, as
amended, or any successor thereto.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989.
"FNMA" means ▇▇▇▇▇▇ ▇▇▇, formerly known as the Federal National Mortgage
Association, a federally chartered and privately owned corporation organized
and existing under the Federal National Mortgage Association Charter Act, or
any successor thereto.
"FSA" means Financial Security Assurance Inc. or any successor thereto.
"FSA Insurance Agreement" means the Insurance and Indemnity Agreement,
dated as of April 1, 1999, between the Issuer, FSA, AmREIT, the Seller and
BSABS.
"FSA Policy" means the irrevocable financial guaranty insurance policy
(Policy No. 50799-N) issued by FSA with respect to the Notes.
"Indenture" means the Indenture, dated as of the date hereof, between the
Issuer and the Trustee, as such Indenture may be amended or supplemented from
time to time in accordance with its terms.
"Independent Accountants" shall have the meaning ascribed to such term
under the Indenture.
"Index" means, as to each Adjustable Rate Mortgage Loan, the index from
time to time in effect for the adjustment of the Mortgage Rate set forth as
such on the related Mortgage Note.
"Initial Mortgage Loan Purchase Agreement" means the mortgage loan
purchase agreement dated as of April 1, 1999 between AmREIT and the Seller.
"Insurance Policy" means, with respect to any Mortgage Loan, any primary
mortgage guaranty insurance policy or other insurance policy with respect to
the Mortgage Loans, including all riders and endorsements thereto in effect,
including any replacement policy or policies for any Insurance Policies (but
shall not include the FSA Policy).
"Insurance Proceeds" means proceeds paid by an insurer pursuant to any
Insurance Policy, other than any amount included in such Insurance Proceeds in
respect of Insured Expenses.
"Insured Expenses" means amounts applied out of payments made by an
insurer under an Insurance Policy to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the Servicing
Provisions.
"Interest Remittance Amount" means, with respect to any Remittance Date,
the sum of (i) the interest component of the Monthly Payments due on the
related Due Date collected or advanced, adjusted to the Net Mortgage Rate,
plus (ii) the interest collected on Principal Prepayments occurring during the
related Collection Period, adjusted to the Net Mortgage Rate, plus, (iii) any
Compensating Interest in respect of the related Collection Period, plus (iv)
interest components of late Monthly Payments collected during the related
Collection Period and not previously advanced, adjusted to the Net Mortgage
Rate, plus (v) any other collections in respect of interest received during
the related Collection Period and not included under (i) through (iv) above,
adjusted to the Net Mortgage Rate.
"Investor Certificate" shall have the meaning ascribed thereto in the
Deposit Trust Agreement.
"LIBOR" means, for each Adjustable Rate Mortgage, the six-month London
Interbank Rate determined as provided in the related Mortgage Note.
"Liquidated Mortgage Loan" means with respect to any Payment Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in
the calendar month preceding the month of such Payment Date and as to which
the Master Servicer has certified (in accordance with this Agreement) that it
has received all amounts it expects to receive in connection with the
liquidation of such Mortgage Loan including the final disposition of an REO
Property.
"Liquidation Expenses" means expenses incurred by the Master Servicer or
any Subservicer in connection with the liquidation of any defaulted Mortgage
Loan or property acquired in respect thereof (including, without limitation,
legal fees and expenses, committee or referee fees, and, if applicable,
brokerage commissions and conveyance taxes), any unreimbursed amount expended
by the Master Servicer pursuant to the related Mortgage Loan and any
unreimbursed expenditures for real property taxes or for property restoration
or preservation of the related Mortgaged Property. Liquidation Expenses shall
not include any previously incurred expenses in respect of an REO Mortgage
Loan which have been netted against related proceeds.
"Liquidation Proceeds" means amounts, including Insurance Proceeds,
received in connection with the partial or complete liquidation of defaulted
Mortgage Loans, whether through trustee's sale, foreclosure sale or otherwise
or amounts received in connection with any condemnation or partial release of
a Mortgaged Property and any other proceeds received in connection with an REO
Property, less the sum of related unreimbursed Master Servicing Fees,
Servicing Advances and Monthly Advances and net of any other unreimbursed
expenses incurred in connection with liquidation or foreclosure.
"Liquidation Report" means a report prepared by the Master Servicer in
the ordinary course with respect to Liquidated Mortgage Loans.
"Loan-to-Value Ratio" means, with respect to any Mortgage Loan and as to
any date of determination, the fraction (expressed as a percentage) the
numerator of which is the principal balance of the related Mortgage Loan at
such date of determination and the denominator of which is the Appraised Value
of the related Mortgaged Property.
"Management Agreement" means the Management Agreement dated as of April
1, 1999 between the Issuer and AmREIT, as Manager.
"Management Fee" means the compensation payable to AmREIT under the
Management Agreement which shall equal $1,000 per month.
"Margin" means as to each Adjustable Rate Mortgage Loan, the percentage
amount set forth on the related Mortgage Note which is to be added to the
Index in calculating the Mortgage Rate thereon.
"Master Servicer" means Advanta Mortgage Corp. USA, a Delaware
corporation, and its successors and assigns, in its capacity as master
servicer hereunder.
"Master Servicing Default" means a master servicing default as described
under Section 7(a) of this Agreement.
"Master Servicing Fee" means as to any Payment Date, an amount per
Mortgage Loan equal to the product of the Master Servicing Fee Rate and the
Stated Principal Balance of such Mortgage Loan for such Payment Date.
"Master Servicing Fee Rate" means, with respect to each Mortgage Loan,
the percentage per annum equal to 0.50%.
"Maximum Rate" means as to any Adjustable Rate Mortgage Loan, the maximum
rate set forth on the related Mortgage Note at which interest can accrue on
such Mortgage Loan.
"Minimum Rate" means as to any Adjustable Rate Mortgage Loan, the minimum
rate set forth on the related Mortgage Note at which interest can accrue on
such Mortgage Loan.
"Monthly Advance" means any advance of a payment of interest (but not
principal) due on a Mortgage Loan (adjusted to the Net Mortgage Rate) required
to be made by the Master Servicer with respect to any Payment Date pursuant to
Section 4.
"Monthly Payment" As to any Mortgage Loan (including any REO Mortgage
Loan) and any Due Date, the scheduled payment of principal and interest due
thereon for such Due Date (before adjustment for any Curtailments applied on
or before such Due Date in the related Due Period and any Relief Act
Reductions and Deficient Valuations occurring prior to such Due Date but
before any adjustment to such amortization schedule by reason of any
bankruptcy, other than Deficient Valuations, or similar proceeding or any
moratorium or similar waiver or grace period).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or any successor
thereto. If ▇▇▇▇▇'▇ is designated as a Rating Agency in the Indenture, for
purposes of Section 9(c) the address for notices to Moody's shall be ▇▇▇▇▇'▇
Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Residential Pass-Through Monitoring, or such other address as
Moody's may hereafter furnish to the Issuer and the Master Servicer.
"Mortgage" means the mortgage, deed of trust or other instrument creating
a first lien on an estate in fee simple or leasehold interest in real property
securing a Mortgage Note.
"Mortgage Documents" mean the mortgage documents pertaining to a
particular Mortgage Loan and delivered to the Custodian pursuant to this
Agreement and the Custodial Agreement.
"Mortgage Impairment Insurance Policy" means that which is defined in
Section 3(k).
"Mortgage Insurance Premium Rate" means the applicable premium rate for
each covered Mortgage Loan expressed as a percentage in Schedule VI.
"Mortgage Insurer" means each insurer under an Insurance Policy listed in
Schedule VI.
"Mortgage Loan" means such of the mortgage loans granted by the Issuer to
the Trustee under the Indenture as security for the Notes, as from time to
time are held as part of the Trust Estate (including any REO Property), the
Mortgage Loans so held being identified in the Schedule of Mortgage Loans,
notwithstanding foreclosure or other acquisition of title of the related
Mortgaged Property.
"Mortgage Loan Purchase Agreement" means the mortgage loan purchase
agreement between the Depositor and the Seller.
"Mortgage Note" means the original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Rate" means the annual rate of interest borne by a Mortgage
Note from time to time.
"Mortgaged Property" means the underlying real property securing a
Mortgage Loan.
"Mortgagor" means the obligor(s) on a Mortgage Note.
"Net Mortgage Rate" means, as to any Mortgage Loan and Payment Date, the
related Mortgage Rate as of the Due Date in the month preceding the month of
such Payment Date reduced by the related Expense Fee Rate.
"Net REO Proceeds" means, as to any REO Mortgage Loan, proceeds received
in respect thereof net of any related expenses of the Master Servicer.
"Nonrecoverable Advance" means any portion of a Monthly Advance or a
Servicing Advance previously made or proposed to be made by the Master
Servicer that, in the good faith judgment of the Master Servicer, will not be
ultimately recoverable from the related Mortgagor, related Liquidation
Proceeds or otherwise.
"Note Insurer Default" has the meaning set forth in the Indenture.
"Note Payment Account" means the Eligible Account or Accounts created and
maintained with the Trustee pursuant to Section 8.02 of the Indenture, to
which shall be remitted from time to time certain of the funds the Master
Servicer has collected and deposited in the Collection Account with respect to
the Mortgage Loans, as required hereunder.
"Noteholder" or "Holder" means the Person in whose name a Note is
registered in the Note Register (as defined in the Indenture).
"Notes" mean the Issuer's Mortgage-Backed LIBOR Notes, Class A, Series
1999-1.
"Officer's Certificate" means a certificate (i) signed by the Chairman of
the Board, the Vice Chairman of the Board, the President, a Managing Director,
a Vice President (however denominated), an Assistant Vice President, the
Treasurer, the Secretary, or one of the Assistant Treasurers or Assistant
Secretaries of the Master Servicer, or (ii) if provided for in this Agreement,
signed by a Servicing Officer, as the case may be, and delivered to the
Trustee and FSA as required by this Agreement.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Master Servicer or the Issuer, as applicable, including,
in-house counsel, reasonably acceptable to the Trustee and FSA.
"Original Mortgage Loan" means the Mortgage Loan refinanced in connection
with the origination of a Refinancing Mortgage Loan.
"Original Note Balance" means $229,000,000.
"Original Pool Principal Balance" means the Pool Principal Balance as of
the Cut-off Date which is equal to $236,285,896.00.
"OTS" means the Office of Thrift Supervision.
"Outstanding" shall have the meaning ascribed thereto in the Indenture.
"Outstanding Mortgage Loan" means, as of any Due Date, a Mortgage Loan
with a Stated Principal Balance greater than zero which was not the subject of
a Principal Prepayment in Full prior to such Due Date and which did not become
a Liquidated Mortgage Loan prior to such Due Date.
"Owner Trustee" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as Owner Trustee under
the Deposit Trust Agreement, until a successor Person shall have become the
Owner Trustee pursuant to the applicable provisions of the Deposit Trust
Agreement, and thereafter "Owner Trustee" shall mean such successor Person.
"Payment Date" means, with respect to the Notes and the Investor
Certificate, the 25th day of each calendar month after the initial issuance of
the Notes and the Investor Certificate or, if such 25th day is not a Business
Day, the next succeeding Business Day, commencing in May 1999.
"Periodic Rate Cap" means, as to any Adjustable Rate Mortgage Loan and
any Adjustment Date, the maximum allowable percent increase to the related
Mortgage Rate on any such Adjustment Date, as specified in the related
Mortgage Note.
"Permitted Investments" means, at the time, any one or more of the
following obligations and securities.
(i) obligations of the United States or any agency thereof, provided
such obligations are backed by the full faith and credit of the United
States;
(ii) general obligations of or obligations guaranteed by any state
of the United States or the District of Columbia receiving the highest
long-term debt rating of each Rating Agency;
(iii) commercial paper which is then receiving the highest
commercial paper rating of each Rating Agency;
(iv) certificates of deposit, demand or time deposits, or bankers'
acceptances issued by any depository institution or trust company
incorporated under the laws of the United States or of any state thereof
and subject to supervision and examination by federal and/or state
banking authorities, provided that the commercial paper and/or long-term
unsecured debt obligations of such depository institution or trust
company (or in the case of the principal depository institution in a
holding company system, the commercial paper or long-term unsecured debt
obligations of such holding company, but only if ▇▇▇▇▇'▇ is a Rating
Agency) are then rated one of the two highest long-term and the highest
short-term ratings of each Rating Agency for such securities;
(v) demand or time deposits or certificates of deposit issued by any
bank or trust company or savings institution to the extent such deposits
are fully insured by the FDIC;
(vi) repurchase obligations with respect to any security described
in clauses (i) above, in either case entered into with a depository
institution or trust company (acting as principal) described in clause
(iv) above;
(vii) securities (other than stripped bonds, stripped coupons or
instruments sold at a purchase price in excess of 115% of the face amount
thereof) bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States or any state thereof
which have the highest rating of each Rating Agency (except if the Rating
Agency is Moody's, such rating shall be the highest commercial paper
rating of Moody's for any such securities);
(viii) interests in any money market fund which invests only in
other Permitted Investments which at the date of acquisition of the
interests in such fund and throughout the time such interests are held in
such fund has the highest applicable rating by each applicable Rating
Agency;
(ix) short term investment funds which invest only in other
Permitted Investments sponsored by any trust company or national banking
association incorporated under the laws of the United States or any state
thereof which are rated by each applicable Rating Agency in their
respective highest applicable rating category;
(x) such other investments having a specified stated maturity and
bearing interest or sold at a discount acceptable to FSA and to each
applicable Rating Agency as will not result in a change in the rating
(without regard to the existence of the FSA Policy) then assigned to the
Notes by each Rating Agency, as evidenced by a signed writing delivered
by each Rating Agency; and
(xi) any mutual fund, money market funds, common trust fund or other
pooled investment vehicle, the assets of which are limited to instruments
that otherwise would constitute Permitted Investments hereunder,
including any fund managed by the Trustee, the Master Servicer or any
affiliate of the Trustee or the Master Servicer or any fund to which the
Trustee, the Master Servicer or any affiliate of the Trustee or the
Master Servicer acts as an advisor, provided that such fund has the
highest applicable rating by each Rating Agency,
provided, that no such instrument shall be a Permitted Investment if (i)
such instrument evidences the right to receive interest only payments with
respect to the obligations underlying such instrument or (ii) such instrument
would require the Issuer to register as an investment company under the
Investment Company Act of 1940, as amended.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
"Pool Principal Balance" means, with respect to any Payment Date, the
aggregate of the Stated Principal Balances of the Mortgage Loans which were
Outstanding Mortgage Loans on the Due Date in the month preceding the month of
such Payment Date.
"Prepayment Interest Shortfall" means, as to any Payment Date, Mortgage
Loan and Principal Prepayment, the amount, if any, by which one month's
interest at the related Net Mortgage Rate (giving effect to any Relief Act
Reduction) on such Principal Prepayment exceeds the amount of interest paid in
connection with such Principal Prepayment.
"Principal Prepayment" means any payment of principal by a Mortgagor on a
Mortgage Loan that is received in advance of its scheduled Due Date and is not
accompanied by an amount representing scheduled interest due on any date or
dates in any month or months subsequent to the month of prepayment, including
both Curtailments and Principal Prepayments in Full.
"Principal Prepayment in Full" means any Principal Prepayment made by a
Mortgagor of the entire principal balance of a Mortgage Loan.
"Principal Remittance Amount" means, with respect to any Remittance Date,
the sum of (i) the principal component of the Monthly Payments due on the
related Due Date and actually collected, plus (ii) Principal Prepayments
occurring during the related Collection Period, plus (iii) any principal
components of late Monthly Payments collected during the related Collection
Period, plus (iv) any other collections in respect of principal received
during the related Collection Period and not included under (i) through (iii)
above.
"Prospectus Supplement" means the Prospectus Supplement dated April 9,
1999 relating to the Notes.
"PUD" means Planned Unit Development.
"Purchase Price" means, with respect to the purchase of any Mortgage Loan
from the Issuer an amount equal to the sum of (i) 100% of the unpaid principal
balance of the Mortgage Loan on the date of such purchase, and (ii) accrued
interest thereon at the applicable Mortgage Rate from the date through which
interest was last paid by the Mortgagor to the Due Date in the month in which
the Purchase Price is to be distributed to Noteholders plus the amount of any
unreimbursed Servicing Advances with respect to such purchased Mortgage Loan.
"Purchase and Sale Agreements" means the agreements, listed in Schedule
V, pursuant to which AmREIT acquired the Mortgage Loans.
"Qualified Insurer" means a mortgage guaranty insurance company duly
qualified as such under the laws of the state of its principal place of
business and each state having jurisdiction over such insurer in connection
with the insurance policy issued by such insurer, duly authorized and licensed
in such states to transact a mortgage guaranty insurance business in such
states and to write the insurance provided by the insurance policy issued by
it, approved as a FNMA- or FHLMC-approved mortgage insurer or having a claims
paying ability rating of at least "AA" or equivalent rating by a nationally
recognized statistical rating organization. Any replacement insurer with
respect to a Mortgage Loan must have at least as high a claims paying ability
rating as the insurer it replaces had on the Closing Date.
"Rating Agency" shall mean each of the Rating Agencies specified in the
Indenture. If any such organization or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, as is designated by the Issuer and
acceptable to FSA, notice of which designation shall be given to the Trustee.
References herein to a given rating or rating category of a Rating Agency
shall mean such rating category without giving effect to any modifiers.
"Realized Loss" means, with respect to each Liquidated Mortgage Loan, an
amount (not less than zero or more than the Stated Principal Balance of the
Liquidated Mortgage Loan) as of the date of such liquidation, equal to (i) the
Stated Principal Balance of the Liquidated Mortgage Loan as of the date of
such liquidation, plus (ii) interest at the Adjusted Net Mortgage Rate from
the Due Date as to which interest was last paid or advanced (and not
reimbursed) to Noteholders up to the Due Date in the month in which
Liquidation Proceeds are required to be distributed on the Stated Principal
Balance of such Liquidated Mortgage Loan from time to time, minus (iii) the
Liquidation Proceeds, if any, received during the month in which such
liquidation occurred, to the extent applied as recoveries of interest at the
Adjusted Net Mortgage Rate and to principal of the Liquidated Mortgage Loan.
With respect to each Mortgage Loan which has become the subject of a Deficient
Valuation, if the principal amount due under the related Mortgage Note has
been reduced, the difference between the principal balance of the Mortgage
Loan outstanding immediately prior to such Deficient Valuation and the
principal balance of the Mortgage Loan as reduced by the Deficient Valuation.
With respect to each Mortgage Loan which has become the subject of a Debt
Service Reduction and any Payment Date, the amount, if any, by which the
principal portion of the related Monthly Payment has been reduced.
"Refinancing Mortgage Loan" means any Mortgage Loan originated in
connection with the refinancing of an existing mortgage loan.
"Released Mortgage Property Proceeds" means, as to any Mortgage Loan,
proceeds received by the Master Servicer in connection with (a) a taking of an
entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or (b) any release of part of the Mortgaged Property from the
lien of the related Mortgage, whether by partial condemnation, sale or
otherwise; which are not released to the Mortgagor in accordance with
applicable law, Accepted Servicing Practices and this Agreement.
"Relief Act" means the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
"Relief Act Reductions" means, with respect to any Payment Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Relief Act, the amount, if any, by which (i) interest
collectible on such Mortgage Loan for the most recently ended calendar month
is less than (ii) interest accrued thereon for such month pursuant to the
Mortgage Note.
"Remittance Amount" means, with respect to any Remittance Date, an amount
equal to (i) the Principal Remittance Amount, plus (ii) the Interest
Remittance Amount, minus (iii) any amounts withdrawn by the Master Servicer
pursuant to Section 3(g) out of funds which would otherwise be payable under
clause (i) or (ii).
"Remittance Date" means, with respect to any Payment Date, the 18th of
the month in which such Payment Date occurs, or if such 18th day is not a
Business Day, the Business Day preceding such 18th day.
"Remittance Date Statement" has the meaning set forth in Section 3(h).
"REO Acquisition" means the acquisition of any REO Property pursuant to
Section 3(p).
"REO Disposition" means the final sale by the Master Servicer of an REO
Property.
"REO Mortgage Loan" means any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related
Mortgage Note is discharged and the related Mortgaged Property is held as part
of the Trust Estate.
"REO Property" means a Mortgaged Property acquired by the Trust Estate
through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Replacement Mortgage Loan" means a Mortgage Loan substituted for a
Deleted Mortgage Loan which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form attached to the
Custodial Agreement, (i) have a principal balance, after deduction of the
principal portion of the Monthly Payment due in the month of substitution, not
in excess of, and not more than 20% less than, the Stated Principal Balance of
the Deleted Mortgage Loan; (ii) be accruing interest at a rate no lower than
and not more than 1.0% per annum higher than, that of the Deleted Mortgage
Loan and, if an Adjustable Rate Mortgage Loan, be bearing interest based on an
Index that is LIBOR; (iii) have a Loan-to-Value Ratio no higher than that of
the Deleted Mortgage Loan; (iv) have a Mortgage Rate not lower than, and not
more than 1.0% per annum higher than that of the Deleted Mortgage Loan; (v)
have a remaining term to maturity no greater than (and not more than 36 months
less than) that of the Deleted Mortgage Loan; (vi) comply with each
representation and warranty set forth in Schedule III hereto; and (vii) be
otherwise acceptable to FSA.
"Request for Release" means the Request for Release submitted by the
Master Servicer or AmREIT to the Custodian, substantially in one of the forms
attached to the Custodial Agreement, as appropriate.
"Required Insurance Policy" means with respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under the
Servicing Provisions.
"Responsible Officer" means, when used with respect to the Trustee, any
officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Senior Trust Officer, Trust Officer, Assistant
Trust Officer, any Assistant Secretary, any trust officer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and to whom, with respect to a particular
matter, such matter is referred because of such officer's knowledge of and
familiarity with the particular subject. When used with respect to AmREIT or
the Master Servicer, the President or any Vice President, Assistant Vice
President, or any Secretary or Assistant Secretary.
"Rolling Delinquency Percentage" has the meaning set forth in the
Indenture.
"SAIF" means the Savings Association Insurance Fund, or any successor
thereto.
"S&P" means Standard & Poor's Ratings Services, a division of ▇▇▇▇▇▇-▇▇▇▇
Inc. If S&P is designated as a Rating Agency in the Indenture, for purposes of
Section 9(c) the address for notices to S&P shall be Standard & Poor's Ratings
Group, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage
Surveillance Monitoring, or such other address as S&P may hereafter furnish to
the Issuer and the Master Servicer.
"Schedule of Mortgage Loans" means the schedule attached hereto as
Schedule I listing the Mortgage Loans to be master serviced by the Master
Servicer pursuant to this Agreement (as from time to time amended by the
Issuer to reflect the addition of Replacement Mortgage Loans and the deletion
of Deleted Mortgage Loans pursuant to the provisions of this Agreement and
Section 8.05 of the Indenture) pledged to the Trustee as part of the Trust
Estate and from time to time subject to this Agreement and the Indenture,
setting forth the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgagor's name and the street address of the Mortgaged
Property, including the zip code;
(iii) the maturity date;
(iv) the original principal balance;
(v) the Original Pool Principal Balance;
(vi) the first payment date of the Mortgage Loan;
(vii) the Monthly Payment in effect as of the Cut-off Date;
(viii) the Loan-to-Value Ratio at origination;
(ix) a code indicating whether the residential dwelling at the time
of origination was represented to be owner-occupied;
(x) a code indicating whether the residential dwelling is either (a)
a detached single family dwelling, (b) attached single family dwelling,
(c) a dwelling in a PUD, (d) a condominium unit, or (e) a two- to
four-unit residential property;
(xi) the Mortgage Rate in effect as of the Cut-off Date;
(xii) the Master Servicing Fee Rate;
(xiii) the Maximum Rate and the Minimum Rate, if any;
(xiv) the Periodic Rate Cap, if any;
(xv) the Adjustment Date, if any;
(xvi) the Margin, if any;
(xvii) the purpose for the Mortgage Loan; and
(xviii) the type of documentation program pursuant to which the
Mortgage Loan was originated.
Such schedule shall also set forth (a) the total of the amounts described
under (iv) and (vii) above and (b) the weighted average, weighted on the basis
of the Original Pool Principal Balance, of the amounts described under (xi)
and (xii) above.
"Seller" means American Residential Eagle, Inc., a Delaware corporation,
which, as of the Closing Date, owns all of the outstanding beneficial
interests in the Issuer, and its successors and assigns.
"Servicing Account" means the separate Eligible Account or Accounts
created and maintained pursuant to this Agreement.
"Servicing Advances" means any customary, reasonable and necessary
"out-of-pocket" costs and expenses, incurred by the Master Servicer in the
performance of its servicing obligations, including, but not limited to, (i)
expenditures in connection with a foreclosed Mortgage Loan prior to the
liquidation thereof, including expenditures for real estate property taxes,
hazard insurance premiums and property restoration or preservation
("Preservation Expenses"); (ii) the cost of any enforcement or judicial
proceedings, including (a) foreclosures, and (b) other legal actions and costs
associated therewith that potentially affect the existence, validity,
priority, enforceability or collectability of the Mortgage Loans, including
collection agency fees and costs of pursuing or obtaining personal judgments,
garnishments, levies, attachment and similar actions; (iii) the cost of the
conservation, management, liquidation, sale or other disposition of any
Mortgaged Property acquired in satisfaction of the related Mortgage Loan,
including reasonable fees paid to any independent contractor in connection
therewith; and (iv) advances to keep liens current, unless with respect to any
of the foregoing the Master Servicer has determined that such advance would
not be recoverable.
"Servicing Officer" means any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Mortgage Loan
whose name and facsimile signature appear on a list of servicing officers
furnished to the Trustee, the Custodian and FSA by the Master Servicer on the
Closing Date pursuant to this Agreement, as such list may from time to time be
amended.
"Servicing Provisions" means the provisions for servicing and/or
administering the Mortgage Loans set forth in Article III.
"Stated Maturity" shall have the meaning ascribed thereto in the
Indenture.
"Stated Principal Balance" means, as to any Mortgage Loan and Payment
Date, the principal balance of such Mortgage Loan as of the Due Date preceding
the date of determination as specified for such Due Date in the amortization
schedule (before any adjustment to such amortization schedule by reason of any
bankruptcy (other than Deficient Valuations) or similar proceeding or any
moratorium or similar waiver or grace period) after giving effect to Principal
Prepayments in Full or Curtailments received and applied prior to such Due
Date, Deficient Valuations incurred prior to such Due Date, to any
Curtailments applied by the Master Servicer in reduction of the unpaid
principal balance of such Mortgage Loan as of such Due Date and to the payment
of principal due on such Due Date and irrespective of any delinquency in
payment by the related Mortgagor. The Stated Principal Balance of a Mortgage
Loan which becomes a Liquidated Mortgage Loan prior to such Due Date shall be
zero.
"Statistical Cut-off Date" means March 1, 1999.
"Substitution Amount" has the meaning ascribed to such term pursuant to
Section 2(c)(iv).
"Subservicer" shall mean any Person with whom the Master Servicer has
entered into a Subservicing Agreement and who satisfies the requirements set
forth in Section 3(b) hereof in respect of the qualification of a Subservicer.
"Subservicing Agreement" shall mean any agreement between the Master
Servicer and any Subservicer relating to subservicing and/or administration of
certain Mortgage Loans as provided in Section 3(b), a copy of which shall be
delivered, along with any modifications thereto, to the Issuer, the Trustee
and FSA.
"Trust Estate" shall have the meaning ascribed to such term in the
Indenture.
"Trust Receipt" means, as applicable, either the Initial Trust Receipt in
the form of Exhibit One-A to the Custodial Agreement or the Final Trust
Receipt in the form of Exhibit One-B to the Custodial Agreement.
"Trustee Mortgage File" means, with respect to each Mortgage Loan, the
Mortgage Documents.
"Weighted Average Net Mortgage Rate" means, as to any Payment Date, the
weighted average of the Net Mortgage Rates weighted on the basis of the Stated
Principal Balances of the Mortgage Loans as of the Due Date in the preceding
calendar month.
2. Mortgage Documents.
(a) Trustee to Retain Possession of Documents through Custodian.
(i) Concurrently with the execution and delivery hereof, the Issuer
has pledged, transferred and assigned to the Trustee for the benefit of
the Noteholders and FSA, as collateral for the payment of principal and
interest on the Notes, all right, title and interest of the Issuer in and
to the Trust Estate for the Notes, including the Mortgage Loans. Prior to
or contemporaneous with the execution of this Agreement, or within the
applicable time periods specified below, the Issuer shall have delivered
or caused to be delivered to the Custodian, with respect to each Mortgage
Loan, all originals of the Mortgage Documents and any other instruments
relating thereto comprising the Trustee Mortgage File.
In the event that in connection with any Mortgage Loan the Issuer
cannot deliver (A) the original recorded Mortgage, (B) all interim
recorded assignments of Mortgage or (C) the lender's title policy
(together with all riders thereto) satisfying the requirements set forth
in the Custodial Agreement, concurrently with the execution and delivery
hereof, the Issuer shall promptly deliver to the Custodian, in accordance
with the terms and conditions of the Custodial Agreement, (x) in the case
of (A) or (B) above, such original Mortgage or such interim assignment of
Mortgage, as the case may be, with evidence of recording indicated
thereon upon receipt thereof from the public recording office, or a copy
thereof, certified, if appropriate, by the relevant recording office, but
in no event shall any such delivery of the original Mortgage Loan and
each such interim assignment of Mortgage or a copy thereof, certified, if
appropriate, by the relevant recording office, be made later than 90 days
following the Closing Date, or, (y) in the case of (C) above, such title
policy, no later than 90 days following the Closing Date; provided,
however, that in the event the Issuer is unable to deliver by such date
each Mortgage and each such interim assignment of Mortgage by reason of
the fact that any such documents have not been returned by the
appropriate recording office, or, in the case of each such interim
assignment of Mortgage, because the related Mortgage has not been
returned by the appropriate recording office, the Issuer shall deliver
such documents to the Custodian as promptly as possible upon receipt
thereof and, in any event, within 180 days following the Closing Date.
The Issuer shall forward or cause to be forwarded to the Custodian (I)
from time to time additional original documents evidencing an assumption
or modification of a Mortgage Loan and (II) any other documents required
to be delivered by the Issuer to the Custodian. In the event that the
original Mortgage is not delivered and in connection with the payment in
full of the related Mortgage Loan the public recording office requires
the presentation of a "lost instruments affidavit and indemnity" or any
equivalent document, because only a copy of the Mortgage can be delivered
with the instrument of satisfaction or reconveyance, the Issuer shall
execute and deliver or cause to be executed and delivered such a document
to the public recording office. In the case where a public recording
office retains the original recorded Mortgage or in the case where a
Mortgage is lost after recordation in a public recording office, the
Issuer shall deliver to the Custodian a copy of such Mortgage certified
by such public recording office to be a true and complete copy of the
original recorded Mortgage.
As promptly as practicable subsequent to the Issuer's pledge,
transfer and assignment, and in any event within thirty (30) days
thereafter, the Issuer shall (X) affix the Trustee's name to each
assignment of Mortgage, as the assignee thereof, (Y) cause such
assignment to be in proper form for recording in the appropriate public
office for real property records within thirty (30) days after receipt
thereof and (Z) cause to be delivered for recording in the appropriate
public office for real property records the assignments of the Mortgages
to the Trustee, except that, with respect to any assignment of a Mortgage
as to which the Issuer has not received the information required to
prepare such assignment in recordable form, the Issuer's obligation to do
so and to deliver the same for such recording shall be as soon as
practicable after receipt of such information and in any event within
thirty (30) days after the receipt thereof, and the Issuer need not cause
to be recorded any assignment which relates to a Mortgage Loan the
Mortgaged Property relating to which is located in any jurisdiction under
the laws of which, as evidenced by an Opinion of Counsel from local
counsel, delivered by the Issuer (at the Issuer's expense) to the Trustee
and FSA in accordance with Section 1.01 of the Indenture, the recordation
of such assignment is not necessary to protect the Trustee's and the
Noteholders' and FSA's interest in the related Mortgage Loan; provided,
however, notwithstanding the delivery of any legal opinions, each
assignment of Mortgage shall be recorded by the Issuer at its expense
upon the earliest to occur of (I) the direction by FSA, (II) a Default
under the Indenture, or (III) any bankruptcy, insolvency or foreclosure
with respect to the related Mortgagor.
In the case of Mortgage Loans that have been prepaid in full as of
the Closing Date, the Issuer, in lieu of delivering the above documents
to the related Custodian, will deposit in the Collection Account the
portion of such payment that is required to be deposited in the
Collection Account pursuant to Section 3(g).
Until the Notes have been paid in full and the Issuer has otherwise
fulfilled its obligations under the Indenture, the Custodian shall retain
possession and custody of each Trustee Mortgage File in accordance with
and subject to the terms and conditions set forth in the Custodial
Agreement, the Indenture and this Agreement.
(ii) On the Closing Date, the Trustee shall receive a Trust Receipt
from the Custodian, whereby the Custodian acknowledges receipt of the
documents identified in the Trust Receipt and declares that it holds and
will hold such documents and the other documents delivered to it
constituting the Trustee Mortgage Files in trust for the exclusive use
and benefit of the Trustee, as the holder of the Trust Receipt acting on
behalf of all present and future Noteholders and FSA. The Custodian
acknowledges in the Custodial Agreement that it will maintain possession
of the Mortgage Notes in the State provided in the Custodial Agreement,
unless otherwise permitted by the Trustee, the Rating Agencies and FSA.
The Custodian has agreed, pursuant to the Custodial Agreement, to
execute and deliver on the Closing Date to the Trustee a Trust Receipt
constituting an initial such receipt in the form attached to the
Custodial Agreement. Based on its review and examination required by and
in accordance with the Custodial Agreement, and only as to the documents
identified in such initial certification, the Custodian acknowledges that
such documents appear regular on their face and relate to the specified
Mortgage Loan; provided that the Custodian shall be under no obligation
to ascertain that, except as therein provided, any information set forth
in said Trust Receipt is accurate. Neither the Trustee nor the Custodian
shall be under any duty or obligation to inspect, review or examine said
documents, instruments, certificates or other papers to determine that
the same are genuine, enforceable or appropriate for the represented
purpose or that they have actually been recorded in the real estate
records or that they are other than what they purport to be on their
face.
Not later than 180 days after the Closing Date, the Custodian shall
deliver to the Trustee the Trust Receipt in final form, with any
applicable exceptions noted thereon.
If, in the course of its review, the Custodian finds any document
constituting a part of a Trustee Mortgage File which does not meet the
requirements of the Custodial Agreement, the Custodian shall list such as
an exception in the Trust Receipt; provided, however, that the Custodian
shall not make any determination as to whether (A) any endorsement is
sufficient to transfer all right, title and interest of the party so
endorsing, as noteholder or assignee thereof, in and to that Mortgage
Note or (B) that any assignment of Mortgage is in recordable form or is
sufficient to effect the assignment of and transfer to the assignee
thereof under the mortgage to which the assignment of Mortgage relates.
Subject to the time extensions for certain documents set forth in Section
2(a)(ii) above, AmREIT shall promptly correct or cure such defect within
90 days from the date it was so notified of such defect and, if AmREIT
does not correct or cure such defect within such period, AmREIT shall
either (I) substitute for the related Mortgage Loan a Replacement
Mortgage Loan, which substitution shall be accomplished in the manner and
subject to the conditions set forth in Section 2(c)(iv), or (II) purchase
such Mortgage Loan from the Issuer within 90 days from the date AmREIT
was notified of such defect in writing at the Purchase Price of such
Mortgage Loan. Any such substitution pursuant to clause (I) above shall
not be effected prior to the delivery to the Custodian of a Request for
Release. The Purchase Price for any such Mortgage Loan purchased pursuant
to clause (II) shall be deposited by AmREIT in the Collection Account on
or prior to the applicable Remittance Date in the month following the
month of purchase and, upon the making of such deposit and the delivery
of related Request for Release, the Custodian shall release the related
Trustee Mortgage File to AmREIT. The Issuer and the Trustee (or the
Master Servicer as its agent) shall execute and deliver at AmREIT's
request such instruments of transfer or assignment prepared by AmREIT, in
each case without recourse, as shall be necessary to vest in AmREIT, or a
designee, the Issuer's and the Trustee's interest in any Mortgage Loan
released pursuant hereto.
The Custodian shall retain possession and custody of each Trustee
Mortgage File in accordance with and subject to the terms and conditions
set forth in the Custodial Agreement. The Issuer or the Trustee shall
promptly deliver to the Custodian, upon the execution or receipt thereof,
the originals of such other documents or instruments constituting the
Trustee Mortgage File as come into the possession of the respective
Issuer or Trustee from time to time.
It is understood and agreed that the obligation of AmREIT to
substitute for or to purchase any Mortgage Loan which does not meet the
requirements set forth in the Custodial Agreement shall constitute the
sole remedy respecting such defect available to the Trustee and any
Noteholder against AmREIT.
(b) Security Interest of Trustee; Master Servicer Authorization.
(i) The Master Servicer hereby acknowledges that concurrently with
the execution of this Agreement, the Trustee has acquired and holds a
security interest in the Trustee Mortgage Files and in all Mortgage Loans
represented by such Trustee Mortgage Files and in all funds now or
hereafter held by, or under the control of, the Master Servicer that are
collected by the Master Servicer in connection with the Mortgage Loans,
whether as Monthly Payments, as Principal Prepayments, or as Liquidation
Proceeds or Insurance Proceeds or otherwise, and in all proceeds of the
foregoing and proceeds of proceeds (but excluding any Master Servicing
Fees and any other amounts or reimbursements to which the Master Servicer
is entitled to deduct under this Agreement). The Master Servicer agrees
that so long as the Mortgage Loans are assigned to the Trustee, all
Trustee Mortgage Files (and any documents or instruments constituting a
part of such files), and such funds (except as above provided) which come
into the possession or custody of, or which are subject to the control
of, the Master Servicer shall be held by the Master Servicer for and on
behalf of the Trustee as the Trustee's agent and bailee for purposes of
perfecting the Trustee's security interest therein, as provided by
Section 9-305 of the Uniform Commercial Code of the State in which such
property is located. The Master Servicer hereby accepts such agency and
acknowledges that the Trustee, as secured party, will be deemed to have
possession at all times of all Trustee Mortgage Files and any other
documents or instruments constituting a part of such files, such funds
and other items for purposes of Section 9-305 of the Uniform Commercial
Code of the State in which such property may be held by the Master
Servicer.
(ii) Subject to clause (i) above, the Master Servicer also agrees
that it shall not create, incur or subject any Trustee Mortgage File or
other documents relating to a Mortgage Loans which are in the possession
of the Master Servicer with respect to each Mortgage Loan or any funds
that are deposited in the Note Payment Account and the Collection
Account, or any funds that otherwise are or may become due or payable to
the Trustee for the benefit of the Noteholders, to any claim, lien,
security interest, judgment, levy, writ of attachment or other
encumbrance (other than the claims of the Noteholders), or assert by
legal action or otherwise any claim or right of set-off against any such
Trustee Mortgage File or any funds collected or held by, or under the
control of, the Master Servicer from time to time in respect of a
Mortgage Loan.
(iii) Without limiting the generality of the foregoing, the Master
Servicer (1) is hereby authorized and empowered by the Issuer and the
Trustee, to execute and deliver, on behalf of itself, the Issuer, the
Noteholders, FSA and the Trustee or any of them, any and all instruments
of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the
Mortgage Loans and with respect to the related Mortgaged Properties and
(2) subject to Section 3(p), to institute foreclosure proceedings or
obtain deeds in lieu of foreclosure so as to convert ownership of
Mortgaged Properties into the name of the Issuer pursuant to Section 3(p)
of this Agreement. The Master Servicer may ▇▇▇ to enforce or collect on
any of the Mortgage Loans or any insurance policy covering a Mortgage
Loan, in its own name if possible, or on behalf of the Issuer or the
Trustee. If the Master Servicer commences a legal proceeding to enforce a
Mortgage Loan or any such insurance policy, the Issuer and the Trustee
shall thereupon be deemed to have automatically assigned the Mortgage
Loan or the rights under such insurance policy to the Master Servicer for
purposes of collection only. If, however, in any suit or legal proceeding
for enforcement, it is held that the Master Servicer may not enforce or
collect on a Mortgage Loan or any insurance policy covering a Mortgage
Loan on the ground that it is not a real party in interest or a holder
entitled to enforce such Mortgage Loan or such insurance policy, as the
case may be, then the Issuer and the Trustee shall, upon the written
request of a Servicing Officer, execute and return to the Master Servicer
such powers of attorney and other documents as are necessary or
appropriate to enable the Master Servicer to enforce such Mortgage Loan
or insurance policy, as the case may be, and which are prepared by the
Master Servicer and submitted to the Issuer or the Trustee for execution.
(c) Representations and Warranties of the Master Servicer, AmREIT and the
Issuer.
(i) Advanta Mortgage Corp. USA in its capacity as Master Servicer,
hereby makes the representations and warranties set forth in Schedule II
hereto, and by this reference incorporated herein, to the Issuer, FSA and
the Trustee, as of the Closing Date, or if so specified therein, as of
the Cut-off Date.
(ii) AmREIT has made in the Mortgage Loan Purchase Agreement the
representations and warranties as set forth in Schedule III hereto, as of
the Closing Date, or if so specified therein, as of the Cut-off Date, and
such representations and warranties, and the obligations associated
therewith, have been assigned to the Issuer, FSA and the Trustee;
(iii) The Issuer hereby makes the representations and warranties set
forth in Schedule IV hereto, and by this reference incorporated herein,
to the Trustee and the Master Servicer, as of the Closing Date.
(iv) Upon discovery by any of the parties hereto or FSA, of a breach
of a representation or warranty described in Section 2(c)(ii) (without
regard to any limitation regarding the knowledge of AmREIT contained
therein) that materially and adversely affects the value of any Mortgage
Loan or the interests of the Noteholders or FSA in any Mortgage Loan, the
party discovering such breach shall give prompt written notice thereof to
the other parties and FSA. AmREIT confirms its covenant in the Initial
Mortgage Loan Purchase Agreement to comply with the following: within 90
days of the earlier of its discovery or its receipt of written notice
from any party of a breach of any representation or warranty (without
regard to any limitation regarding the knowledge of AmREIT contained
therein) made pursuant to Section 2(c)(ii) which materially and adversely
affects the value of any Mortgage Loan or the interests of the
Noteholders or FSA, in any Mortgage Loan, AmREIT shall cure such breach
in all material respects, and if such breach is not so cured, shall, (A)
remove such Mortgage Loan (a "Deleted Mortgage Loan") from the Trust
Estate and substitute in its place a Replacement Mortgage Loan, in the
manner and subject to the conditions set forth in this Section 2(c); or
(B) purchase the affected Mortgage Loan or Mortgage Loans from the Issuer
(with the Trustee releasing its lien thereon) at the Purchase Price in
the manner set forth below; provided, however, that any such substitution
pursuant to (A) above shall not be effected prior to the delivery to the
Custodian of a Request for Release for the Deleted Mortgage Loan Trustee
Mortgage File, and the delivery to the Custodian of the Trustee Mortgage
File for any such Replacement Mortgage Loan. AmREIT shall promptly
reimburse the Trustee or FSA for any expenses reasonably incurred by the
Trustee or FSA in respect of enforcing the remedies for such breach.
With respect to the representations and warranties described in this
Section 2(c) which are made to the best of AmREIT's knowledge, if it is
discovered by either the Issuer or the Trustee that the substance of such
representation and warranty is inaccurate and such inaccuracy materially
and adversely affects the value of any Mortgage Loan, or the interests of
the Noteholders or FSA therein, notwithstanding AmREIT's lack of
knowledge with respect to the substance of such representation or
warranty, such inaccuracy shall be deemed a breach of the applicable
representation or warranty.
With respect to any Replacement Mortgage Loan or Loans, AmREIT shall
deliver to the Custodian for the benefit of the Noteholders and FSA the
Mortgage Note, the Mortgage, the related assignment of the Mortgage, and
such other documents and agreements as are required by the Custodial
Agreement, with the Mortgage Note endorsed and the Mortgage assigned as
required by the Custodial Agreement. No substitution is permitted to be
made in any calendar month after the Remittance Date for such month.
Monthly Payments due with respect to Replacement Mortgage Loans in the
month of substitution shall not be part of the Trust Estate and will be
retained by AmREIT on the next succeeding Payment Date. For the month of
substitution, the Remittance Amount will include the Monthly Payment due
on any Deleted Mortgage Loans for such month and thereafter AmREIT shall
be entitled to retain all amounts received in respect of such Deleted
Mortgage Loans.
The Issuer shall amend the Schedule of Mortgage Loans for the
benefit of the Noteholders and FSA to reflect the removal of such Deleted
Mortgage Loans and the substitution of the Replacement Mortgage Loans and
the Issuer shall deliver the amended Schedule of Mortgage Loans to the
Trustee and FSA. Upon such substitution, the Replacement Mortgage Loans
shall be subject to the terms of this Agreement in all respects, and
AmREIT shall be deemed to have made with respect to such Replacement
Mortgage Loans, as of the date of substitution, the representations and
warranties made pursuant to Section 2(c)(ii) with respect to such
Mortgage Loans. Upon any such substitution and the deposit to the
Collection Account of the amount required to be deposited therein in
connection with such substitution as described in the following
paragraph, the Custodian shall release the Trustee Mortgage File held for
the benefit of the Noteholders and FSA relating to such Deleted Mortgage
Loans to AmREIT. The Issuer and the Trustee (or the Master Servicer as
its agent) shall execute and deliver at AmREIT's direction such
instruments of transfer or assignment prepared by AmREIT, in each case
without recourse, as shall be necessary to vest title in AmREIT, or its
designee, the Issuer's and the Trustee's interest in any Deleted Mortgage
Loan substituted for pursuant to this Section 2(c).
For any month in which AmREIT substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, AmREIT will
determine the amount (if any) by which the aggregate principal balance of
all such Replacement Mortgage Loans as of the date of substitution is
less than the aggregate Stated Principal Balance of all such Deleted
Mortgage Loans (after application of the scheduled principal portion of
the monthly payments due in the month of substitution). The amount of
such shortage (the "Substitution Amount") shall be deposited into the
Collection Account by AmREIT on or before the Remittance Date for the
Payment Date in the month succeeding the calendar month during which the
related Mortgage Loan became replaced hereunder.
In the event that AmREIT shall have purchased a Mortgage Loan, the
Purchase Price therefor shall be deposited in the Collection Account
pursuant to Section 3(g) and in compliance with the provisions of Section
8.05 of the Indenture on or before the Remittance Date for the Payment
Date in the month following the month during which AmREIT became
obligated hereunder to purchase or replace such Mortgage Loan and upon
such deposit of the Purchase Price and receipt of a Request for Release,
the Custodian shall release the related Trustee Mortgage File held for
the benefit of the Noteholders to AmREIT. The Issuer and the Trustee (or
the Master Servicer as its agent) shall execute and deliver at AmREIT's
direction such instruments of transfer or assignment, prepared by AmREIT,
in each case without recourse, as shall be necessary to vest title in
AmREIT, or its designee, the Issuer's and the Trustee's interest in any
Deleted Mortgage Loan substituted for pursuant to this Section 2(c). It
is understood and agreed that the obligation under this Agreement of
AmREIT to cure, purchase or replace any Mortgage Loan as to which a
breach has occurred and is continuing shall constitute the sole remedy
against AmREIT respecting such breach available to Noteholders or the
Trustee on their behalf.
The representations and warranties made pursuant to this Section 2(c)
shall survive delivery of the respective Trustee Mortgage Files to the
Custodian for the Trustee for the benefit of the Noteholders and FSA.
3. General Duties of the Master Servicer.
(a) Master Servicer to Service Mortgage Loans.
(i) The Master Servicer agrees to perform all servicing duties under
this Agreement subject to the terms hereof.
(ii) The Master Servicer shall service and administer the Mortgage
Loans on behalf of the Issuer, the Trustee and FSA and shall have full
power and authority, acting alone or through one or more Subservicers, to
do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting
the generality of the foregoing, the Master Servicer, in its own name or
the name of a Subservicer, may, and is hereby authorized and empowered by
the Trustee to, execute and deliver, on behalf of itself and the Trustee
or either of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans, the insurance
policies and accounts related thereto and the properties subject to the
Mortgages. Upon the execution and delivery of this Agreement, and from
time to time as may be required thereafter, the Trustee shall, upon
written request, execute for the Master Servicer or its Subservicers any
powers of attorney furnished to the Trustee by the Master Servicer and
such other documents furnished to the Trustee by the Master Servicer as
may be necessary or appropriate to enable the Master Servicer to carry
out its servicing and administrative duties hereunder.
In servicing and administering the Mortgage Loans, the Master
Servicer shall employ procedures consistent with Accepted Servicing
Practices and in a manner consistent with recovery under any Insurance
Policy required to be maintained by the Master Servicer pursuant to this
Agreement.
The Master Servicer shall make appropriate interest rate and payment
adjustments on each Adjustment Date in compliance with applicable
regulatory adjustable mortgage loan requirements and the Mortgage Notes
that evidence Adjustable Rate Mortgage Loans. The Master Servicer shall
execute and deliver all appropriate notices required by the applicable
adjustable mortgage loan laws and regulations and the Mortgage Loan
Documents regarding such interest rate adjustments and payment
adjustments.
Costs incurred by the Master Servicer in effectuating the timely
payment of taxes and assessments on the property securing a Mortgage Note
and foreclosure costs may be added by the Master Servicer to the amount
owing under such Mortgage Note where the terms of such Mortgage Note so
permit; provided, however, that the addition of any such cost shall not
be taken into account for purposes of calculating the principal amount of
the Mortgage Note and Mortgage Loan, the Monthly Payments on the Mortgage
Note and Mortgage Loan or remittances to be made to the Collection
Account. Such costs shall be recoverable by the Master Servicer pursuant
to Section 3(g).
(iii) Subject to Section 3(p), the Master Servicer is hereby
authorized and empowered to execute and deliver on behalf of the Trustee,
all instruments of satisfaction or cancellation, or of partial or full
release, discharge and all other comparable instruments, with respect to
the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Master Servicer, the Trustee shall execute any
powers of attorney furnished to the Trustee by the Master Servicer and
other documents necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties under this Agreement.
(iv) If the Mortgage relating to a Mortgage Loan did not have a lien
senior on the related Mortgaged Property as of the Cut-Off Date, then the
Master Servicer, in such capacity, may not consent to the placing of a
lien senior to that of the Mortgage on the related Mortgaged Property.
(v) The Master Servicer agrees to monitor the premiums due on the
Insurance Policies listed in Schedule VI providing private mortgage
insurance coverage of the Mortgage Loans identified in such Schedule. The
Master Servicer further agrees to pay such premiums when due (A) by
deducting from the Collection Account an amount from collections of
interest on each covered Mortgage Loan or (B) by advancing from the
Amount Held for Future Distributions or its own funds (which advances
shall be treated as if it were deemed part of the Monthly Advance on any
Delinquent Mortgage Loan and subject to recovery as herein provided),
equal to the per annum percentage set forth on Schedule VI.
(vi) The Master Servicer agrees to collect all prepayment penalties
or charges that may become due on the Mortgage Loans being serviced by it
and to deposit such collections into the Collection Account. The Master
Servicer agrees to withdraw from the Collection Account and distribute to
the Issuer (or its designee) on each Remittance Date the amount of
prepayment penalties and charges collected during the related Due Period.
(vii) The Master Servicer shall deliver a list of Servicing Officers
to the Master Servicer, the Trustee and FSA by the Closing Date.
(b) Subservicing Agreements Between the Master Servicer and
Subservicers.
(i) The Master Servicer may, subject to the prior written approval
of the Issuer and FSA, enter into Subservicing Agreements with
Subservicers for the servicing and administration of the Mortgage Loans
and for the performance of any and all other activities of the Master
Servicer hereunder; provided, however, that the Issuer and FSA hereby
approve Advanta Bank Corp., a Utah industrial loan corporation and
affiliate of the Master Servicer as a Subservicer. Each Subservicer shall
be either (i) a depository institution the accounts of which are insured
by the FDIC or (ii) another entity that engages in the business of
originating, acquiring or servicing loans, and in either case shall be
authorized to transact business in the state or states where the related
Mortgaged Properties it is to service are situated. In addition, each
Subservicer will obtain and preserve its qualifications to do business as
a foreign corporation in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform or cause to be
performed its duties under the related Subservicing Agreement. Each
Subservicing Agreement shall provide that the Subservicer's rights shall
terminate at the option of the successor Master Servicer and without any
termination fee, expense, penalty or other cost upon the termination,
resignation or other removal of the related Master Servicer under this
Agreement.
(ii) Notwithstanding any Subservicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements
between a Master Servicer and a Subservicer or reference to actions taken
through a Subservicer or otherwise, the Master Servicer shall remain
obligated and primarily liable to the Trustee and FSA for the servicing
and administering of the Mortgage Loans in accordance with the provisions
of this Agreement without diminution of such obligation or liability by
virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the
same terms and conditions as if the Master Servicer alone were servicing
and administering the Mortgage Loans. For purposes of this Agreement, the
Master Servicer shall be deemed to have received payments on Mortgage
Loans when its Subservicer has received such payments.
(c) Master Servicer Authorization.
The Issuer as owner of the Mortgage Loans and the Trustee as lienholder
with respect thereto, hereby authorize and appoint the Master Servicer as
their agent to exercise all rights of the party entitled to exercise ownership
rights with respect to the Mortgage Loans in accordance with the terms of this
Agreement.
(d) Access to Certain Documentation.
The Master Servicer shall afford the Issuer, FSA and the Trustee
reasonable access to all records and documentation regarding the Mortgage
Loans within the Master Servicer's possession and all accounts, insurance
information and other matters relating to this Agreement maintained by the
Master Servicer, such access being afforded without charge, but only upon
reasonable request and during normal business hours at the office designated
by the Master Servicer. The Master Servicer shall also provide to the OTS and
the FDIC and to comparable regulatory authorities supervising Holders of Notes
and the examiners and supervisory agents of the OTS, the FDIC and such other
authorities, access to the documentation regarding the Mortgage Loans within
the possession of the Master Servicer (or reasonably accessible to it pursuant
to the Servicing Agreements) and required by applicable regulations of the OTS
and the FDIC. Such access shall be afforded without charge, but only upon
reasonable and prior written request and during normal business hours at the
offices designated by the Master Servicer. Nothing in this Section 3(d) shall
limit the obligation of the Master Servicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of the Master Servicer to provide access as provided in this Section 3(d) as a
result of such obligation shall not constitute a breach of this Section 3(d).
(e) Rights of the Issuer and the Trustee in Respect of the Master
Servicer.
The Issuer may, but is not obligated to, enforce the obligations of the
Master Servicer hereunder and may, but is not obligated to, perform, or cause
a designee to perform, any defaulted obligation of the Master Servicer
hereunder and in connection with any such defaulted obligation to exercise the
related rights of the Master Servicer hereunder; provided that the Master
Servicer shall not be relieved of any of its obligations hereunder by virtue
of such performance by the Issuer or its designee. Neither the Trustee nor the
Issuer shall have any responsibility or liability for any action or failure to
act by the Master Servicer nor shall the Trustee or the Issuer be obligated to
supervise the performance of the Master Servicer hereunder or otherwise. The
Trustee shall not be liable for any acts or omissions of the Master Servicer
or any Subservicer. In particular, the Trustee shall not be liable for any
servicing errors or interruption resulting from any failure of the Master
Servicer or any Subservicer to maintain computer and other information systems
that are year-2000 compliant.
(f) Trustee to Act as Master Servicer.
In the event that the Master Servicer shall for any reason no longer be
the Master Servicer hereunder (including by reason of a Master Servicing
Default), unless a successor Master Servicer acceptable to FSA (after
consultation with the Trustee) has been appointed pursuant to Section 6(c) or
Section 7, the Trustee or its successor shall thereupon succeed to all of the
rights and assume all of the obligations of the Master Servicer hereunder
arising thereafter, except that the Trustee shall not be (i) liable for any
acts or omissions of the predecessor Master Servicer as such hereunder, (ii)
obligated to make Servicing Advances or Monthly Advances if it is prohibited
from doing so by applicable law, or (iii) deemed to have made any
representations and warranties of the Master Servicer hereunder. Any such
assumption shall be subject to Section 7(b).
(g) Collection of Mortgage Loan Payments; Collection Account; Note
Payment Account.
(i) The Master Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this
Agreement and any applicable Insurance Policy, follow such collection
procedures as shall constitute Accepted Servicing Practices. Consistent
with the foregoing, the Master Servicer may in its discretion waive any
assumption fee, late payment charge or other charge (but not prepayment
penalties or charges) in connection with a Mortgage Loan, provided,
however, that the Master Servicer shall not waive any prepayment
penalties or charges without the prior consent of the Issuer and provided
further that if the Issuer has not consented or objected within two (2)
Business Days after notice of the proposed waiver, the Issuer shall be
deemed to have consented thereto. Further, consistent with the
above-described standard, the Master Servicer may in its discretion
arrange a schedule, running for no more than 180 days after the Due Date
for payment of any installment on any Mortgage Note, for the liquidation
of Delinquent items. Any provision of this agreement to the contrary
notwithstanding, the Master Servicer shall not agree to the modification
or waiver of any provision of a Mortgage Loan (other than prepayment
penalties or charges as permitted above) (A) at a time when such Mortgage
Loan is not in default or such default is not reasonably foreseeable or
(B) if the aggregate Stated Principal Balance of all Mortgage Loans as to
which any such modification or waiver has been agreed to would exceed
four percent (4.0%) of the Original Pool Principal Balance, without the
prior consent of FSA as to this clause (B), provided that if FSA has not
consented or objected within five (5) Business Days after notice of the
proposed waiver or modification, FSA shall be deemed to have consented
thereto.
(ii) The Master Servicer shall establish and maintain in the name of
the Trustee a Collection Account, in trust for the benefit of the Trustee
and FSA. The Collection Account shall be established and maintained as an
Eligible Account. The Master Servicer shall deposit in its Collection
Account on the Closing Date and thereafter, within two Business Days of
receipt (except as otherwise permitted herein), the following payments
and collections received or made by it:
(A) all payments received before or after the Cut-off Date on
account of principal on the Mortgage Loans (other than payments of
principal due prior to the Cut-off Date);
(B) all payments received before or after the Cut-off Date on
account of interest on the Mortgage Loans (other than payments of
interest that accrued on each Mortgage Loan up to and including
March 1, 1999);
(C) all Liquidation Proceeds;
(D) all Insurance Proceeds;
(E) all Released Mortgaged Property Proceeds;
(F) any amounts payable in connection with the repurchase of
any Mortgage Loan and any Substitution Amount;
(G) any amount contributed by the Issuer to be used for payment
of principal and/or interest on the Notes or for any other purpose
identified by the Issuer;
(H) any prepayment penalties or charges collected by the Master
Servicer;
(I) any amount expressly required to be deposited in the
Collection Account in accordance with certain provisions of this
Agreement; and
provided, however, that the Master Servicer shall be entitled, at
its election, either (a) to withhold and to pay to itself the applicable
Master Servicing Fee from any payment on account of interest or other
recovery (including Net REO Proceeds) as received and prior to deposit of
such payments in the Collection Account or (b) to withdraw the applicable
Master Servicing Fee from the Collection Account after the entire payment
or recovery has been deposited therein; provided, further, that with
respect to any payment of interest received by the Master Servicer in
respect of a Mortgage Loan (whether paid by the Mortgagor or received as
Liquidation Proceeds, Insurance Proceeds or otherwise) which is less than
the full amount of interest then due with respect to such Mortgage Loan,
only that portion of such payment that bears the same relationship to the
total amount of such payment of interest as the rate used to determine
the Master Servicing Fee bears to the Mortgage Rate borne by such
Mortgage Loan shall be allocated to the Master Servicing Fee with respect
to such Mortgage Loan. All other amounts shall be deposited in the
Collection Account not later than the second Business Day following the
day of receipt by the Master Servicer.
The Master Servicer may invest the funds in its Collection Account
only in Permitted Investments, which shall mature not later than the
Remittance Date with respect to available funds to be withdrawn on that
date and, in each case, shall not be sold or disposed of prior to its
maturity. All such Permitted Investments shall be made in the name of the
Trustee, for the benefit of the Noteholders and FSA. All income and gain
(net of any losses) realized from any such investment of funds on deposit
in the Collection Account shall be for the benefit of the Master Servicer
and shall be retained or withdrawn by it monthly as provided herein. The
amount of any realized losses in the Collection Account incurred in any
such account in respect of any such investments shall promptly be
deposited by the Master Servicer in the Collection Account. The Trustee
shall not be liable for the amount of any loss incurred in respect of any
investment or lack of investment of funds held in the Collection Account
and made in accordance with this subsection.
The foregoing requirements for deposit in the Collection Account
shall be exclusive, it being understood and agreed that, without limiting
the generality of the foregoing, payments in the nature of those
described in the last paragraph of Section 5 and payments in the nature
of late payment charges, modification fees or assumption fees,
insufficient funds charges or other amounts the Master Servicer may
charge with respect to the Mortgage Loans (but not prepayment penalties
or charges) need not be deposited by the Master Servicer in the
Collection Account. If the Master Servicer deposits in the Collection
Account any amount not required to be deposited therein, it may at any
time withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding. All funds (excluding investment
earnings thereon) deposited by the Master Servicer in the Collection
Account shall be held in the Collection Account for the account of the
Trustee in trust for the Noteholders until disbursed or withdrawn in
accordance with Section 3(g)(iii).
Prior to the time of their required deposit in the Collection
Account, all amounts required to be deposited therein may be deposited in
an account in the name of Master Servicer, provided that such account is
an Eligible Account. All such funds shall be held by the Master Servicer
in trust for the benefit of the Noteholders and FSA pursuant to the terms
hereof.
The Collection Account may, upon written notice by the Master
Servicer to the Trustee and FSA, be transferred to a different depository
so long as such transfer is to an Eligible Account.
(iii) The Master Servicer may, from time to time, make withdrawals
from the Collection Account for the following purposes, without
duplication:
(A) to reimburse itself for any accrued unpaid Master Servicing
Fees and for unreimbursed Monthly Advances and Servicing Advances.
The Master Servicer's right to reimbursement for unpaid Master
Servicing Fees and unreimbursed Monthly Advances and Servicing
Advances shall be limited (subject to clause (B) below) to late
collections on the related Mortgage Loan, including Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds
and such other amounts as may be collected by the Master Servicer
from the related Mortgagor or otherwise relating to the Mortgage
Loan in respect of which such unreimbursed amounts are owed;
(B) to reimburse itself for any Monthly Advances or Servicing
Advances determined in good faith to have become Nonrecoverable
Advances, such reimbursement to be made from any funds in the
Collection Account;
(C) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code
in accordance with a final, nonappealable order of a court having
competent jurisdiction;
(D) to withdraw any funds deposited in the Collection Account
that were not required to be deposited therein;
(E) to pay itself the Master Servicing Fee (net of any
Compensating Interest) and any additional servicing compensation set
forth in Section 5 hereof to the extent not otherwise retained or
paid;
(F) to pay to AmREIT with respect to each Mortgage Loan or
property acquired in respect thereof that has been repurchased or
replaced pursuant to Section 2(a) or 2(c) or to pay to the Issuer
with respect to each Mortgage Loan or property acquired in respect
thereof that has been released from the Lien of the Indenture
following a redemption pursuant to Section 10.01 of the Indenture
all amounts received thereon and not required to be distributed to
the Collection Account;
(G) to pay to AmREIT any Monthly Payments due before the
Cut-off Date;
(H) to make deposits to the Note Payment Account in the amounts
and in the manner provided for in Section 3(g)(iv);
(I) to pay itself any interest earned on or investment income
earned with respect to funds in the Collection Account;
(J) to reimburse itself for expenses, costs and liabilities
pursuant to Section 6(e);
(K) to pay prepayment penalties collected on the Mortgage Loans
to the Issuer as provided in Section 3(a);
(L) to pay premiums due on Insurance Policies as provided in
Section 3(a); and
(M) to clear and terminate the Collection Account upon the
termination of this Agreement.
The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to such subclauses (A)
through (M). Prior to making any withdrawal from the Collection Account
pursuant to subclause (B), the Master Servicer shall deliver to the
Trustee an Officer's Certificate of a Servicing Officer indicating the
amount of any previous Monthly Advance, or Servicing Advance determined
by the Master Servicer to be a Nonrecoverable Advance and identifying the
related Mortgage Loan(s).
(iv) On each Remittance Date, after payment of any amounts described
in Section 3(g)(iii) of this Agreement, the Master Servicer will withdraw
from the Collection Account and remit to the Trustee for deposit into the
Note Payment Account the Remittance Amount in respect of the related
Payment Date.
(h) Master Servicer Monthly Data.
Not later than each Remittance Date, the Master Servicer shall prepare
and forward to the Trustee and FSA a statement (each, a "Remittance Date
Statement"), in such electronic format and in such hardcopy format as the
Master Servicer, the Trustee and FSA shall agree, setting forth with respect
to the related distribution:
(i) the aggregate Remittance Amount in respect of the related
Payment Date, setting forth separately the amounts of the principal and
interest components thereof;
(ii) the amount of the Master Servicing Fees paid to or retained by
the Master Servicer with respect to such Payment Date;
(iii) the Pool Principal Balance for the following Payment Date;
(iv) the amount of Monthly Advances included in the distribution on
such Payment Date;
(v) the number and aggregate principal amounts of Mortgage Loans (A)
Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 30 to 59 days
(2) 60 to 89 days and (3) 90 or more days, (B) in foreclosure and
Delinquent (1) 1 to 29 days (2) 30 to 59 days, (3) 60 to 89 days and (4)
90 or more days, as of the close of business on the last day of the
calendar month preceding such Payment Date and (C) for which the related
Mortgagor was in a bankruptcy proceeding or paying a reduced Monthly
Payment as a result of a bankruptcy work-out;
(vi) the aggregate dollar amount of the Monthly Payments (A) due on
all Outstanding Mortgage Loans on each of the Due Dates in the related
Collection Period and (B) Delinquent 90 days or more on each of the Due
Dates in the related Collection Period;
(vii) with respect to any Mortgage Loan that became an REO Property
during the preceding calendar month, the loan number and Stated Principal
Balance of such Mortgage Loan as of the close of business on the last day
of the calendar month preceding such Payment Date and the date of
acquisition thereof;
(viii) the total number and principal balance of any REO Properties
(and market value, if available) as of the close of business on the last
day of the calendar month preceding such Payment Date;
(ix) the aggregate outstanding principal balance of the three
largest outstanding Mortgage Loans;
(x) the Weighted Average Net Mortgage Rate on the Mortgage Loans as
of the first day of the month prior to the Remittance Date; and
(xi) the aggregate amount of Realized Losses incurred during the
preceding calendar month.
(i) Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Master Servicer shall maintain
accurate records reflecting casualty insurance coverage.
With respect to each Mortgage Loan as to which the Master Servicer
maintains escrow accounts, the Master Servicer shall maintain accurate records
reflecting the status of ground rents, taxes, assessments, water rates and
other charges which are or may become a lien upon the Mortgaged Property and
the status of primary mortgage guaranty insurance premiums, if any, and
casualty insurance coverage and shall obtain, from time to time, all bills for
the payment of such charges (including renewal premiums) and shall effect
payment thereof prior to the applicable penalty or termination date and at a
time appropriate for securing maximum discounts allowable, employing for such
purpose deposits of the Mortgagor in any escrow account which shall have been
estimated and accumulated by the Master Servicer in amounts sufficient for
such purposes, as allowed under the terms of the Mortgage. To the extent that
a Mortgage does not provide for escrow payments, the Master Servicer shall, if
it has received notice of a default or deficiency, monitor such payments to
determine if they are made by the Mortgagor. The Master Servicer, through the
use of a tax tracking vendor, shall monitor the payment of taxes for Mortgages
without escrow payments. In the event Mortgagors fail to pay their real
property taxes, the Master Servicer shall make a Servicing Advance, but only
to the extent it deems such Servicing Advance recoverable.
(j) Maintenance of Casualty Insurance.
The Master Servicer shall cause to be maintained for each Mortgage Loan a
casualty insurance policy with extended coverage issued by a generally
acceptable insurer in an amount which is not less than the full insurable
value of the Mortgaged Property securing such Mortgage Loan or the unpaid
principal balance of such Mortgage Loan, whichever is less; provided, however,
that such insurance may not be less than the minimum amount required to fully
compensate for any loss or damage on a replacement cost basis. If, upon
origination of the Mortgage Loan, the improvements on the Mortgaged Property
were in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards (and such flood insurance
has been made available) the Master Servicer will cause to be maintained a
flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration with a generally acceptable insurance
carrier, in an amount representing coverage not less than the lesser of (i)
the unpaid principal balance of the Mortgage Loan and (ii) the maximum amount
of insurance which was available under the Flood Disaster Protection Act of
1973. The Master Servicer shall also maintain similar fire insurance coverage
and, if applicable, flood insurance on property acquired upon foreclosure, or
by deed in lieu of foreclosure, of any Mortgage Loan in an amount which is at
least equal to the lesser of (i) the full insurable value of the improvements
which are a part of such property and (ii) the principal balance owing on such
Mortgage Loan at the time of such foreclosure or grant of deed in lieu of
foreclosure; provided, however, that such insurance may not be less than the
minimum amount required to fully compensate for any loss or damage on a
replacement cost basis. It is understood and agreed that such insurance shall
be with insurers approved by the Master Servicer and that no earthquake or
other additional insurance is to be required of any Mortgagor, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. Pursuant to Section
3(g), any amounts collected by the Master Servicer under any insurance
policies maintained pursuant to this Section 3(j) (other than amounts to be
applied to the restoration or repair of the related Mortgaged Property or
released to the Mortgagor in accordance with Accepted Servicing Practices)
shall be deposited into the Collection Account, subject to withdrawal pursuant
to Section 3(g). Any cost incurred by the Master Servicer in maintaining any
such insurance shall be added to the amount owing under the Mortgage Loan
where the terms of the Mortgage Loan so permit; provided, however, that the
addition of any such cost shall not be taken into account for purposes of
calculating the principal amount of the Mortgage Note or Mortgage Loan, the
Monthly Payments on the Mortgage Note or the distributions to be made to the
Noteholders. Such costs shall be recoverable by the Master Servicer pursuant
to Section 3(g). In the event that the Master Servicer shall obtain and
maintain a blanket policy issued by an insurer that is acceptable under
Accepted Servicing Practices, insuring against hazard losses on all of the
Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligation as set forth in this Section 3(j), it being understood and agreed
that such policy may contain a deductible clause, in which case the Master
Servicer shall, in the event that there shall not have been maintained on the
related mortgaged or acquired property an insurance policy complying with the
first sentence of this Section 3(j) and there shall have been a loss which
would have been covered by such a policy had it been maintained, be required
to deposit from its own funds into the Collection Account the amount not
otherwise payable under the blanket policy because of such deductible clause.
(k) Reserved.
(l) Fidelity Bond; Errors and Omissions Policy.
(i) The Master Servicer shall maintain with a responsible company,
and at its own expense, a blanket fidelity bond (a "Fidelity Bond") and
an errors and omissions insurance policy (an "Errors and Omissions
Policy"), in an amount generally maintained by prudent mortgage loan
servicers having servicing portfolios of a similar size.
(ii) The Master Servicer shall be deemed to have complied with this
provision if one of its respective Affiliates has such a Fidelity Bond
and Errors and Omissions Policy and, by the terms of such fidelity bond
and errors and omission policy, the coverage afforded thereunder extends
to the Master Servicer. The Master Servicer shall cause each and every
Subservicer for it to maintain a policy of insurance covering errors and
omissions and a fidelity bond which would meet the requirements of this
Section 3(l).
(m) Collection of Taxes, Assessments and Other Items; Servicing
Account.
In addition to the Collection Account, the Master Servicer shall
establish and maintain a Servicing Account with respect to those Mortgage
Loans that have an escrow feature, which shall be an Eligible Account, and
shall deposit therein all payments by Mortgagors for taxes, assessments,
primary mortgage or hazard insurance premiums or comparable items. Withdrawals
from the Servicing Account may be made to effect payment of taxes,
assessments, primary mortgage or hazard insurance premiums or comparable
items, to reimburse the Master Servicer out of related collections for any
advances made in the nature of any of the foregoing, to refund to any
Mortgagors any sums determined to be overages, or to pay any interest owed to
Mortgagors on such account to the extent required by law or to clear and
terminate the Servicing Account at the termination of this Agreement. The
Master Servicer shall advance the payments referred to in the first sentence
of this Section 3(m) that are not timely paid by the Mortgagors on the date
when the tax, premium or other cost for which such payment is intended is due,
but the Master Servicer shall be required to so advance only to the extent
that such advances, in the good faith judgment of the Master Servicer, will be
recoverable by the Master Servicer pursuant to Section 3(g) out of Liquidation
Proceeds, Insurance Proceeds or otherwise.
(n) Periodic Filings with the Securities and Exchange Commission;
Additional Information.
The Master Servicer agrees to promptly furnish to the Issuer, from time
to time upon request, such information, reports and financial statements
within its control related to this Agreement and the Mortgage Loans as the
Issuer reasonably deems appropriate to prepare and file all necessary reports
with the Commission.
(o) Enforcement of Due-on-Sale Clauses; Assumption Agreements.
In any case in which a Mortgaged Property is about to be conveyed by the
Mortgagor (whether by absolute conveyance or by contract of sale, and whether
or not the Mortgagor remains liable thereon) and the Master Servicer has
knowledge of such prospective conveyance, the Master Servicer shall effect
assumptions in accordance with the terms of any due-on-sale provision
contained in the related Mortgage Note or Mortgage. The Master Servicer shall
enforce any due-on-sale provision contained in such Mortgage Note or Mortgage
to the extent the requirements thereunder for an assumption of the Mortgage
Loan have not been satisfied to the extent permitted under the terms of the
related Mortgage Note, unless such provision is not exercisable under
applicable law and governmental regulations or in the Master Servicer's
judgment, such exercise is reasonably likely to result in legal action by the
Mortgagor, or such conveyance is in connection with a permitted assumption of
the related Mortgage Loan. Subject to the foregoing, the Master Servicer is
authorized to take or enter into an assumption agreement from or with the
Person to whom such property is about to be conveyed, pursuant to which such
person becomes liable under the related Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that
the Mortgage Rate with respect to such Mortgage Loan shall remain unchanged.
The Master Servicer is also authorized, to release the original Mortgagor from
liability upon the Mortgage Loan and substitute the new Mortgagor as obligor
thereon. In connection with such assumption or substitution, the Master
Servicer shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual for mortgage loans similar to the
Mortgage Loans and as it applies to mortgage loans owned solely by it. The
Master Servicer shall notify the Trustee that any such assumption or
substitution agreement has been completed by forwarding to the Trustee a copy
of such assumption or substitution agreement, and the Master Servicer shall
deliver the original thereof to the Custodian to be added to the related
Mortgage File and shall, for all purposes, be considered a part of such
Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such assumption or
substitution agreement, the Mortgage Rate of the related Mortgage Note and the
payment terms shall not be changed. Any fee collected by the Master Servicer
for entering into an assumption or substitution of liability agreement will be
retained by the Master Servicer as servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Master Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any conveyance
by the Mortgagor of the property subject to the Mortgage or any assumption of
a Mortgage Loan by operation of law which the Master Servicer in good faith
determines it may be restricted by law from preventing, for any reason
whatsoever, or if the exercise of such right would impair or threaten to
impair any recovery under any applicable insurance policy or, in the Master
Servicer's judgment, be reasonably likely to result in legal action by the
Mortgagor.
(p) Realization Upon Defaulted Mortgage Loans.
Except as provided in the last two paragraphs of this Section 3(p), the
Master Servicer shall foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made
for collection of Delinquent payments. In connection with such foreclosure or
other conversion, the Master Servicer shall follow Accepted Servicing
Practices. Without limiting the foregoing, the Master Servicer agrees to
provide any required notices to any Mortgage Insurer, to file claims and other
required reports and to take any other actions as may be necessary to obtain
payments under any Insurance Policy covering a defaulted Mortgage Loan. The
foregoing is subject to the proviso that the Master Servicer shall not be
required to expend its own funds in connection with any foreclosure or to
restore any damaged property unless it shall determine that such expenses will
be recoverable to it through Liquidation Proceeds (respecting which it shall
have priority for purposes of withdrawal from the Collection Account pursuant
to Section 3(g) or otherwise). The Master Servicer shall be entitled to
reimbursement of the Master Servicing Fee and other amounts due it, if any, to
the extent, but only to the extent, that withdrawals from the Collection
Account with respect thereto are permitted under Section 3(g).
The Master Servicer may foreclose against the Mortgaged Property securing
a defaulted Mortgage Loan either by foreclosure, by sale or by strict
foreclosure, and in the event a deficiency judgment is available against the
Mortgagor or any other person, may proceed for the deficiency.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be issued to the Master Servicer on behalf of the
Trustee in the name of the Trustee, as trustee on behalf of the Noteholders.
Notwithstanding any such acquisition of title and cancellation of the related
Mortgage Loan, such Mortgage Loan shall be considered to be a Mortgage Loan
held in the Trust Estate until such time as the related Mortgaged Property
shall be sold and such Mortgage Loan becomes a Liquidated Mortgage Loan.
Consistent with the foregoing, for purposes of all calculations hereunder, so
long as such Mortgage Loan shall be considered to be an Outstanding Mortgage
Loan:
(i) It shall be assumed that, notwithstanding that the indebtedness
evidenced by the related Mortgage Note shall have been discharged, such
Mortgage Note and the related amortization schedule in effect at the time
of any such acquisition of title (after giving effect to any previous
Curtailments and before any adjustment thereto by reason of any
bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period) remain in effect, except that such schedule shall be
adjusted to reflect the application of Net REO Proceeds received in any
month pursuant to the succeeding clause.
(ii) Net REO Proceeds received in any month shall be deemed to have
been received first in payment of the accrued interest that remained
unpaid on the date that such Mortgage Loan became an REO Mortgage Loan,
with the excess thereof, if any, being deemed to have been received in
respect of the Delinquent principal installments that remained unpaid on
such date. Thereafter, Net REO Proceeds received in any month shall be
applied to the payment of installments of principal and accrued interest
on such Mortgage Loan deemed to be due and payable in accordance with the
terms of such Mortgage Note and such amortization schedule and any excess
shall be treated as a Curtailment received in respect of such Mortgage
Loan.
(iii) Only that portion of Net REO Proceeds allocable to interest
that bears the same relationship to the total amount of Net REO Proceeds
allocable to interest as the rate of the Master Servicing Fee bears to
the Mortgage Interest Rate borne by such Mortgage Loan shall be allocated
to the Master Servicing Fee with respect thereto.
In lieu of foreclosing upon any defaulted Mortgage Loan, the Master
Servicer may, in its discretion, permit the assumption of such Mortgage Loan
in accordance with Accepted Servicing Practices. In connection with any such
assumption, the Mortgage Rate of the related Mortgage Note and the payment
terms shall not be changed. Any fee collected by the Master Servicer for
entering into an assumption agreement will be retained by the Master Servicer
as servicing compensation. Alternatively, the Master Servicer may encourage
the refinancing of any defaulted Mortgage Loan by the Mortgagor.
Notwithstanding the foregoing, to the extent the Master Servicer has
actual knowledge of environmental hazards, prior to taking title to any
Mortgaged Property, the Master Servicer shall make, or cause to be made,
inspection of the Mortgaged Property in accordance with the Accepted Servicing
Practices. The Master Servicer shall be entitled to rely upon the results of
any such inspection made by others. In cases where the inspection reveals that
such Mortgaged Property is potentially contaminated with or affected by
hazardous wastes or hazardous substances, the Master Servicer shall promptly
give written notice of such fact to FSA and the Trustee. The Master Servicer
shall not take title to any Mortgaged Property with respect to this paragraph
without obtaining the written consent of FSA and, if taken in the name of the
Trustee, the written consent of the Trustee.
(q) Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full will be escrowed in a
manner customary for such purposes, or for any other servicing procedure to be
performed in connection with a Mortgage Loan, the Master Servicer will
immediately notify the Trustee and deliver, or cause to be delivered, to the
Custodian, a Request for Release, in accordance with the Custodial Agreement.
Upon receipt of such request, the Custodian will release the related Trustee
Mortgage File to the Master Servicer in accordance with the terms of the
Custodial Agreement. Subject to the further limitations set forth below, the
Master Servicer shall cause the Trustee Mortgage File or documents so released
to be returned to the Custodian when the need therefor by the Master Servicer
no longer exists, unless the Mortgage Loan is liquidated and the proceeds
thereof are deposited in the Collection Account, in which case the Master
Servicer shall deliver to the Custodian a supplemental Request for Release
reflecting such liquidation, signed by a Servicing Officer of the Master
Servicer.
If the Master Servicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by the Servicing
Provisions, the Master Servicer shall deliver or cause to be delivered to the
Trustee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity.
(r) Reports by the Master Servicer; Collection Account Statement.
Not later than 45 days after each Payment Date, the Master Servicer shall
provide to the Issuer, the Trustee and FSA a statement, certified by a
Servicing Officer, setting forth the status of the Collection Account as of
the close of business on the last day of the immediately preceding calendar
month, stating that all distributions required by this Agreement to be made by
the Master Servicer have been made (or if any required distribution has not
been made by the Master Servicer, specifying the nature and status thereof)
and showing, for the period covered by such statement, the aggregate of
deposits into and withdrawals from the Collection Account for each category of
deposit specified in 3(g) and each category of withdrawal specified in Section
3(g) and the amount transferred to the Collection Account. Such statement
shall also state the aggregate unpaid principal balance of all the Mortgage
Loans as of the close of business on the last day of the month preceding the
month in which such Payment Date occurs.
(s) Annual Statement as to Compliance.
The Master Servicer will deliver to the Issuer, the Trustee and FSA on or
before April 30th of each year, beginning with April 30, 2000, an Officers'
Certificate stating as to each signer thereof, that (i) a review of the
activities of the Master Servicer during the preceding calendar year and of
its performance under this Agreement has been made under such officer's
supervision, and (ii) to the best of such officer's knowledge, based on such
review, the Master Servicer has fulfilled all its obligations under this
Agreement throughout such year, or if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof. Such Officers' Certificate shall be
accompanied by the statement described in Section 3(t) of this Agreement.
(t) Annual Independent Public Accountants' Servicing Report.
On or before April 30th of every year, beginning with April 30, 2000, the
Master Servicer, at its expense, shall cause a firm of nationally recognized
independent public accountants to furnish a statement to the Master Servicer
to the effect that, on the basis of an examination of certain documents and
records relating to the servicing of the mortgage loans being serviced by the
Master Servicer under servicing agreements similar to this Agreement,
conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers or Statement of Auditing Standards No. 70, such
firm is of the opinion that such servicing has been conducted in compliance
with this Agreement.
(u) Liquidation Report.
With respect to the liquidation of a Mortgage Loan or disposition of an
REO Property, upon the determination by the Master Servicer that all
Liquidation Proceeds which it expects to recover with respect to such Mortgage
Loan or REO Property have been recovered, the Master Servicer shall promptly
deliver to the Issuer and FSA a related Liquidation Report with respect to
such Mortgage Loan.
(v) Adjustment of Servicing Compensation in Respect of Prepaid
Mortgage Loans.
Not later than the close of business on the Remittance Date prior to each
Payment Date, the Master Servicer shall remit to the Trustee (without right or
reimbursement therefor) for deposit into the Note Payment Account an amount
equal to the lesser of (a) the aggregate of the Prepayment Interest Shortfalls
for the related Payment Date resulting from Principal Prepayments in Full or
Curtailments during the related Collection Period and (b) its aggregate Master
Servicing Fees payable with respect to the related Due Period and shall not
have the right to reimbursement therefor (the "Compensating Interest"),
provided, however, that the Master Servicer shall not be required to pay
Compensating Interest due to application of the Relief Act.
(w) Maintenance of Corporate Existence and Licenses.
Except as provided in Section 6(b), the Master Servicer will keep in full
effect its existence, rights and franchises as a corporation, will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction necessary to protect the validity and enforceability of this
Agreement or any of the Mortgage Loans and to perform its duties under this
Agreement and will otherwise operate its business so as to cause the
representations and warranties under Section 2(c) to be true and correct at
all times under this Agreement.
(x) Optional Purchase of Defaulted Mortgage Loans.
Any Affiliate of AmREIT, in its sole discretion, shall have the right to
elect (by written notice sent to the Trustee and the Master Servicer), but
shall not be obligated, to purchase for its own account from the Trust Estate
(or, in the case of the Issuer, to remove from the Lien of the Indenture) any
Mortgage Loan which is 90 days or more Delinquent in the manner and at the
Purchase Price specified in Section 2(c)(iv) with respect to Deleted Mortgage
Loans and subject to the limitations of Section 8.05 of the Indenture;
provided, however, such repurchase rights (i) must first be exercised as to
those Mortgage Loans most Delinquent in payment at the time of repurchase and
(ii) may be exercised, in the aggregate (but excluding those Mortgage Loans
being removed to satisfy any Mortgage Insurer's right to purchase Delinquent
Mortgage Loans covered by an Insurance Policy), with respect to no more than
three percent (3.0%) of the Original Pool Principal Balance without FSA's
prior consent. The Purchase Price for any Mortgage Loan purchased hereunder
shall be deposited in the Collection Account and the Custodian, upon notice of
receipt by the Master Servicer of such deposit, shall release to the purchaser
of such Mortgage Loan the related Trustee's Mortgage File. The Issuer and the
Trustee (or the Master Servicer as its agent) shall execute and deliver such
instruments of transfer or assignment prepared by the purchaser of such
Mortgage Loan, in each case without recourse, as shall be necessary to vest in
the purchaser such Mortgage Loan. The purchaser of such Mortgage Loan shall
succeed to all the Issuer's right, title and interest in and to such Mortgage
Loan and all security and documents related thereto. Such assignment shall be
an assignment outright and not for security. The purchaser of such Mortgage
Loan shall thereupon own such Mortgage Loan, and all security and documents,
free of any obligation to the Trustee or the Noteholders with respect thereto.
(y) No Solicitation.
The Master Servicer agrees not to use the Master Servicer's records to
specifically solicit or permit any affiliate to solicit any Mortgagor with
respect to the refinancing of a Mortgage Loan. The Master Servicer agrees that
it will not take, permit or cause any action to be taken, directly or
indirectly, to solicit any Mortgagor to refinance the related written consent
of the Issuer and FSA; provided, however, all promotions of any kind directed
to the general public derived from marketing lists of any nature shall not be
considered solicitation pursuant to this section and shall be permitted
provided such marketing list shall not have been generated from the Master
Servicer's servicing records. Furthermore, the Master Servicer shall not be
prohibited from responding to unsolicited requests or inquiries made by a
Mortgagor. The Master Servicer agrees not to refer a Mortgagor's inquiry to
the Master Servicer's affiliates; provided, however, that the Master Servicer
or its affiliates shall have no liability to the Issuer or FSA if the
Mortgagor proceeds directly to the Master Servicer's affiliates. It is
understood and agreed that all rights and benefits relating to the
solicitation of any Mortgagor and the attendant rights, title and interest in
and to the list of Mortgagors and data relating to their Mortgage Loans shall
be retained by the Issuer.
4. Monthly Advances.
If, on any Remittance Date, the Master Servicer determines that any
Monthly Payments due on the Due Date immediately preceding such Remittance
Date have not been received as of the close of business on the Business Day
preceding such Remittance Date, the Master Servicer shall make a Monthly
Advance with respect to such Delinquent Monthly Payments; provided, however,
that in no event shall the Master Servicer be required to make any Monthly
Advances that the Master Servicer determines would constitute a Nonrecoverable
Advance. The Master Servicer shall include in the amount to be deposited in
the Note Payment Account on such Remittance Date an amount equal to such
Monthly Advance, if any, which deposit may be made in whole or in part from
the Amount Held for Future Distribution. Any funds being held for future
distribution to the Note Payment Account and so used shall be replaced by the
Master Servicer from its own funds by deposit in the Collection Account on or
before the Business Day preceding any such future Remittance Date to the
extent that funds in the Collection Account on such Remittance Date shall be
less than payments to the Note Payment Account required to be made on such
date.
The Master Servicer shall designate on its records the specific Mortgage
Loans and related installments (or portions thereof) as to which such Monthly
Advance shall be deemed to have been made, such determination being conclusive
for purposes of withdrawals from the Collection Account pursuant to Section
3(g). The Master Servicer shall deliver to the Issuer, the Trustee and FSA on
the related Remittance Date an Officer's Certificate of a Servicing Officer
indicating the amount of any proposed Monthly Advance determined by the Master
Servicer to be a Nonrecoverable Advance.
In the event that the Master Servicer fails to make a Monthly Advance
required to be made by it hereunder and such failure is not cured within the
cure period provided in Section 7(a)(i) (a "Defaulted Monthly Advance"), then
the Trustee shall make such Defaulted Monthly Advance on the related Payment
Date (by depositing an amount equal to the Defaulted Monthly Advance in the
Note Payment Account); provided, however, that the Trustee shall not be
obligated to make the Defaulted Monthly Advance if it determines that such
advance would constitute a Nonrecoverable Advance; and provided, further, that
the Trustee shall have no obligation to make any subsequent Monthly Advances
under this provision with respect to such Master Servicing Default unless the
Trustee shall have assumed all of the obligations of the Master Servicer in
accordance with the provisions of Section 7(b) (in lieu of FSA directing that
a different successor Master Servicer be appointed). Notwithstanding the
foregoing, if the Master Servicer is not terminated pursuant to Section 7(a)
as a result of such Master Servicing Default, and if thereafter the Master
Servicer fails to make a Monthly Advance required to be made under this
Section 4, then the Trustee shall have no obligation to make any Monthly
Advance under this Section 4.
5. Master Servicing Compensation and Expenses.
The Master Servicer shall be entitled, at its election, either (a) to pay
itself the Master Servicing Fee out of any Mortgagor payment on account of
interest or Net REO Proceeds prior to the deposit of such payment in the
Collection Account or (b) to withdraw from the Collection Account such Master
Servicing Fee pursuant to Section 3(g). The Master Servicer shall also be
entitled, at its election, either (a) to pay itself the Master Servicing Fee
in respect of each Delinquent Mortgage Loan out of Liquidation Proceeds in
respect of such Mortgage Loan or other recoveries with respect thereto to the
extent permitted in Section 3(g) or (b) to withdraw from the Collection
Account the Master Servicing Fee in respect of each such Mortgage Loan to the
extent of such Liquidation Proceeds or other recoveries, to the extent
permitted by Section 3(g).
Servicing compensation in the form of assumption fees, late payment
charges, tax service fees, fees for statement of account or payoff of the
Mortgage Loan (to the extent permitted by applicable law) or otherwise shall
be retained by the Master Servicer and are not required to be deposited in the
Collection Account; provided, however, that all prepayment penalties shall be
remitted to the Collection Account. The aggregate Master Servicing Fee is
reserved for the administration of the Trust Estate and, in the event of
replacement of the Master Servicer as servicer of the Mortgage Loans, for the
payment of other expenses related to such replacement. The aggregate Master
Servicing Fee shall be offset as provided in Section 3(v). The Master Servicer
shall be required to pay all expenses incurred by it in connection with its
servicing activities hereunder (including maintenance of the casualty
insurance required by Section 3(j)) and shall not be entitled to reimbursement
therefor except as specifically provided herein.
6. Master Servicer.
(a) Liabilities of the Master Servicer.
The Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by it
herein.
(b) Merger or Consolidation of the Master Servicer.
Any Person into which the Master Servicer may be merged or consolidated,
or any Person resulting from any merger, conversion, other change in form or
consolidation to which the Master Servicer shall be a party, or any Person
succeeding to the business of the Master Servicer, shall be the successor to
the Master Servicer hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided, however, that the successor or
resulting Person to the Master Servicer shall be a Person that shall be
qualified to act as Master Servicer hereunder and shall have a net worth of
not less than $15,000,000 and FSA shall have consented in writing to its
assumptions of such master servicing obligations.
(c) Resignation of Master Servicer; Termination Without Cause.
Except as otherwise provided in subsections (b) and (d) hereof, the
Master Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon appointment of a successor Master Servicer
acceptable to FSA (after consultation with the Trustee) and receipt by the
Trustee of a letter from each Rating Agency that such a resignation and
appointment will not result in a downgrading of the rating of any of the Notes
(without regard to the FSA Policy) and with the prior written consent of FSA,
or (ii) upon determination that its duties hereunder are no longer permissible
under applicable law. Any such determination under clause (ii) permitting the
resignation of the Master Servicer shall be evidenced by an Opinion of Counsel
(at the expense of the Master Servicer) to such effect delivered to the
Trustee, the Issuer and FSA, which Opinion of Counsel shall be reasonably
acceptable to the Trustee, the Issuer and FSA. No such resignation shall
become effective until the Trustee shall have assumed, or a successor Master
Servicer shall have been appointed by the Trustee as directed by FSA (after
consultation with the Trustee) and until such successor shall have assumed,
the Master Servicer's responsibilities and obligations under this Agreement.
Notice of such resignation shall be given promptly by the Master Servicer to
the Trustee, FSA and the Issuer.
With the prior written consent of the Trustee and FSA, the Issuer may
terminate the Master Servicer from its rights, duties and obligations hereby
imposed upon it by delivering written notice of termination to the Master
Servicer, with copies to the Trustee and FSA, no less than sixty (60) days
prior to the effective date of termination provided, however, that no such
termination shall become effective until a successor Master Servicer
designated by AmREIT and acceptable to the Trustee and FSA shall have assumed
the Master Servicer's responsibilities and obligations under this Agreement
and the Trustee shall have received a letter from each Rating Agency that such
termination and assumption will not result in a downgrading of the rating of
any of the Notes. Upon the effective date of termination, the Master Servicer
shall be paid a termination fee of $35.00 per Mortgage Loan being serviced
hereunder at the time, which amount shall be payable by AmREIT and shall in no
case be an obligation of any other Person.
(d) Assignment or Delegation of Duties by the Master Servicer.
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; provided, however, that the Master Servicer
shall have the right without the prior written consent of the Trustee, the
Issuer or the Rating Agencies but with the prior written consent of FSA to
delegate or assign to or subcontract with or authorize or appoint an Affiliate
of the Master Servicer to perform and carry out any duties, covenants or
obligations to be performed and carried out by the Master Servicer hereunder.
In no case, however, shall any such delegation, subcontracting or assignment
to an Affiliate of the Master Servicer relieve the Master Servicer of any
liability hereunder. Notice of such permitted assignment shall be given
promptly by the Master Servicer to the Issuer and the Trustee. If, pursuant to
any provision hereof, the duties of the Master Servicer are transferred to a
successor Master Servicer, the entire amount of the Master Servicing Fees and
other compensation payable to the Master Servicer pursuant hereto, including
amounts payable to or permitted to be retained or withdrawn by the Master
Servicer pursuant to provision hereof, shall thereafter be payable to such
successor Master Servicer.
(e) Limitation on Liability of the Master Servicer and Others.
Neither the Master Servicer nor any of the directors, officers, employees
or agents of the Master Servicer shall be under any liability to the Trustee
or the Noteholders for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the 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 Master Servicer and any
director, officer, employee or agent of the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Issuer (as
provided in Section 8.02(d) of the Indenture) and AmREIT hereby jointly and
severally agree to indemnify and hold harmless the Master Servicer each of its
directors, officers, employees and agents, and its and their respective
successors and assigns, as applicable, from and against any and all losses,
liabilities, claims, charges, damages, fines, penalties, judgments, actions,
suits, costs and expenses of any kind or nature whatsoever (including
reasonable attorneys' fees and expenses and reasonable fees and expenses of
experts) imposed on, incurred by, or asserted against the Master Servicer or
any of its directors, officers, employees, agents, or any of their respective
successors or assigns, in any way related to or arising out of this Agreement
other than any such loss, liability or claim resulting solely from the Master
Servicer's willful misfeasance, bad faith or negligence in the performance of
its duties hereunder. This indemnification will survive the termination of the
Master Servicer or this Agreement. The Master Servicer shall be under no
obligation to appear in, prosecute or defend any legal action that is not
incidental to its duties to master service the Mortgage Loans in accordance
with this Agreement and that in its opinion may involve it in any expenses or
liability; provided, however, that the Master Servicer may in its sole
discretion undertake any such action that it may deem necessary or desirable
in respect to this Agreement and the rights and duties of the parties hereto
and the interests of the Noteholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom shall
be expenses, costs and liabilities of the Issuer and the Master Servicer shall
be entitled to be reimbursed therefor out of the Collection Account as
provided by Section 3(g).
7. Master Servicing Default; Termination and Liabilities.
(a) Master Servicing Default.
Any of the following acts or occurrences shall constitute a Master
Servicing Default by the Master Servicer under this Agreement:
(i) any failure by the Master Servicer to remit any payment, other
than a Servicing Advance, required to be made by the Master Servicer
under the terms of this Agreement which continues unremedied for three
Business Days after the date upon which such payment was required to be
made or which causes a claim to be made on the FSA Policy;
(ii) the failure by the Master Servicer to make any required
Servicing Advance which failure continues unremedied for a period of 30
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Master Servicer by
the Issuer, the Trustee or FSA;
(iii) any failure on the part of the Master Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in this
Agreement, or the failure of any representation and warranty made
pursuant to Section 2(c) to be true and correct, which continues
unremedied for a period of 30 days (or 15 days in the case of a failure
to pay the premium for any insurance policy which is required to be
maintained under this Agreement) after the date on which written notice
of such failure, requiring the same to be remedied, shall have been given
to the Master Servicer by the Trustee, at the direction of FSA, or by FSA
or, with the consent of FSA, the Noteholders holding Voting Interests
aggregating not less than 51%;
(iv) a decree or order of a court or agency or supervisory authority
having jurisdiction in an involuntary case under any present or future
federal or state bankruptcy, insolvency or similar law or for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer and such decree or order
shall have remained in force, undischarged or unstayed for a period of 60
days;
(v) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to the Master Servicer or of or relating to all or substantially
all of the Master Servicer's property;
(vi) 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;
(vii) on any Payment Date the Rolling Delinquency Percentage exceeds
15%;
(viii) if on any Payment Date the Annual Loss Percentage exceeds
1.65%; or
(ix) if (a) on any Payment Date occurring before May 1, 2000, the
aggregate Realized Losses since the Cut-off Date exceed 1.40% of the
Original Pool Principal Balance, (b) on any Payment Date on or after May
1, 2000 and before May 1, 2001, the aggregate Realized Losses since the
Cut-off Date exceed 2.25% of the Original Pool Principal Balance, (c) on
any Payment Date on or after May 1, 2001 and before May 1, 2002, the
aggregate Realized Losses since the Cut-off Date exceed 2.60% of the
Original Pool Principal Balance, (d) on any Payment Date on or after May
1, 2002 and before May 1, 2003, the aggregate Realized Losses since the
Cut-off Date exceed 3.20% of the Original Pool Principal Balance, (e) on
any Payment Date on or after May 1, 2003 and before May 1, 2004, the
aggregate Realized Losses since the Cut-off Date exceed 3.75% of the
Original Pool Principal Balance or (f) on any Payment Date on or after
May 1, 2004, the aggregate Realized Losses since the Cut-off Date exceed
5.00% of the Original Pool Principal Balance.
If a Master Servicing Default shall occur, then, and in each and every
such case, so long as such Master Servicing Default shall not have been
remedied the Trustee may with the prior written consent of FSA, and shall at
the direction of FSA or the Holders of Notes aggregating not less than 51% of
all Voting Interests with the prior written consent of FSA, by notice in
writing to the Master Servicer (with a copy to each Rating Agency and FSA),
and in addition to any other rights the Trustee may have on behalf of the
Noteholders or FSA as a result of such Master Servicing Default, terminate all
of the rights and obligations of the Master Servicer thereafter arising under
this Agreement and in and to the Mortgage Loans and the proceeds thereof,
other than its rights as a Noteholder under the Indenture and its obligations
which are not assumed by the Trustee pursuant to Section 3(f). On and after
the receipt by the Master Servicer of such written notice, all authority and
power of the Master Servicer as such hereunder, whether with respect to the
Mortgage Loans or otherwise, unless an alternative successor Master Servicer
shall have been appointed by FSA (after consultation with the Trustee), shall
pass to and be vested in the Trustee. The Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments,
and to do or accomplish all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, whether to complete the
transfer and endorsement or assignment of the Mortgage Loans and related
documents, or otherwise.
The Master Servicer agrees to cooperate with the Trustee in effecting the
termination of the Master Servicer's responsibilities and rights as such
hereunder, including, without limitation, the transfer to the Trustee or other
successor Master Servicer of all cash amounts which shall at the time be
credited to the Collection Account or thereafter be received by the Master
Servicer as such with respect to the Mortgage Loans. The Master Servicer shall
promptly provide the Trustee or other successor Master Servicer, as
applicable, at the Master Servicer's cost and expense, all documents and
records reasonably requested by it to enable it to assume the Master
Servicer's functions hereunder. Any collections received by the Master
Servicer after such removal shall be appropriately endorsed by it and remitted
directly to the Trustee or, at the direction of the Trustee, to the successor
Master Servicer. Neither the Trustee nor any other successor Master Servicer
shall be held liable by reason of any failure to make, or any delay in making,
any distribution hereunder or any portion thereof caused by (i) the failure of
the Master Servicer to deliver, or any delay in delivering, cash, documents or
records to it, or (ii) restrictions imposed by any regulatory authority having
jurisdiction over the Master Servicer hereunder.
Notwithstanding any termination of the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to receive any amounts
payable to such Master Servicer hereunder the entitlement to which arose prior
to the termination of its activities hereunder.
The Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default or Master Servicing Default unless a
Responsible Officer of the Trustee's corporate trust department shall have
actual knowledge thereof or shall have received a notice of default from FSA
or the Master Servicer. In the absence of such notice, the Trustee may
conclusively assume there is no such default or Master Servicing Default.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Master Servicer under this Agreement, except
during such time, if any, as the Trustee shall be the successor to, and be
vested with the rights, duties, powers and privileges of, the Master Servicer
in accordance with the terms of this Agreement or except as provided in
Section 4 hereof.
(b) Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7(a) or FSA fails to deliver the Extension
Notice contemplated in Section 7(e), the Trustee shall, subject to and to the
extent provided in Section 3(f), unless an alternative Master Servicer
designated by FSA (after consultation with the Trustee) has been appointed, be
the successor to the Master Servicer in its capacity as master servicer under
this Agreement and the transactions set forth or provided for herein and shall
be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Master Servicer by the terms and provisions hereof and
applicable law including the obligation to make Monthly Advances pursuant to
Section 4; provided, however, that it is understood and acknowledged by the
parties that there will be a period of transition (not to exceed sixty (60)
days) before the servicing transfer is fully effected. As compensation
therefor, the Trustee or other successor Master Servicer shall be entitled to
all funds relating to the Mortgage Loans that the Master Servicer would have
been entitled to hereunder if the Master Servicer had continued to act
hereunder and any additional amounts agreed to by FSA. Notwithstanding the
foregoing, if the Trustee has become the successor to the Master Servicer in
accordance with Section 7(a), the Trustee may, if it shall be unwilling to so
act, or shall, if it is prohibited by applicable law from making Monthly
Advances pursuant to Section 4 or if it is otherwise unable to so act,
appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution acceptable to FSA the
appointment of which does not adversely affect the then current rating of the
Notes (without regard to the FSA Policy) by each Rating Agency as the
successor to the Master Servicer hereunder in the assumption of all or any
part of the responsibilities, duties or liabilities of the Master Servicer
hereunder. Any successor to the Master Servicer shall be an institution which
is a FNMA and FHLMC approved seller/servicer in good standing, which has a net
worth of at least $15,000,000, which is willing to master service the Mortgage
Loans and which executes and delivers to the Issuer and the Trustee an
agreement accepting such delegation and assignment, containing an assumption
by such Person of the rights, powers, duties, responsibilities, obligations
and liabilities of the Master Servicer (other than liabilities of the Master
Servicer under Section 6(e) incurred prior to termination of the Master
Servicer under Section 7(a)), with like effect as if originally named as a
party to this Agreement; provided that each Rating Agency acknowledges that
its rating of the Notes (without regard to the existence of the FSA Policy) in
effect immediately prior to such assignment and delegation will not be
qualified or reduced as a result of such assignment and delegation. Pending
appointment of a successor to the Master Servicer hereunder, the Trustee,
unless the Trustee is prohibited by law from so acting, shall, subject to
Section 3(f), act in such capacity as hereinabove provided. In connection with
such appointment and assumption, FSA may make such arrangements for the
compensation of such successor out of earnings on the accounts as it and such
successor shall agree. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor Master Servicer shall
be deemed to be in default hereunder by reason of any failure to make, or any
delay in making, any distribution hereunder or any portion thereof or any
failure to perform, or any delay in performing, any duties or responsibilities
hereunder, in either case caused by the failure of the preceding Master
Servicer to deliver or provide, or any delay in delivering or providing, any
cash, information, documents or records to it.
The Master Servicer shall pay the expenses of transferring the Trustee
Mortgage Files in connection with the transfer of servicing from the Master
Servicer to a successor Master Servicer (whether or not the Trustee is the
successor Master Servicer). Notwithstanding anything in this Agreement to the
contrary, the Trustee shall be entitled to be reimbursed by the Issuer (as
provided in Section 8.02(d) of the Indenture) and AmREIT for all other costs
and expenses incurred by the Trustee in connection with or associated with the
transfer of servicing from the Master Servicer to a successor Master Servicer
(whether or not the Trustee is the successor Master Servicer), including,
without limitation, any costs or expenses associated with the complete
transfer of all servicing data and the completion, correction and/or
manipulation of such servicing data as may be required to correct any errors
or insufficiencies in the servicing data provided by the Master Servicer or as
otherwise may be required to enable the successor Master Servicer (including
the Trustee) to service the Mortgage Loans properly and effectively in
accordance with the provisions of this Agreement.
Any successor to the Master Servicer as master servicer shall give notice
to the Subservicers of such change of master servicer and shall, during the
term of its service as master servicer, maintain in force the policy or
policies that the Master Servicer is required to maintain pursuant to Section
3(l).
(c) Waivers by FSA
FSA (so long as no Note Insurer Default has occurred and is continuing),
may waive any events permitting removal of the Master Servicer pursuant to
this Section 7. Upon any waiver of a past default, such default shall cease to
exist, and any Master Servicing 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.
(d) Notification to Noteholders.
(i) Upon any termination of or appointment of a successor to the
Master Servicer, the Trustee shall give prompt written notice thereof to
Noteholders, the Issuer, FSA and each Rating Agency.
(ii) Within 60 days after the occurrence of any Master Servicing
Default, the Trustee shall transmit by mail to all Noteholders and the
Issuer notice of each such Master Servicing Default hereunder known to
the Trustee, unless such Master Servicing Default shall have been cured
or waived.
(e) Term of Service Appointment.
Upon the occurrence of a Master Servicing Default, the Master Servicer
shall act as Master Servicer under this Agreement, subject to the right of
removal set forth in Section 7(a) above, for an initial period commencing on
the date on which such Master Servicing Default occurred and ending on the
last day of the calendar quarter in which such Master Servicing Default
occurred, which period may be extended by FSA in its sole discretion (an
"Extension Notice") for a succeeding quarterly period ending on December 31,
March 31, June 30 and September 30 of each year (each such quarterly period
for which the Master Servicer shall be designated to act as Master Servicer
hereunder, a "Term of Service"); provided that nothing in this clause (e)
shall prohibit the Trustee with consent of FSA or at the direction of FSA from
removing the Master Servicer pursuant to Section 7(a) above. In the event FSA
fails to deliver an Extension Notice prior to the end of any Term of Service,
the Master Servicer shall be automatically terminated.
8. Miscellaneous.
(a) Term of Master Servicing Agreement.
The obligations to be performed by the Master Servicer under this
Agreement shall commence on and as of the date on which the Issuer issues the
Notes and shall terminate as to each Mortgage Loan upon (i) the payment in
full of all principal and interest due under such Mortgage Loan or other
liquidation of such Mortgage Loan as contemplated by this Agreement, (ii) the
termination of the Master Servicer's rights and powers under this Agreement by
the Trustee as provided in Section 7(a) or 7(e), or (iii) the release by the
Trustee of its security interest in such Mortgage Loan.
(b) Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided in Section 6(d), this Agreement may not be assigned by the Master
Servicer without the prior written consent of the Trustee and FSA and written
notice to the Issuer.
(c) Notices.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given when delivered at the following
addresses:
The Master Servicer: Advanta Mortgage Corp. USA
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: SVP Loan Servicing
The Issuer: American Residential Eagle Bond Trust (1999-1)
----------
c/o Wilmington Trust Company, as Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
With a copy to:
American Residential Eagle, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇▇▇ ▇▇▇▇
Seller: American Residential Investment Trust, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇ and/or ▇▇▇▇▇▇ ▇▇▇▇
The Trustee: Norwest Bank Minnesota, National Association
Norwest
Sixth and Marquette
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration/
AmREIT 1999-1
with a copy to:
Norwest Bank Minnesota, National Association
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration/
(AMREIT 1999-1)
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
FSA: Financial Security Assurance Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Transaction Oversight
Re: American Residential Eagle Bond
Trust 1999-1
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Nos.:(▇▇▇) ▇▇▇-▇▇▇▇ or (▇▇▇) ▇▇▇-▇▇▇▇
(in each case in which notice or other
communication to FSA refers to a Master
Servicing Default, a claim on the Policy or
with respect to which failure on the part of
FSA to respond shall be deemed to constitute
consent or acceptance, then a copy of such
notice or other communication should also be
sent to the attention of each of the General
Counsel and the Head--Financial Guaranty
Group and shall be marked to indicate "URGENT
MATERIAL ENCLOSED.")
Any Rating Agency: The address specified therefor in the definition
corresponding to the name of such Rating Agency.
Any of the above entities may at any time give notice in writing to the
others of a change of its address for the purpose of this Section 8(c).
(d) Governing Law.
This Agreement shall be construed in accordance with and governed by the
substantive laws of the State of New York applicable to agreements made and to
be performed in the State of New York and the obligations, rights and remedies
of the parties hereto and the Noteholders shall be determined in accordance
with such laws.
(e) Amendments.
This Agreement shall not be amended, changed, modified, terminated or
discharged in whole or in part except (i) by an instrument in writing signed
by all parties hereto, or their respective successors or assigns, (ii) in
compliance with Section 8.08 of the Indenture and (iii) with the prior written
consent of FSA.
(f) Severability.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions
of this Agreement.
(g) No Joint Venture.
The Master Servicer and the Issuer are not partners or joint venturers
with each other and nothing herein shall be construed to make them such
partners or joint venturers or impose any liability as such of either of them.
(h) Execution in Counterparts.
This Agreement may be executed in one or more counterparts, any of which
shall constitute an original as against any party whose signature appears on
it, and all of which shall together constitute a single instrument. This
Agreement shall become binding when one or more counterparts, individually or
taken together, bear the signatures of all parties.
(i) Limitation of Liability of Wilmington Trust Company.
It is expressly understood and agreed by the parties hereto that (a) this
Agreement is executed and delivered by Wilmington Trust Company, not
individually or personally but solely as Owner Trustee of American Residential
Eagle Bond Trust 1999-1 under the Deposit Trust Agreement, in the exercise of
the powers and authority conferred and vested in it as Owner Trustee, (b) each
of the representations, undertakings and agreements herein made on the part of
the Issuer is made and intended not as personal representations, undertakings
and agreements by Wilmington Trust Company but is made and intended for the
purpose for binding only the Issuer, (c) nothing herein contained shall be
construed as creating any liability on Wilmington Trust Company, and (d) under
no circumstances shall Wilmington Trust Company be personally liable for the
payment of any indebtedness or expenses of the Issuer or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Issuer under this Agreement or the other Operative
Agreements.
(j) Nonpetition Covenants.
Notwithstanding any prior termination of this Agreement, the Master
Servicer and the Trustee shall not, prior to the date which is one year and
one day after the termination of this Agreement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer (or any assignee)
to invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or state
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
(k) Third-Party Beneficiary.
FSA shall be a third-party beneficiary of this Agreement and shall be
entitled to enforce the provisions hereof as if a party hereto; provided,
however, that notwithstanding the foregoing, for so long as a Note Insurer
Default is continuing with respect to FSA's obligations under the FSA Policy,
the Noteholders shall succeed to FSA's rights hereunder other than any right
of FSA to payments hereunder.
(l) Trust Estate and Accounts Held for Benefit of FSA.
The Master Servicer shall hold any property in its possession that is
included in the Trust Estate, including funds in the Collection Account (but
excluding any Master Servicing Fees and any other amounts or reimbursements to
which the Master Servicer is entitled to deduct under this Agreement) for the
benefit of the Noteholders and FSA and all references in this Agreement and in
the Notes to the benefit of Holders of the Notes shall be deemed to include
FSA.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the Noteholder shall
also be sent to FSA.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, each party has caused this Master Servicing Agreement
to be executed by its duly authorized officer or officers as of the day and
year first above written.
AMERICAN RESIDENTIAL EAGLE BOND
TRUST 1999-1, as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Its: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
ADVANTA MORTGAGE CORP. USA, as
Master Servicer
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Its: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: /s/ ▇▇▇ ▇▇▇▇
-----------------------------
Its: ▇▇▇ ▇▇▇▇, Assistant Vice President
ACKNOWLEDGED AS TO SECTION 2,
SECTION 6(c), SECTION 6(e) AND SECTION 7(b):
AMERICAN RESIDENTIAL INVESTMENT
TRUST, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Its: ▇▇▇ ▇. Fullerr
ACKNOWLEDGED AS TO SECTION 6(e)
AND SECTION 7(b):
AMERICAN RESIDENTIAL EAGLE, INC
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------
Its: ▇▇▇ ▇. ▇▇▇▇▇▇
SCHEDULE I
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-1
Mortgage-Backed LIBOR Notes, Class A, Series 1999-1
Schedule of Mortgage Loans
SCHEDULE II
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-1
Mortgage-Backed LIBOR Notes, Class A, Series 1999-1
Representations and Warranties of the Master Servicer
Advanta Mortgage Corp. USA ("Advanta") hereby makes the representations
and warranties set forth in this Schedule II to the Issuer and the Trustee, as
of the Closing Date. Capitalized terms used but not otherwise defined in this
Schedule II shall have the meanings ascribed thereto in the Master Servicing
Agreement (the "Master Servicing Agreement") relating to the above-referenced
Notes, among Advanta, as Master Servicer, American Residential Eagle Bond
Trust 1999-1, as Issuer, and Norwest Bank Minnesota, National Association, as
Trustee.
(1) Advanta is duly organized as a corporation and is validly
existing and in good standing under the laws of Delaware and is duly
authorized and qualified to transact any and all business contemplated by
the Master Servicing Agreement to be conducted by Advanta.
(2) Advanta has the full power and authority to master service the
Mortgage Loans, and to execute, deliver and perform its obligations
under, the Master Servicing Agreement and has duly authorized by all
necessary action on the part of Advanta the execution, delivery and
performance of the Master Servicing Agreement; and the Master Servicing
Agreement, and, assuming the due authorization, execution and delivery
thereof by the other parties thereto, constitutes a legal, valid and
binding obligation of Advanta, enforceable against Advanta in accordance
with its terms, except that (a) the enforceability thereof may be limited
by bankruptcy, insolvency, moratorium, receivership and other similar
laws relating to creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(3) The execution and delivery of the Master Servicing Agreement by
Advanta, the master servicing of the Mortgage Loans by Advanta under the
Master Servicing Agreement, the consummation of any other of the
transactions contemplated by the Master Servicing Agreement, and the
fulfillment of or compliance with the terms thereof will not (A) result
in a material breach of any term or provision of the charter or by-laws
of Advanta or (B) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under, the
terms of any other material agreement or instrument to which Advanta is a
party or by which it may be bound, or (C) constitute a material violation
of any statute, order or regulation applicable to Advanta of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Advanta.
(4) No litigation is pending or, to the best of Advanta's knowledge,
threatened against Advanta that would materially and adversely affect the
execution or delivery of the Master Servicing Agreement by Advanta or
enforceability of the Master Servicing Agreement against Advanta or the
ability of Advanta to master service the Mortgage Loans or to perform any
of its other obligations under the Master Servicing Agreement in
accordance with the terms thereof.
(5) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Advanta of its obligations under the Master Servicing
Agreement, or if any such consent, approval, authorization or order is
required, Advanta has obtained the same.
SCHEDULE III
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-1
Mortgage-Backed LIBOR Notes, Class A, Series 1999-1
Representations and Warranties as to the Mortgage Loans
In the Mortgage Loan Purchase Agreement (which has been assigned to the
Trustee), American Residential Investment Trust, Inc. (the "Seller") makes the
representations and warranties set forth in this Schedule III, as of the
Closing Date, or if so specified herein, as of the Cut-off Date or the
Statistical Cut-off Date, as the case may be. Capitalized terms used but not
otherwise defined in this Schedule III shall have the meanings ascribed
thereto in the Master Servicing Agreement (the "Master Servicing Agreement")
relating to the above-referenced Series of Notes, issued by American
Residential Eagle Bond Trust 1999-1.
(a) General. The information with respect to the Mortgage Loan set
forth in the Mortgage File and the Mortgage Loan Schedule is true and
correct in all material respects, and no Mortgage Loan has been modified,
revised, changed or altered in any manner by AmREIT. The Mortgage Loan
was originated and underwritten in accordance with Seller's underwriting
guidelines, as described in the Prospectus Supplement for the
above-referenced Notes. Each document in the related Mortgage File has
been or shall be delivered in accordance with the terms of this
agreement.
(b) Payments Current. As of March 1, 1999 (the "Statistical Cut-off
Date"), no more than 1.42% of the Mortgage Loans (by Principal Balance as
of the Statistical Cut-off Date) were 30 but not more than 59 days
Delinquent and no more than 3.72% of the Mortgage Loans (by Principal
Balance as of the Statistical Cut-off Date) were 60 days or more
Delinquent and no Mortgage Loan is more than [____] days Delinquent.
First payment due on such Mortgage Loans has been or will be made on a
timely basis.
(c) No Outstanding Charges. There are no defaults in complying with
the terms of the Mortgage Note or the Mortgage, and all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due
and owing have been paid, or, if required by the Mortgage or applicable
law, 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. Seller has not advanced funds, or
induced, solicited or knowingly received any advance of funds by a party
other than the Mortgagor, directly or indirectly, for the payment of any
amount required under the Mortgage Loan, except for interest accruing
from the date of the Mortgage Note or date of disbursement of the
Mortgage Loan proceeds, whichever is earlier, to the day which precedes
by one month the Due Date of the first installment of principal and
interest.
(d) Original Terms Unmodified; No Defenses. The terms of the
Mortgage Note and Mortgage have not been impaired, waived, altered or
modified in any respect, and no Mortgagor has been released, in whole or
in part. The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including without limitation the
defense of usury, nor will the operation of any of the terms of the
Mortgage Note or the Mortgage, or the exercise of any right thereunder,
render either the Mortgage Note or the Mortgage unenforceable, in whole
or in part, no such right of rescission, set-off, counterclaim or defense
has been asserted with respect thereto, and no Mortgagor was a debtor in
any state or federal bankruptcy or insolvency proceeding at the time the
Mortgage Loan was funded.
(e) Hazard Insurance. All buildings or other improvements upon the
Mortgaged Property are insured by a generally acceptable insurer against
loss by fire, hazards of extended coverage and such other hazards as are
customarily insured against in the broad form of extended coverage hazard
insurance available for properties in the area where the Mortgaged
Property is located in an amount not less than the least of (i) the
outstanding principal balance of the Mortgage Loan (together, in the case
of a subordinate lien Mortgage Loan, with the outstanding principal
balance of the senior mortgage(s), (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis or (iii) the
full insurable value of the Mortgaged Property, but in any event in no
greater amount as may be allowed by applicable law. If upon origination
of the Mortgage Loan, the Mortgaged Property was in an area identified in
the Federal Register by the Federal Emergency Management Agency as having
special flood hazards (and such flood insurance was required by federal
regulation and such flood insurance has been made available), a flood
insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration is in effect in an amount not less
than the least of (I) the outstanding principal balance of the Mortgage
Loan (together, in the case of a subordinate lien Mortgage Loan, with the
outstanding principal balance of the senior mortgage(s), (II) the minimum
amount required to compensate for damage or loss on a replacement cost
basis or (III) the maximum amount of insurance that is available under
the Flood Disaster Protection Act of 1973. All individual insurance
policies contain a standard mortgagee loss payable clause and all
premiums thereon have been paid. The Mortgage obligates the Mortgagor
thereunder to maintain the hazard insurance policy at the Mortgagor's
cost and expense, and on the Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and maintain such insurance at such
Mortgagor's cost and expense, and to seek reimbursement therefor from the
Mortgagor. Where required by state law or regulation, the Mortgagor has
been given an opportunity to choose the carrier of the required hazard
insurance, provided the policy is not a "master" or "blanket" hazard
insurance policy covering the common facilities of a planned unit
development. Each insurance policy required hereunder is the valid and
binding obligation of the insurer, is in full force and effect, and will
be in full force and effect and inure to the benefit of Purchaser upon
the consummation of the sale of the Mortgage Loan to Purchaser pursuant
to this Agreement. Seller has not engaged in, and has no knowledge of the
Mortgagor's having engaged in, any act or omission which would impair the
coverage of any such policy, the benefits of the endorsement provided for
herein, or the validity and binding effect of either including, without
limitation, the payment, retention, or realization of any unlawful fee,
commission, kickback, or other unlawful compensation or value of any kind
to or by any attorney, firm or other person or entity, and no such
unlawful items have been received, retained or realized by Seller.
(f) Compliance with Applicable Laws. Any and all requirements of any
federal, state or local law including, without limitation, usury,
truth-in-lending, real estate settlement procedures, consumer credit
protection, equal credit opportunity or disclosure laws applicable to the
Mortgage Loan have been complied with, and Seller shall maintain in its
possession, available for Purchaser's inspection, and shall deliver to
Purchaser upon demand, evidence of compliance with all such requirements,
to the extent compliance requires preparation of one or more documents.
(g) No Satisfaction of Mortgage. The Mortgage has not been
satisfied, canceled, subordinated or rescinded, in whole or in part, and
the Mortgaged Property has not been released from the lien of the
Mortgage, in whole or in part, nor has any instrument been executed that
would effect any such release, cancellation, subordination or rescission.
Seller has not waived the performance by the Mortgagor of any action, if
the Mortgagor's failure to perform such action would cause the Mortgage
Loan to be in default, nor has Seller waived any default resulting from
any action or inaction by the Mortgagor.
(h) Valid Lien. The Mortgage is a valid, subsisting and enforceable
first lien on the Mortgaged Property, of the priority described in the
Mortgage File and the Mortgage Loan Schedule, if any, including all
buildings on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in or
annexed to such buildings, and all additions, alterations and
replacements made at any time with respect to the foregoing. The lien of
the Mortgage is subject only to:
(i) the lien of current real property taxes and assessments not
yet due and payable;
(ii) covenants, conditions and restrictions, rights of way,
easements and other matters of the public record as of the date of
recording acceptable to prudent mortgage lending institutions
generally and specifically referred to in the lender's title
insurance policy delivered to the originator of the Mortgage Loan
and (a) referred to or otherwise considered in the appraisal made
for the originator of the Mortgage Loan or (b) which do not
adversely affect the Appraised Value of the Mortgaged Property set
forth in such appraisal;
(iii) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the
security intended to be provided by the mortgage or the use,
enjoyment, value or marketability of the related Mortgaged Property;
and
(iv) any senior liens identified in the Mortgage File if the
Mortgage is identified as a subordinate lien in the Mortgage File
and the Mortgage Loan Schedule, if any.
Any security agreement, chattel Mortgage or equivalent document related
to and delivered in connection with the Mortgage Loan establishes and creates
a valid, subsisting and enforceable lien and security interest, of the same
priority as the Mortgage, on the property described therein and Seller has
full right to sell and assign the same to Purchaser.
(i) Validity of Mortgage Documents. The Mortgage Note and the
Mortgage and any other agreement executed and delivered by a Mortgagee in
connection with a Mortgage Loan are genuine, and each is the legal, valid
and binding obligation of the maker thereof enforceable in accordance
with its terms. All parties to the Mortgage Note, the Mortgage and any
other such related agreements are the parties described in the Mortgage
File and had legal capacity to enter into the Mortgage Loan and to
execute and deliver the Mortgage Note, the Mortgage and any such
agreement. The related Assignment of Mortgage is in recordable form and
is acceptable for recording under the laws of the jurisdiction in which
the Mortgaged Property is located.
(j) Full Disbursement of Proceeds. The proceeds of the Mortgage Loan
have been fully disbursed and there is no requirement for future advances
thereunder. All costs, fees and expenses incurred in making or closing
the Mortgage Loan and the recording of the Mortgage or closing the
Mortgage Loan and the recording of the Mortgage were paid, and the
Mortgagor is not entitled to any refund of any amounts paid or due under
the Mortgage Note or Mortgage.
(k) Ownership. Immediately prior to the sale of the Mortgage Loan to
Purchaser hereunder, Seller has good, indefeasible and marketable title
thereto, and has full right to transfer and sell the Mortgage Loan to
Purchaser free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest, and has full
right and authority to subject to no interest or participation of, or
agreement with, any other party, to sell and assign the Mortgage Loan
pursuant to this Agreement, and following the sale of the Mortgage Loan,
Purchaser will own the Mortgage Loan free and clear of any encumbrance,
equity, participation interest, lien, pledge, charge, claim or security
interest. Seller intends to relinquish all rights to possess, control and
monitor the Mortgage Loan.
(l) Doing Business. All parties which have had any interest in the
Mortgage Loan, whether as a mortgagee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest, were)
(i) in compliance with any and all applicable licensing requirements of
the laws of the state wherein the Mortgaged Property is located, and (ii)
organized under the laws of such state, (iii) qualified to do business in
such state, (iv) federal savings and loan associations or national banks
having principal officers in such state, or (v) not doing business in
such state.
(m) Title Insurance. The Mortgage Loan is covered by either (i) an
attorney's opinion of title and abstract of title, the form and substance
of which is acceptable to prudent mortgage lending institutions making
mortgage loans in the area where the Mortgaged Property is located or
(ii) an ALTA or, if approved in writing by Purchaser, a CLTA lender's
title insurance policy, and each such title insurance policy is issued by
a title insurer qualified to do business in the jurisdiction where the
Mortgaged Property is located, insuring the mortgagee as to the
appropriate priority of the lien of the Mortgage in the original
principal amount of the Mortgage Loan, plus the outstanding principal
balance of any senior mortgage loan in the case of a subordinate lien
Mortgage Loan (or to the extent a Mortgage Note provides for negative
amortization, the maximum amount of negative amortization in accordance
with the Mortgage), subject only to the exceptions contained in clauses
(i), (ii) and (iv) of paragraph (h) of this Section 7.02, and, in the
case of an adjustable rate Mortgage Loan, against any loss by reason of
the invalidity or unenforceability of the lien resulting from the
provisions of the Mortgage providing for adjustment to the related
Mortgage Interest Rate and Monthly Payment. Where required by state law
or regulation, the Mortgagor has been given the opportunity to choose the
carrier of the required mortgage title insurance. Such lender's title
insurance policy is valid and remains in full force and effect. No claims
have been made under such lender's title insurance policy, and neither
Seller, nor to Seller's knowledge, any prior holder of the Mortgage has
done, by act of omission, anything which would impair the coverage of
such lender's title insurance policy, including without limitation, the
payment, retention or realization of any unlawful fee, commission,
kickback or other unlawful compensation or value of any kind by or to any
attorney, firm or other person or entity, and no such unlawful items have
been received, retained or realized by Seller.
(n) No Defaults. There is no default, breach, violation or event of
acceleration existing under the Mortgage Note and no event which, with
the passage of time or with notice and the expiration of any grace or
cure period, other than the failure to make, prior to expiration of the
applicable grace period, the Monthly Payment due immediately prior to the
related Closing Date if such Closing Date occurs prior to the expiration
of such grace period, would constitute a default, breach, violation or
event of acceleration and neither AmREIT nor its predecessors have waived
any default, breach, violation or event of acceleration.
(o) No Mechanics' Liens. There is no mechanic's or similar lien or
claim which has been filed for work, labor or material (and no rights are
outstanding that under the law could give rise to such a lien) affecting
the related Mortgaged Property which is or may be a lien prior to, or
equal or coordinate with, the lien of the related Mortgage, except to the
extent insured against by the related title insurance policy.
(p) Location of Improvements; No Encroachments. All improvements
which were considered in determining the Appraised Value of the Mortgaged
Property lie wholly within the boundaries and building restriction lines
of the Mortgaged Property. No improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or
regulation.
(q) Payment Terms. The Mortgage Note is payable in monthly
installments of principal and interest sufficient to amortize the
Mortgage Loan fully by the stated maturity date, over an original term of
not more than thirty years from commencement of amortization, except for
a Mortgage Note relating to a "balloon" Mortgage Loan which amortizes the
principal balance of such Mortgage Note over a thirty year period but
provides for a balloon payment of the outstanding principal balance no
sooner than the fifth year.
(r) Customary Provisions. The Mortgage contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Mortgaged
Property of the benefits of the security provided thereby, including (i)
in the case of a Mortgage designated as a deed of trust, by trustee's
sale, and (ii) otherwise by judicial foreclosure. Upon default by the
Mortgagor on the Mortgage Loan and foreclosure on, or trustee's sale of,
the Mortgaged Property pursuant to the proper procedures, the holder of
the Mortgage Loan will be able to deliver good and merchantable title to
the Mortgaged Property, subject to one or more superior mortgages in the
case of a subordinate lien Mortgage Loan. There is no homestead or other
exemption available to the Mortgagor which would interfere with the right
to sell the Mortgaged Property at a trustee's sale or the right to
foreclose the Mortgage.
(s) Residential Property. The Mortgaged Property is improved by a
one-to-four-family residential dwelling owned by the related Mortgagor in
fee simple; provided, however, that no such Mortgaged Property consists
of a mobile home or cooperative.
(t) Occupancy and Use of the Mortgaged Property. 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.
(u) Deeds of Trust. In the event the Mortgage constitutes a deed of
trust, a trustee, authorized and duly qualified under applicable law to
serve as such, has been properly designated and currently so serves and
is named in the Mortgage, and no fees or expenses are or will become
payable by Purchaser to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor.
(v) Due-On-Sale. Subject to applicable state law, the Mortgage
contains an enforceable provision for the acceleration of the payment of
the unpaid principal balance of the Mortgage Loan in the event that the
Mortgaged Property is sold or transferred without the prior written
consent of the mortgagee thereunder.
(w) No Buydown Provisions; No Graduated Payments or Contingent
Interests. The Mortgage Loan does not contain provisions, and no
arrangements have been made, pursuant to which Monthly Payments are or
were paid or partially paid with funds deposited in any separate account
established by Seller, the Mortgagor or anyone on behalf of the
Mortgagor, or paid by any source other than the Mortgagor nor does it
contain any other similar provisions which may constitute a "buydown"
provision. The Mortgage Loan is not a graduated payment mortgage loan and
the Mortgage Loan does not have a shared appreciation or other contingent
interest feature.
(x) Consolidation of Future Monthly Advances. Any advances made
after origination of the Mortgage Loan but prior to the Cut-Off Date have
been consolidated with the outstanding principal amount secured by the
Mortgage, and the secured principal amount, as consolidated, bears a
single interest rate and single repayment term. The lien of the Mortgage
securing the consolidated principal amount is expressly insured in
accordance with the requirements of paragraph (mortgage) of this Section
7.02. The consolidated principal amount does not exceed the original
principal amount of the Mortgage Loan.
(y) Mortgaged Property Undamaged. To Seller's knowledge, the
Mortgaged Property is undamaged 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
Mortgage Loan or the use for which the premises were intended, and each
Mortgaged Property is in good repair. There is no proceeding pending or,
to the knowledge of Seller, threatened for the total or partial
condemnation of the Mortgaged Property. A full appraisal and a review
appraisal of the Mortgaged Property was performed or recertified in
connection with the origination of the Mortgage Loan, each within 120
days of the closing thereof, and each such appraisal was performed in
accordance with the Uniform Standards of Professional Appraisal Practice
and in accordance with the standards commonly employed by appraisers of
similar properties in the same region.
(z) Servicing; Escrow Deposits; Interest Rate Adjustments. The
Mortgage Loan has been serviced in accordance with Accepted Servicing
Practices. With respect to escrow deposits and Escrow Payments, all such
payments have or will be transferred to Purchaser and there exist no
deficiencies in connection therewith for which customary arrangements for
repayment thereof have not been made. All Escrow Payments have been
collected in full compliance with state and federal law. If required
under the Mortgage and not prohibited by applicable law, an escrow of
funds has been established in an amount sufficient to pay for every item
that remains unpaid and has been assessed but is not yet due and payable.
No escrow deposits or Escrow Payments or other charges or payments due
Seller have been capitalized under the Mortgage or the Mortgage Note. All
Mortgage Interest Rate adjustments have been made in compliance with
state and federal law and the terms of the related Mortgage Note. Any
interest required to be paid pursuant to state and local law has been
properly paid and credited.
(aa) No Violation of Environmental Laws. There is no pending action
or proceeding directly involving the Mortgaged Property in which
compliance with any environmental law, rule, regulation or order of any
federal, state or other governmental authority is an issue; and, to
Seller's knowledge, the Mortgaged Property is in compliance with all such
laws, rules, regulations and orders.
(bb) Soldiers' and Sailors' Civic Relief Act. The Mortgagor has not
notified Seller of any relief requested by the Mortgagor under the
Soldiers' and Sailors' Civic Relief Act of 1990.
(cc) Leaseholds. If the Mortgage Loan is secured by a leasehold
estate, the lease is valid and in good standing, all rents and other
payments that have become due under the lease have been paid properly,
the lessee is not in default under any provision of the lease, the lease
does not provide for its forfeiture or termination for any reason except
the nonpayment of lease rents, and the maturity date of the lease is at
least five years after the maturity date of the Mortgage.
(dd) No Misrepresentation. To Seller's knowledge, neither the
Mortgagor nor any other party has made any misrepresentation or committed
any fraud in connection with the origination of the Mortgage Loan or the
sale of the Mortgage Loan to Purchaser.
(ee) Insurance. Seller has caused to be performed any and all acts
required to be performed to preserve the rights and remedies of Purchaser
and its successors and assigns in any Insurance policies applicable to
the Mortgage Loan including any necessary notifications of insurers,
assignments of policies or interest therein, and the vesting of
co-insured, joint loss payee and mortgage rights in favor or Purchaser
and its successors and assigns. If the related Mortgagor purchased a
credit life insurance policy in connection with the closing of the
Mortgage Loan, the premium has been paid over to the insurer.
(ff) No Litigation. The Mortgage Loan has at no time been the
subject of litigation, including but not limited to foreclosure
litigation or bankruptcy proceedings.
(gg) Loan-To-Value. As of the Statistical Cut-off Date, no Mortgage
Loan had a Loan-To-Value Ratio at origination in excess of 95.00% and as
of the Statistical Cut-off Date, the weighted average Loan-To-Value Ratio
at origination is 77.62%.
(hh) Status of Originators. Each Mortgage Loan was 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.
(ii) Coverage by Mortgage Insurer. Each of the Mortgage Loans that
is identified on Schedule IV hereto is covered by an Insurance Policy
issued by the Mortgage Insurer. All requirements for the valid transfer
of each Insurance Policy listed in Schedule VI, including any assignments
or notices required, have been satisfied. As of the Closing Date, with
respect to each Mortgage Loan that is subject to an Insurance Policy,
AmREIT has not taken any action, or omitted to take any action, and has
no knowledge of any circumstances that would cause the Mortgage Insurer
to deny a claim with respect to such Mortgage Loan.
SCHEDULE IV
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-1
Mortgage-Backed LIBOR Notes, Class A, Series 1999-1
Representations and Warranties of the Issuer
American Residential Eagle Bond Trust 1999-1 (the "Issuer") hereby makes
the representations and warranties set forth in this Schedule IV to the Master
Servicer and the Trustee, as of the Closing Date. Capitalized terms used but
not otherwise defined in this Schedule IV shall have the meanings ascribed
thereto in the Master Servicing Agreement (the "Master Servicing Agreement")
relating to the above-referenced Series, among Advanta Mortgage Corp. USA, as
Master Servicer, the Issuer, and Norwest Bank Minnesota, National Association,
as Trustee.
(A) The Issuer is a statutory business trust duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and possesses all requisite authority, power, licenses, permits and
franchises to conduct any and all business contemplated by the Master
Servicing Agreement and to comply with its obligations under the terms of
that Agreement, the performance of which have been duly authorized by all
necessary action.
(B) Neither the execution and delivery of the Master Servicing
Agreement by the Issuer, nor the performance and compliance with the
terms thereof by the Issuer will (A) result in a material breach of any
term or provision of the instruments creating the Issuer or governing its
operations, or (B) materially conflict with, result in a material breach,
violation or acceleration of, or result in a material default under, the
terms of any other material agreement or instrument to which the Issuer
is a party or by which it may be bound, or (C) constitute a material
violation of any statute, order or regulation applicable to the Issuer of
any court, regulatory body, administrative agency or governmental body
having jurisdiction over the Issuer; and the Issuer is not in breach or
violation of any material indenture or other material agreement or
instrument, or in violation of any statute, order or regulation of any
court, regulatory body, administrative agency or governmental body having
jurisdiction over it which breach or violation may materially impair the
Issuer's ability to perform or meet any of its obligations under the
Master Servicing Agreement.
(C) The Master Servicing Agreement, and all documents and
instruments contemplated hereby, which are executed and delivered by the
Issuer, will, assuming due authorization, execution by and delivery to
the other parties hereto and thereto, constitute valid, legal and binding
obligations of the Issuer, enforceable in accordance with their
respective terms, except that (a) the enforceability thereof may be
limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
(D) No litigation is pending or, to the best of the Issuer's
knowledge, threatened against the Issuer that would materially and
adversely affect the execution, delivery or enforceability of the Master
Servicing Agreement or the ability of the Issuer to perform its
obligations thereunder.
(E) Immediately prior to the pledge of the Mortgage Loans to the
Trustee, the Issuer had good title to, and was the sole owner of, each
Mortgage Loan free and clear of any liens, charges or encumbrances or any
ownership or participation interests in favor of any other Person.
SCHEDULE V
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-1
Mortgage-Backed LIBOR Notes, Class A, Series 1999-1
Purchase and Sale Agreements
1. Master Mortgage Loan Sale and Purchase Agreement dated as of March 27,
1998, by and between CoreWest Banc. ("Seller") and American Residential
Investment Trust, Inc. ("Purchaser")
2. Master Mortgage Loan Sale and Purchase Agreement dated as of ________, by
and between On Call Mortgage ("Seller") and American Residential
Investment Trust, Inc. ("Purchaser")
3. Master Mortgage Loan Sale and Purchase Agreement dated as of January 27,
1999, by and between Mortgage Lenders Network, USA ("MLN") ("Seller") and
American Residential Investment Trust, Inc. ("Purchaser")
4. Master Mortgage Loan Sale and Purchase Agreement dated as of December 10,
1997, by and between Accredited Home Lenders, Inc. ("Seller") and
American Residential Investment Trust, Inc. ("Purchaser")
5. Master Mortgage Loan Sale and Purchase Agreement dated as of April 27,
1998, by and between Fieldstone Mortgage Company ("Seller") and American
Residential Investment Trust, Inc. ("Purchaser")
6. Master Mortgage Loan Sale and Purchase Agreement dated as of September 9,
1998, by and between New America Capital Markets ("Seller") and American
Residential Investment Trust, Inc. ("Purchaser")
7. Master Mortgage Loan Sale and Purchase Agreement dated as of September 9,
1998, by and between Alternative Lending Capital ("Seller") and American
Residential Investment Trust, Inc. ("Purchaser")
8. Master Mortgage Loan Sale and Purchase Agreement dated as of May 26,
1998, by and between Prime Financial Network, Inc. ("Seller") and
American Residential Investment Trust, Inc. ("Purchaser")
9. Master Mortgage Loan Sale and Purchase Agreement dated as of October 21,
1998, by and between ComUnity Lending Corporation ("Seller") and American
Residential Investment Trust, Inc. ("Purchaser")
10. Master Mortgage Loan Sale and Purchase Agreement dated as of January 29,
1998, by and between Provident Funding Associates, L.P. ("Seller") and
American Residential Investment Trust, Inc. ("Purchaser")
11. Master Mortgage Loan Sale and Purchase Agreement dated as of October 15,
1998, by and between Ameriquest Mortgage Company ("Seller") and American
Residential Investment Trust, Inc. ("Purchaser")
12. Master Mortgage Loan Sale and Purchase Agreement dated as of September
22, 1998, by and between Greentree Mortgage Company, L.P. ("Seller") and
American Residential Investment Trust, Inc. ("Purchaser")
13. Master Mortgage Loan Sale and Purchase Agreement dated as of October 6,
1998, by and between Empire Home Loan Corporation ("Seller") and American
Residential Investment Trust, Inc. ("Purchaser")
SCHEDULE VI
AMERICAN RESIDENTIAL EAGLE BOND TRUST 1999-1
Mortgage-Backed LIBOR Notes, Class A, Series 1999-1
List of Insurance Policies and Related Premiums
and Mortgage Loans
Mortgage
Insurer Policy No. Loan(s) Covered Premium
Commonwealth Mortgage Assurance Company 55468-000 Attached as Appendix I 1.23% per annum
Incontestability Endorsement 10539 ED. 9/96
Cooperative Housing Endorsement 10570 ED. 1/98
Financed Single Premium Endorsement 10571 ED. 1/98