Execution Copy
4/28/00
PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION,
Depositor
MORTGAGE LENDERS NETWORK USA, INC.,
Servicer
MORTGAGE LENDERS NETWORK USA, INC.,
Seller
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of April 1, 2000
---------------------------------
MORTGAGE LENDERS NETWORK HOME EQUITY LOAN TRUST,
SERIES 2000-1
TABLE OF CONTENTS
Table of Contents
Page
ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms...............................................................4
Section 1.02. Accounting.................................................................34
ARTICLE II.
ESTABLISHMENT OF THE TRUST; PURCHASE AND SALE OF MORTGAGE
LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Establishment of the Trust.................................................35
Section 2.02. Purchase and Sale of Mortgage Loans........................................35
Section 2.03. Grant of Security Interest.................................................35
Section 2.04. Document Delivery Requirements.............................................36
Section 2.05. Acceptance by Trustee......................................................40
Section 2.06. Repurchase or Substitution of Mortgage Loans by the
Seller or the Servicer.....................................................41
Section 2.07. Representations and Warranties with Respect to the
Mortgage Loans.............................................................44
Section 2.08. Representations and Warranties of the Seller...............................45
Section 2.09. Representations, Warranties and Covenants of the
Servicer...................................................................47
Section 2.10. Representations and Warranties of the Depositor............................50
Section 2.11. Execution of Certificates..................................................52
Section 2.12. [Reserved].................................................................52
Section 2.13. [Reserved].................................................................52
Section 2.14. Designation of Interests in the REMIC......................................52
ARTICLE III.
ADMINISTRATION AND SERVICING OF THE TRUST
Section 3.01. Administration of the Trust; Servicing of the Mortgage
Loans......................................................................54
Section 3.02. Subservicing Agreements Between Servicer and
Subservicers...............................................................58
Section 3.03. Successor Subservicers, Termination of Subservicing
Agreement..................................................................59
Section 3.04. Liability of the Servicer..................................................60
Section 3.05. Independent Contractor Relationship; No Contractual
Relationship Between Subservicers and Trustee or
Certificateholders.........................................................60
Section 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee......................................................60
Section 3.07. Collection of Certain Mortgage Loan Payments;
Interest Rate and Monthly Payment Adjustments..............................61
Section 3.08. Subservicing Accounts......................................................62
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.........................................................63
Section 3.10. Collection Account.........................................................63
Section 3.11. Withdrawals from the Collection Account....................................65
Section 3.12. Investment of Funds in the Accounts........................................66
Section 3.13. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage............................................67
Section 3.14. Enforcement of Due-on-Sale Clauses.........................................69
Section 3.15. Realization upon Defaulted Mortgage Loans; Options to .......................
Purchase Mortgage Loans....................................................69
Section 3.16. Trustee to Cooperate; Release of Mortgage Files............................72
Section 3.17. Servicing Compensation.....................................................73
Section 3.18. Reports to the Trustee; Collection Account Statements......................73
Section 3.19. Statement as to Compliance and Financial Statements........................74
Section 3.20. Independent Public Accountants' Servicing Report...........................75
Section 3.21. Access to Certain Documentation............................................76
Section 3.22. Title, Management and Disposition of REO Property..........................76
Section 3.23. Prepayment Interest Shortfalls.............................................79
Section 3.24. First Liens................................................................79
Section 3.25. Reports to the Securities and Exchange Commission..........................79
Section 3.26. Claims Upon the PMI Policy.................................................80
ARTICLE IV.
FLOW OF FUNDS
Section 4.01. Establishment of Accounts..................................................81
Section 4.02. The Certificate Insurance Policy...........................................81
Section 4.03. Deposits into, and Transfers Among, the Accounts...........................84
Section 4.04. Flow of Funds and Distributions............................................84
Section 4.05. Statements to Certificateholders...........................................87
Section 4.06. Remittance Reports.........................................................91
Section 4.07. Compliance with Withholding Requirements...................................92
ARTICLE V.
THE CERTIFICATES
Section 5.01. The Certificates...........................................................93
Section 5.02. Registration of Transfer and Exchange of Certificates......................94
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates..........................96
Section 5.04. Persons Deemed Certificateholders..........................................97
Section 5.05. Book-Entry Certificates....................................................97
Section 5.06. Notices to Depository......................................................98
Section 5.07. Definitive Certificates....................................................98
ARTICLE VI.
THE SELLER, THE DEPOSITOR AND THE SERVICER
Section 6.01. Liability of the Seller, the Depositor and the Servicer...................100
Section 6.02. Merger or Consolidation of the Seller or the Servicer.....................100
Section 6.03. Limitation on Liability of the Seller, the Depositor, the
Servicer, any Subservicer and Others......................................100
Section 6.04. Limitation on Resignation of the Servicer; No
Assignment or Delegation of Duties by Servicer............................101
Section 6.05. Rights of the Seller, the Depositor, the Certificateholders
and Others in Respect of the Servicer.....................................102
Section 6.06. Eligibility Requirements for Servicer.....................................103
ARTICLE VII.
DEFAULT
Section 7.01. Servicer Defaults; Certain Matters Affecting the
Servicer..................................................................104
Section 7.02. Trustee to Act; Appointment of Successor..................................107
Section 7.03. Notification to Mortgagors and Certificateholders.........................109
Section 7.04. Additional Remedies of Trustee upon Servicer
Defaults..................................................................109
Section 7.05. Waiver of Servicer Defaults...............................................109
Section 7.06. Survivability of Servicer Liabilities.....................................110
Section 7.07. Appointment and Term of Servicer..........................................110
Section 7.08. Appointment of Backup Servicer............................................110
ARTICLE VIII.
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.........................................................111
Section 8.02. Certain Matters Affecting the Trustee.....................................112
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans....................113
Section 8.04. Trustee May Own Certificates..............................................114
Section 8.05. Expenses of Trustee.......................................................114
Section 8.06. Trustee Eligibility Requirements..........................................114
Section 8.07. Resignation and Removal of the Trustee....................................115
Section 8.08. Successor Trustee.........................................................116
Section 8.09. Merger or Consolidation of Trustee........................................117
Section 8.10. Appointment of Co-Trustee or Separate Trustee.............................117
Section 8.11. Trustee Records...........................................................118
Section 8.12. Appointment of Office or Agency...........................................118
Section 8.13. Exercise of Trustee Powers by Certificateholders..........................118
ARTICLE IX.
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 9.01. Certain Rights of the Certificate Insurer.................................120
Section 9.02. Trustee To Act Solely with Consent of the Certificate
Insurer...................................................................120
Section 9.03. Trust Fund and Accounts Held for Benefit of the
Certificate Insurer and the Certificateholders............................121
Section 9.04. Effect of Payments by the Certificate Insurer;
Subrogation...............................................................121
Section 9.05. Notices to the Certificate Insurer........................................122
Section 9.06. Third-Party Beneficiary...................................................122
Section 9.07. Trustee to Hold the Policy................................................122
ARTICLE X.
TERMINATION
Section 10.01. Termination...............................................................123
Section 10.02. Additional Termination Requirements.......................................125
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.................................................................126
Section 11.02. Recordation of Agreement; Counterparts....................................127
Section 11.03. Limitation on Rights of Certificateholders................................127
Section 11.04. Governing Law; Jurisdiction...............................................128
Section 11.05. Notices...................................................................128
Section 11.06. Severability of Provisions................................................129
Section 11.07. Article and Section References............................................129
Section 11.08. Notice to the Rating Agencies.............................................130
Section 11.09. Further Assurances........................................................131
Section 11.10. Benefits of Agreement.....................................................131
Section 11.11. Acts of Certificateholders................................................131
Section 11.12. Tax Matters Person........................................................132
EXHIBITS:
Exhibit A Forms of Offered Certificates
Exhibit B Form of Class X Certificates
Exhibit C Forms of Class R Certificates
Exhibit D Mortgage Loan Schedule
Exhibit E-1 Request for Release
Exhibit E-2 Request for Release (Mortgage Loans Paid in Full)
Exhibit F PMI Mortgage Loans
Exhibit G Form of Collection Account Certification
Exhibit H Form of Liquidation Report
Exhibit I Form of Collection Account Activity Report
Exhibit J Forms of Transfer Certification
Exhibit K Form of Class R Certificate Transfer Affidavit
Exhibit L Form of Written Order to Authenticate
Exhibit M Prepayment Charge Schedule
Exhibit N Depository Agreement
Exhibit O Form of Servicer Request for Reimbursement
This Pooling and Servicing Agreement is dated as of April 1, 2000 (the
"Agreement"), among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, as
depositor (the "Depositor"), MORTGAGE LENDERS NETWORK USA, INC., as servicer (in
such capacity, the "Servicer" or "Mortgage Lenders"), MORTGAGE LENDERS NETWORK
USA, INC., as seller (the "Seller"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as trustee (the "Trustee").
PRELIMINARY STATEMENT:
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
WHEREAS, Mortgage Lenders is in the business of originating or
purchasing from others certain mortgage loans, including the Mortgage Loans;
WHEREAS, the Depositor has purchased from the Seller Mortgage Loans
originated or purchased by Mortgage Lenders and wishes to establish a trust
administered by the Trustee, which trust will (i) purchase the Mortgage Loans
from the Depositor, with the result that the entire beneficial ownership of the
Mortgage Loans will be in the Trust Fund, and (ii) issue pass-through
certificates which in the aggregate will evidence the entire beneficial
ownership in the Trust Fund, with the result that, following such purchase from
the Depositor, the Trustee will hold legal title to the Trust Fund and the
Certificateholders will hold beneficial title to the Trust Fund;
WHEREAS, the Servicer wishes to provide for the servicing of the
Mortgage Loans on the terms and conditions herein set forth; and
WHEREAS, the Depositor intends that the two REMIC elections be made
with respect to the Trust Fund, as provided herein, the Trustee shall elect that
the Trust Fund be treated for federal income tax purposes as comprising two
REMICs (each a "REMIC" or, in the alternative, the Lower Tier REMIC and the
Upper Tier REMIC, respectively). Each Certificate, other than the Class R
Certificate, represents ownership of a regular interest in the Upper Tier REMIC
for purposes of the REMIC Provisions. The Class R Certificate represents
ownership of the sole class of residual interest in each of the Lower Tier REMIC
and the Upper Tier REMIC for purposes of the REMIC Provisions. The Upper Tier
REMIC shall hold as assets the several classes of uncertificated Lower Tier
Interests, other than the Class LTR Interest, set out below. Each such Lower
Tier Interest, other than the Class LTR Interest, is hereby designated as a
regular interest in the Lower Tier REMIC.
Lower Tier Interest Initial Lower Tier
Rate Principal Amount
---- ----------------
Class LT-N (1) $108,139,013.60
Class LT-A-1 (1) 32,000,000.00
Class LT-A-2 (1) 31,000,000.00
Class LT-A-3 (1) 27,997,000.00
Class LT-A-4 (1) 5,000,000.00
Class LT-A-5 (1) 10,500,000.00
Class LT-R (2) (2)
(1) The interest rate with respect to any Distribution Date for these interests
is a per annum variable rate equal to the weighted average of the Net
Mortgage Rates on the Mortgage Loans as of the first day of the calendar
month immediately preceding such Distribution Date.
(2) The Class LT-R interest does not have a principal amount or an interest
rate.
The Lower Tier REMIC shall hold as assets all of the assets included in the
Trust Fund other than the Lower Tier Regular Interests.
With respect to any Distribution Date, interest that accrues on the Class
LT-N Interest will be deferred and added to the principal balance of the Class
LT-N Interest in an amount equal to 50% of any increase in the
Overcollateralized Amount for such Distribution Date.
With respect to any Distribution Date, principal shall be distributed to
and losses shall be allocated among the Lower Tier Regular Interests in a manner
such that, immediately following such Distribution Date, the principal balance
of each of the Class LT-A1, Class LT-A-2, Class LT-A3, Class LT-A4, and Class
LT-A-5 Interests equals 50% of its Corresponding Class of Upper Tier REMIC
Regular Interest.
The Upper Tier REMIC shall issue the following classes of interests and
each Upper Tier Interest, other than the Class UT-R Interest, is hereby
designated as a regular interest in the Upper Tier REMIC.
Upper Tier Class Upper Tier Interest Initial Upper Tier Corresponding
Designation Rate Principal Amount Certificate
----------- ---- ---------------- -----------
Class A-1 (1) $64,000,000.00 Class A-1
Class A-2 7.605% 62,000,000.00 Class A-2
(2)
Class A-3 7.770% 54,553,000.00 Class A-3
(2)
Class A-4 8.040% 10,000,000.00 Class A-4
(2)
Class A-5 7.670% 21,000,000.00 Class A-5
(2)
Class X (3) (3) Class X
Class UT-R (1) Class R
(1) With respect to any Distribution Date, the Class A-1 Interests will bear
interest at a per annum rate equal to the lesser of (a) One Month LIBOR on
the related Determination Date plus 0.14% and (b) the product of the Net
WAC Cap and a fraction, the numerator of which is 30 and the denominator of
which is the actual number of days in the immediately preceding calendar
month.
(2) With respect to any Distribution Date, the rate at which interest is
payable on these interests will be the lesser of the rate shown above or
the Net WAC Cap.
(3) The Class X Interest does not have a principal balance. As of any
Distribution Date, the Class X Interest shall have a notional principal
balance equal to the Aggregate Loan Balance as of the first day of the
calendar month preceding such Distribution Date. With respect to any
Distribution Date, the Class X Interest shall bear interest at a rate equal
to the excess, if any, of the weighted average of the interest rates on the
Lower Tier Regular Interests over the product of (a) 2 and (b) the Adjusted
Lower Tier Net WAC. With respect to any Distribution Date, interest that so
accrues on the notional balance of the Class X Interest shall be deferred
in an amount equal to any increase in the Overcollateralization Amount on
such Distribution Date. Such deferred interest shall not itself bear
interest. On any Distribution Date, the Class X Interest shall be entitled
to receive any amounts distributable pursuant to paragraph seventh of
Section 4.04(b)(v).
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the Seller, the Depositor, the Servicer and the Trustee agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. Unless otherwise specified, all
calculations of interest described herein shall be made on the basis of a
360-day year consisting of twelve 30-day months, except that calculations in
respect of interest on the Class A-1 Certificates shall be made on the basis of
the actual number of days elapsed divided by 360 days.
"1933 Act": The Securities Act of 1933, as amended.
"Accepted Servicing Procedures": The servicing procedures set forth in
Section 3.01(b)(i).
"Account": Either of the Collection Account or the Certificate
Account.
"Accrual Period": With respect to any REMIC Regular Interest and any
Class of Regular Certificates (other than the Class A-1 Certificates) and any
Distribution Date, the calendar month preceding the month of such Distribution
Date (such calendar month assumed for purposes of this definition to have 30
days). With respect to the Class A-1 Certificates and any Distribution Date, the
period commencing on the immediately preceding Distribution Date (or, with
respect to the first Distribution Date, on the Closing Date) and ending on the
day immediately preceding such Distribution Date.
"Additional Servicing Compensation": As defined in Section 3.17
hereof.
"Adjusted Lower Tier Net WAC". With respect to any Distribution Date,
the weighted average of the interest rates on the Lower Tier Regular Interests
determined for this purpose by first subjecting the rate payable on the Class
LT-N Interests to a cap of zero, subjecting the rate payable on the Class LT-A-1
Interest to a cap equal to the product of the rate payable on the Class A-1
Certificate multiplied by a fraction, the numerator of which is the actual
number of days in the month preceding the Distribution Date and the denominator
of which is 30, and subjecting the Class LT-A-2, Class LT-A-3, Class LT-A-4, and
Class LT-A-5 Interests to caps that correspond to the fixed rates described in
the Preliminary Statement at which interest is payable on the Corresponding
Class of Certificates.
"Aggregate Loan Balance": With respect to any date of determination,
the aggregate of the Loan Balances of the Mortgage Loans, calculated as of such
date of determination; provided, however, that the Aggregate Loan Balance with
respect to the Distribution Date on which the Termination Price is to be paid
will be deemed to have been equal to zero as of the last day of the related Due
Period.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"Annual Loss Percentage": With respect to any Distribution Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate of
all Realized Losses for the twelve months ending on the last day of the
preceding month and the denominator of which is the aggregate Loan Balance of
the Mortgage Loans and REO Properties as of the first day of the twelfth
preceding calendar month.
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale or transfer of the Mortgage to the assignee thereof (or, if such
sale or transfer is to the Trustee, then to the Trustee for the benefit of
Certificateholders), which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering
Mortgages secured by Mortgaged Properties located in the same county, if
permitted by law.
"Available Funds": With respect to any Distribution Date, the sum of
all amounts on deposit in the Certificate Account on such Distribution Date that
are available after giving effect to the distributions set forth in Section
4.04(a)(i) through (iv).
"Available Funds Shortfall": With respect to any Distribution Date, an
amount equal to the sum of (a) the amount, if any, by which the Interest
Distribution Amount for such Distribution Date exceeds the Available Funds for
such Distribution Date and (b) the OC Deficit for such Distribution Date.
"Backup Servicer": The party appointed by the Servicer pursuant to
Section 7.08.
"Backup Servicer Agreement": The agreement between the Servicer and
the Backup Servicer pursuant to Section 7.08.
"Backup Servicer Fee": The amount payable to the Backup Servicer on
each Distribution Date as compensation for all services rendered by it in its
capacity as Backup Servicer hereunder, which amount shall equal one twelfth of
the product of (i) the Backup Servicer Fee Rate, multiplied by (ii) the
Aggregate Loan Balance of the Mortgage Loans and any REO Properties as of the
second preceding Due Date (or, in the case of the initial Distribution Date, as
of the Cut-off Date).
"Backup Servicer Fee Rate": 0.06% per annum.
"Basic Principal Distribution Amount": With respect to any
Distribution Date, the excess of (i) the Principal Remittance Amount for such
Distribution Date over (ii) the OC Release Amount, if any, for such Distribution
Date.
"Bankruptcy Code": The Bankruptcy Code, as amended (Title 11 to the
United States Code).
"BIF": The Bank Insurance Fund of the FDIC.
"Book-Entry Certificates": Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a Person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06 hereof). On the Closing
Date, all the Offered Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking or savings institutions in The City of New York, the State of
Maryland or Connecticut or in the city in which the corporate trust office of
the Trustee is located are authorized or obligated by law or executive order to
be closed.
"Calculation Date": With respect to any Distribution Date, the first
day of the calendar month in which such Distribution Date occurs.
"Call Option Date": The first Distribution Date on which the Aggregate
Certificate Principal Balance as of the end of the immediately preceding Due
Period is less than or equal to 10% of the Cut-off Date Aggregate Certificate
Principal Balance.
"Certificate": Any Regular Certificate or Class R Certificate.
"Certificate Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 4.01 hereof which shall be
entitled "Certificate Account, Norwest Bank Minnesota, National Association, as
Trustee, in trust for the registered Certificateholders of Mortgage Lenders
Network Asset Backed Pass-Through Certificates, Series 2000-1", and which must
be an Eligible Account.
"Certificate Insurer": Financial Security Assurance Inc., a stock
insurance company organized and created under the laws of the State of New York,
and any successor thereto.
"Certificate Insurer Default": The existence and continuance of a
failure by the Certificate Insurer to make a payment required under the Policy
in accordance with its terms.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
Disqualified Organization or non-U.S. Person shall not be a Holder of a Class R
Certificate for any purpose hereof.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
"Certificate Principal Balance": With respect to any Regular
Certificate, the product of (i) the Percentage Interest represented by such
Regular Certificate and (ii) the Class Certificate Principal Balance of the
related Class as of such date of determination.
"Certificate Register": The register maintained pursuant to Section
5.02 hereof.
"Civil Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Class": Collectively, Certificates which have the same priority of
payment and bear the same class designation and the form of which is identical
except for variation in (i) the Initial Certificate Principal Balance and (ii)
the Percentage Interest evidenced thereby.
"Class A-1 Certificate," "Class A-2 Certificate," "Class A-3
Certificate," "Class A-4 Certificate," and "Class A-5 Certificate": Any one of
the related Classes of Certificates as designated on the face thereof
substantially in the form annexed hereto as Exhibit A, executed, authenticated
and delivered by the Trustee, representing the right to distributions as set
forth herein and therein, and evidencing an interest designated as a "regular
interest" in the REMIC Trust for purposes of the REMIC Provisions.
"Class A-5 Priority Distribution Amount": As of any Distribution Date,
the lesser of (a) the product of (x) the Basic Principal Distribution Amount and
the Extra Principal Distribution Amount, if applicable, (y) the Class A-5 Pro
Rata Percentage and (z) the Shift Percentage and (b) the Basic Principal
Distribution Amount (such product in no event to exceed 100% of the Basic
Principal Distribution Amount and the Extra Principal Distribution Amount, if
applicable).
"Class A-5 Pro Rata Percentage": As of any Distribution Date, a
fraction the numerator of which is the Class Certificate Principal Balance of
the Class A-5 Certificates on such Distribution Date and the denominator of
which is the aggregate of the Class Certificate Principal Balances of all
Classes of Certificates on such Distribution Date.
"Class Certificate Principal Balance": With respect to any Class of
Regular Certificates and any date of determination, the Original Class
Certificate Principal Balance of such Class reduced by the sum of all amounts
actually distributed in respect of principal of such Class on all prior
Distribution Dates.
"Class R Certificate": Any one of the Class R Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein.
"Class X Certificate": Any one of the Class X Certificates as
designated on the face thereof substantially in the form annexed hereto as
Exhibit C, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and therein.
"Closing Date": April 14, 2000.
"Code": The Internal Revenue Code of 1986 as it may be amended from
time to time.
"Collection Account": The account or accounts created and maintained
pursuant to Section 3.10(a) hereof, which shall be entitled "Collection Account,
Norwest Bank Minnesota, National Association, as Trustee, in trust for the
registered Certificateholders of Mortgage Lenders Network Home Equity Loan
Certificates, Series 2000-1", and which must be an Eligible Account.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business with
respect to the Certificates shall be administered, which office is located at
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other
address as the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor, the Servicer and the Certificate Insurer.
"Corresponding Class": The class of interests in any REMIC created
under this Agreement that correspond to the Class of interests in another such
REMIC or to a Class of Certificates in the manner set out below:
Lower Tier Class Corresponding
Designation Upper Tier Interest Certificate
----------- ------------------- -----------
Class LT-A-1 Class A-1 Class A-1
Class LT-A-2 Class A-2 Class A-2
Class LT-A-3 Class A-3 Class A-3
Class LT-A-4 Class A-4 Class A-4
Class LT-A-5 Class A-5 Class A-5
"Cram Down Loss": With respect to a Mortgage Loan, the amount of
reduction of such Mortgage Loan's Loan Balance resulting from an order issued by
a court of appropriate jurisdiction in an insolvency proceeding. A "Cram Down
Loss" shall be deemed to have occurred on the date of issuance of such order.
"Cumulative Loss Percentage": As of any Distribution Date, the
fraction, expressed as a percentage, whose numerator is the aggregate of all
Realized Losses during the period beginning with the Startup Date and ending on
the last day of the calendar month preceding such Distribution Date and whose
denominator is the Cut-off Date Pool Balance.
"Custodian": Fleet National Bank, as custodian pursuant to the Custody
Agreement.
"Custody Agreement": The Custody Agreement dated as of April 1, 2000
among Fleet National Bank, as custodian, Mortgage Lenders Network USA, Inc., as
servicer, and Norwest Bank Minnesota, National Association, as trustee.
"Cut-off Date": With respect to any Mortgage Loan other than a
Qualified Substitute Mortgage Loan, the close of business on April 1, 2000. With
respect to any Qualified Substitute Mortgage Loan, the date designated as such
on the Mortgage Loan Schedule (as amended).
"Cut-off Date Loan Balance": As to any Mortgage Loan, the outstanding,
unpaid principal balance thereof as of the close of business on the applicable
Cut-off Date after giving effect to all scheduled principal payments due,
whether or not received, on or prior to the related Cut-off Date.
"Cut-off Date Pool Balance": The aggregate of the Cut-off Date Loan
Balances of the Mortgage Loans.
"Definitive Certificates": As defined in Section 5.05 hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
one or more Qualified Substitute Mortgage Loans.
"Delinquency Advance": As defined in Section 4.06(b) hereof.
"Delinquency Amount": As of any Distribution Date, the product of the
Rolling Delinquency Percentage for such Distribution Date and the average of the
Aggregate Loan Balance of the Mortgage Loans as of the last day of each of the
three (or one or two, in the case of the first and second Distribution Dates,
respectively) preceding calendar months.
"Delinquency Percentage": With respect to any Distribution Date, the
fraction, expressed as a percentage, the numerator of which is the Aggregate
Loan Balance of all Mortgage Loans that are 60 or more days Delinquent, in
foreclosure or relating to REO Properties as of the close of business on the
last day of the preceding calendar month, and the denominator of which is the
Aggregate Loan Balance of the Mortgage Loans as of the close of business on the
last day of the preceding calendar month.
"Delinquency Statistic Date": April 1, 2000.
"Delinquent": A Mortgage Loan is "Delinquent" if any Monthly Payment
due thereon is not made by the close of business on the day such Monthly Payment
is scheduled to be due. A Mortgage Loan is "30 days Delinquent" if such Monthly
Payment has not been received by the close of business on the corresponding day
of the month immediately succeeding the month in which such Monthly 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, and similarly for "60
days Delinquent," "90 days Delinquent" and so on.
"Depositor": Prudential Securities Secured Financing Corporation, a
Delaware corporation, or any successor in interest.
"Depository": The initial Depository shall be The Depository Trust
Company, whose nominee is Cede & Co., or any other organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository shall initially be the registered Holder of the
Book-Entry Certificates. The Depository shall at all times be a "clearing
corporation" as defined in Section 8-102(3) of the Uniform Commercial Code of
the State of New York.
"Depository Agreement": With respect to any Book-Entry Certificates,
the agreement among the Depositor, the Trustee and the initial Depository, to be
dated on or about April 14, 2000 and substantially in the form of Exhibit N.
"Depository Participant": A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date, the close
of business on the fifteenth day of the calendar month in which such
Distribution Date occurs or, if such fifteenth day is not a Business Day, the
close of business on the Business Day immediately preceding such fifteenth day.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust other than through an
Independent Contractor; provided, however, that the Trustee (or the Servicer on
behalf of the Trustee) shall not be considered to Directly Operate an REO
Property solely because the Trustee (or the Servicer on behalf of the Trustee)
establishes rental terms, chooses tenants, enters into or renews leases, deals
with taxes and insurance, or makes decisions as to repairs or capital
expenditures with respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under
Section 860E of the Code, which as of the Closing Date is any of: (i) the United
States, any state or political subdivision thereof, any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (ii) any organization (other than a cooperative described in Section
521 of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
unless such organization is subject to the tax imposed by Section 511 of the
Code or (iii) any organization described in Section 1381(a)(2)(C) of the Code or
(iv) any other Person so designated by the Seller based upon an Opinion of
Counsel provided by nationally recognized counsel to the Seller that the holding
of an ownership interest in a Class R Certificate by such Person may cause the
Trust Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the transfer
of an ownership interest in the Class R Certificate to such Person. A
corporation will not be treated as an instrumentality of the United States or of
any state or political subdivision thereof, if all of its activities are subject
to tax and, a majority of its board of directors is not selected by a
governmental unit. The term "United States", "state" and "international
organizations" shall have the meanings set forth in Section 7701 of the Code.
"Distribution Date": The 25th day of any calendar month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing on May 25, 2000.
"Due Date": With respect to each Mortgage Loan, the day of the
calendar month on which the Monthly Payment for such Mortgage Loan was due,
exclusive of any days of grace.
"Due Period": With respect to any Distribution Date, the period
beginning on the second day of the calendar month preceding the calendar month
in which such Distribution Date occurs, and ending on the first day of the
calendar month in which such Distribution Date occurs.
"Eligible Account": Either (A) a segregated account or accounts
maintained with an institution whose deposits are insured by the BIF or the SAIF
of the FDIC, the unsecured and uncollateralized long-term debt obligations of
which shall be rated "A" or better by S&P and "A2" or better by Moody's or the
short-term debt obligations of which shall be rated "P-1" by Moody's and in one
of S&P's two highest short-term rating categories by S&P, and which is any of
(i) a federal savings association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (iii) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, (iv) a principal subsidiary of
a bank holding company and (v) approved in writing by the Certificate Insurer or
(B) a segregated trust account maintained with the trust department of a federal
or state chartered depository institution or trust company, having capital and
surplus of not less than $100,000,000, acting in its fiduciary capacity. Any
Eligible Account maintained by the Trustee shall comply with the provisions of
clause (B) hereof.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Estate in Real Property": A fee simple estate or a leasehold estate
in a parcel of real property.
"Extra Principal Distribution Amount": With respect to the
Certificates and any Distribution Date, the lesser of (x) the General Excess
Available Amount for such Distribution Date and (y) the OC Deficiency Amount for
such Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any successor
thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor
thereto.
"Final Recovery Determination": A determination by the Servicer with
respect to any defaulted Mortgage Loan or REO Property (other than a Mortgage
Loan purchased or replaced by the Seller or the Servicer pursuant to Section
2.06 or 3.15(c) hereof) that all Net Recovery Proceeds and other payments or
recoveries that the Servicer, in its reasonable judgment, expects to be finally
recoverable have been recovered or that the Servicer, in its reasonable judgment
as evidenced by an Officers' Certificate which accompanies the related
Liquidation Report in the form of Exhibit H hereto, believes the cost of
obtaining any additional recoveries would exceed the amount of such recoveries.
The Servicer shall maintain records, prepared by a Servicing Officer, of each
Final Recovery Determination.
"First Lien": With respect to any Second Mortgage Loan, the mortgage
loan relating to the corresponding Mortgaged Property having a first priority
lien.
"First Mortgage Loan": Any Mortgage Loan that is secured by a first
lien on or first priority security interest in the related Mortgaged Property.
"FNMA": Federal National Mortgage Association or any successor
thereto.
"General Excess Available Amount": With respect to each Distribution
Date, the amount, if any, by which the Available Funds for such Distribution
Date exceeds the aggregate amount distributed on such Distribution Date pursuant
to subclauses (i) through (iv) of Section 4.04(b).
"Independent": When used with respect to any specified Person, any
such Person who (i) is in fact independent of the Seller, the Depositor, the
Servicer, the Subservicer and the Underwriter, (ii) does not have any direct
financial interest or any material indirect financial interest in the Seller,
the Depositor, the Servicer, the Underwriter, the Subservicer or in any
affiliate of any of them, and (iii) is not connected with the Seller, the
Depositor, the Servicer, the Subservicer or the Underwriter as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions.
"Independent Contractor": Either (i) any Person (other than the
Servicer, the Depositor and the Seller) that would be an "independent
contractor" with respect to the Trust within the meaning of Section 856(d)(3) of
the Code if the Trust were a real estate investment trust (except that the
ownership tests set forth in that section shall be considered to be met by any
Person that owns, directly or indirectly, 35 percent or more of any Class of
Certificates), so long as the Trust does not receive or derive any income from
such Person and provided that the relationship between such Person and the Trust
is at arm's length, all within the meaning of Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person (including the Servicer, the Depositor
and the Seller), if the Trustee and the Certificateholders have each received an
Opinion of Counsel to the effect that the taking of any action in respect of any
REO Property by such Person, subject to any conditions therein specified, that
is otherwise herein contemplated to be taken by an Independent Contractor will
not cause such REO Property to cease to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
"Initial Certificate Principal Balance": With respect to any Regular
Certificate, the amount so indicated on the face thereof.
"Insurance Agreement": The Insurance and Indemnity Agreement dated as
of April 1, 2000 among the Certificate Insurer, the Depositor, the Seller and
the Servicer.
"Insurance Premium": With respect to any Distribution Date, the
product of (x) the aggregate Class Certificate Principal Balance of all Classes
of Offered Certificates, after taking into account all distributions to be made
on such Distribution Date, and (y) one-twelfth of the Premium Rate (and Premium
Supplement, if any).
"Insured Distribution Amount": With respect to any Distribution Date,
the sum of (i) Interest Distribution Amount and (ii) the OC Deficit, if any for
such Distribution Date.
"Insured Payment": As of any Distribution Date, any Available Funds
Shortfall.
"Interest Determination Date": With respect to the Class A-1
Certificates and each Accrual Period after the initial Accrual Period, the
second LIBOR Business Day preceding the commencement of such Accrual Period.
"Interest Distribution Amount": With respect to any Distribution Date
and any Class of Offered Certificates, the interest accrued during the related
Accrual Period on the related Class Certificate Principal Balance at the related
Pass-Through Rate (less the sum of any Prepayment Interest Shortfalls not
covered by the Servicing Fee and any shortfalls in interest resulting from the
application of the Civil Relief Act in each case that are allocable to such
Class).
"Interest Remittance Amount": With respect to any Distribution Date
and related Servicer Remittance Date, the aggregate amount of all scheduled
interest payments due on the Mortgage Loans during the related Due Period, which
were either collected or advanced, net of the related Servicing Fee thereon,
minus the amount, if any, by which (a) the aggregate of the Prepayment Interest
Shortfalls resulting from Principal Prepayments on such Mortgage Loans during
the previous calendar month exceeds (b) the aggregate Servicing Fee received by
the Servicer with respect to such Mortgage Loans and the related Due Period.
"Late Collection": With respect to any Mortgage Loan and the Monthly
Payment due thereon during any Due Period, all amounts received subsequent to
the Determination Date immediately following such Due Period, whether as a late
payment of such Monthly Payment or as Property Insurance Proceeds, Liquidation
Proceeds or otherwise, which represent the late payment or collection of such
Monthly Payment.
"Late Payment Rate": For any date of determination, the lesser of (i)
the greater of (a) the highest rate of interest on any outstanding Class of
Certificates, and (b) the rate of interest set forth in the Eastern Edition of
The Wall Street Journal in its "Money Rates" section as the "prime rate" on the
first Business Day preceding such date of determination that such rate is so
published plus 2% and (ii) the maximum rate permissible under any applicable law
limiting interest rates. The Late Payment Rate shall be computed on the basis of
a year of 360 days calculating the actual number of days elapsed.
"LIBOR Business Day": Any day on which banks in London, England and
The City of New York are open and conducting transactions in foreign currency
and exchange.
"Liquidation Proceeds": The amount (other than Property Insurance
Proceeds) received by the Servicer or Subservicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation or (ii) the liquidation of a defaulted Mortgage
Loan through a trustee's sale, foreclosure sale, REO Disposition or otherwise.
"Liquidation Report": The report in the form of Exhibit H annexed
hereto delivered by the Servicer pursuant to Section 3.15(e) hereof.
"Loan Balance": With respect to each Mortgage Loan and any date of
determination, the outstanding principal balance thereof calculated in
accordance with the terms of the related Mortgage Note after giving effect to
all payments of scheduled principal due on or prior to such date of
determination, to the extent received or advanced, and all payments of
unscheduled principal received prior to the month of such date of determination,
minus the aggregate amount of any Cram Down Losses relating to such principal
balance and allocated thereto prior to such date; provided, however, that the
Loan Balance for any Mortgage Loan for which a Final Recovery Determination has
been made shall be zero as of the end of the month in which such Final Recovery
Determination was made, and at all times thereafter.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Loan Balance
of the related Mortgage Loan on the date of origination of such Mortgage Loan or
the Loan Balance of such Mortgage Loan at the time of purchase of such Mortgage
Loan by the Seller, plus, in the case of a Second Mortgage Loan, the outstanding
principal balance of the related First Lien on such date of origination or
purchase, as the case may be, of the Mortgage Loan, and the denominator of which
is the Value of the related Mortgaged Property.
"Lower Tier Regular Interest": As described in the Preliminary
Statement.
"Lower Tier REMIC": As described in the Preliminary Statement.
"Majority Certificateholders": The Holders of Certificates evidencing
at least 51% of the Voting Rights.
"Majority Class R Certificateholders": The Holders of Class R
Certificates evidencing at least a 51% Percentage Interest in the Class R
Certificates.
"Majority Class X Certificateholders": The Holders of Class X
Certificates evidencing at least a 51% Percentage Interest in the Class X
Certificates
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan which is payable
by a Mortgagor from time to time under the related Mortgage Note, determined
after giving effect to any reduction in the amount of interest collectible from
the related Mortgagor as a result of the application of the Civil Relief Act.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc., a corporation organized
and existing under the laws of the State of Delaware, and its successors, and,
if such corporation shall for any reason no longer perform the functions of a
securities rating agency, "Moody's" shall be deemed to refer to any other
"nationally recognized rating organization," as set forth on the most current
list of such organizations released by the Securities and Exchange Commission
and designated by the Certificate Insurer, notice of which designation shall be
given to the Trustee and the Servicer by the Certificate Insurer.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on or first priority security interest in, or, a second lien on or
second priority security interest in, a Mortgaged Property securing a Mortgage
Note.
"Mortgage File": The mortgage documents listed in Section 2.04 hereof
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Lenders": Mortgage Lenders Network USA, Inc., a corporation
organized under the law of the State of Delaware, or its successor in interest,
in its capacity as the Originator of the Mortgage Loans.
"Mortgage Loan": Each mortgage loan sold, transferred and assigned to
the Trust pursuant to Section 2.02 and Section 2.06 and Section 2.12 hereof as
from time to time is held as a part of the Trust, the Mortgage Loans so held
being identified in the Mortgage Loan Schedule. Any mortgage loan which,
although intended by the parties hereto to have been, and which purportedly was,
sold to the Trust by the Depositor (as indicated by Exhibit D), that in fact was
not transferred and assigned to the Trust for any reason whatsoever, shall
nevertheless be considered a "Mortgage Loan" for all purposes of this Agreement.
As applicable, "Mortgage Loan" shall be deemed to refer to the related REO
Property.
"Mortgage Loan Purchase Agreement": The mortgage loan purchase
agreement, dated April 1, 2000, between the Seller and the Depositor.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust on such date, attached hereto as Exhibit D (as such list
may be amended from time to time), which list shall set forth the following
information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property, including the
city, state and five-digit ZIP code;
(iv) the type of Mortgaged Property;
(v) the Mortgage Rate;
(vi) the occupancy status;
(vii) the original term to stated maturity;
(viii) as of the Cut-off Date, the remaining number of months to
stated maturity;
(ix) the original principal balance;
(x) as of the Delinquency Statistic Date, the paid through date;
(xi) the amount of the Monthly Payment;
(xii) the Cut-off Date Loan Balance;
(xiii) the Loan-to-Value Ratio;
(xiv) the stated maturity date;
(xv) the Due Date;
(xvi) the Value, if available;
(xvii) the lien priority of the Mortgage Loan;
(xviii) the first payment date;
(xix) the purpose of the Mortgage Loan, if available;
(xx) Mortgage Lenders loan grade; and
(xxi) PMI schedule of loans.
Such schedule shall also set forth the total of the amounts described under
(xii) above for all of the Mortgage Loans as of the specified date. Such
schedule may be in the form of more than one list, which list or lists may have
one or more attachments, collectively setting forth all of the information
required. Such list of information contained in a Mortgage Loan Schedule shall
also be provided to the Trustee in a computer-readable format on a tape or disk.
The Mortgage Loan Schedule shall be amended from time to time by the Servicer in
accordance with Sections 2.06 and 2.12 hereof. With respect to any Qualified
Substitute Mortgage Loan, the amounts described in clauses (viii) and (xii),
shall also be set forth as of the date of substitution.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of an estate in real property
improved by a Residential Dwelling.
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan (subject to any reduction in
such rate resulting from an order issued by a court of appropriate jurisdiction
in an insolvency proceeding), as provided in the related Mortgage Note and as
shown or described on the Mortgage Loan Schedule.
"Mortgagor": The obligor or obligors on a Mortgage Note.
"Net Mortgage Rate": With respect to each Mortgage Loan, a rate of
interest per annum equal to the Mortgage Rate minus the sum of (i) the Servicing
Fee Rate, and the Backup Servicing Fee Rate, if any, (ii) the Trustee Fee Rate,
(iii) the rate at which the premium to the PMI Insurer is calculated, if any,
and (iv) the rate at which the premium payable to the Certificate Insurer is
calculated.
"Net Recovery Proceeds": The amount of any gross Property Insurance
Proceeds or Liquidation Proceeds received with respect to any Mortgage Loan or
REO Property minus the sum of (i) all unreimbursed Servicing Advances and
Delinquency Advances, if any, with respect to such Mortgage Loan, (ii) without
duplication, all accrued and unpaid Servicing Fees, if any, and (iii) without
duplication, liquidation expenses.
"Net WAC Cap": With respect to any Distribution Date, a rate equal to
the weighted average of the Net Mortgage Rates as of the first day of the month
preceding the month of such Distribution Date (or, in the case of the first
Distribution Date, the Cut-off Date), weighted on the basis of the related Loan
Balances.
"Net Worth": For any fiscal quarter, the sum of the Servicer's assets
reflected on a balance sheet for such fiscal quarter prepared in accordance with
GAAP consistently applied minus the sum of the Servicer's liabilities required
to be shown as such on a balance sheet for such fiscal quarter prepared in
accordance with GAAP consistently applied.
"New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed or extended on behalf of the Trust if the
Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Delinquency Advance": Any Delinquency Advance (x)
previously made and not previously reimbursed to the Servicer or (y) proposed to
be made in respect of a Mortgage Loan or REO Property that the Servicer
determines will not, or, in the case of a proposed Delinquency Advance, would
not, be recovered from Late Collections, Property Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property.
"Nonrecoverable Servicing Advance": Any Servicing Advance (x)
previously made and not previously reimbursed to the Servicer or (y) proposed to
be made in respect of a Mortgage Loan or REO Property that the Servicer
determines will not, or, in the case of a proposed Servicing Advance, would not,
be recovered from Late Collections, Property Insurance Proceeds or Liquidation
Proceeds on such Mortgage Loan or REO Property.
"Notice": As defined in Section 4.02.
"OC Deficiency Amount": With respect to any Distribution Date, the
amount, if any, by which the OC Target Amount exceeds the Overcollateralized
Amount on such Distribution Date (after giving effect to distributions in
respect of the Basic Principal Distribution Amount on such Distribution Date).
"OC Deficit": With respect to any Distribution Date, the amount by
which (a) the aggregate Class Certificate Principal Balance of all Classes of
Offered Certificates (after giving effect to all distributions to be made
thereon on such Distribution Date) exceeds (b) the Aggregate Loan Balance on the
last day of the immediately preceding calendar month.
"OC Release Amount": With respect to any Distribution Date, the lesser
of (x) the Principal Remittance Amount for such Distribution Date and (y) the
excess, if any, of (i) the Overcollateralized Amount for such Distribution Date,
assuming that 100% of the Principal Remittance Amount is applied as a principal
payment on the Certificates on such Distribution Date over (ii) the OC Target
Amount for such Distribution Date.
"OC Target Amount": Means with respect to the Certificates:
(a) for any Distribution Date on which the Step Down Trigger is not
occurring, the greater of: (i) 4.25% of the Aggregate Loan Balance of the
Mortgage Loans as of the Cut-off Date and (ii) either (A) if the Step Up
Rolling Delinquency Test is met on such Distribution Date but neither the
Step Up Rolling Loss Test, Step Up Claims Denial Test nor the Step Up
Cumulative Loss Test is met on such Payment Date, 90% of the Delinquency
Amount for such Payment Date or (B) if either the Step Up Rolling Loss
Test, Step Up Claims Denial Test or the Step Up Cumulative Loss Test is met
on such Payment Date, 150% of the Delinquency Amount for such Payment Date.
(b) for any Distribution Date on which the Step Down Trigger is
occurring, the greatest of (i) the lesser of (A) 4.25% of the Aggregate
Loan Balance of the Mortgage Loans as of the Cut-off Date and (B) the
Stepped Down Required Overcollateralized Percentage multiplied by the
Aggregate Loan Balance of the Mortgage Loans as of the Determination Date
relating to such Distribution Date, (ii) either (A) if the Step Up Rolling
Delinquency Test is met as such Distribution Date but neither the Step Up
Rolling Loss Test, Step Up Claims Denial Test nor the Step Up Cumulative
Loss Test is met on such Distribution Date, 90% of the Delinquency Amount
for such Payment Date or (B) if either the Step Up Rolling Loss Test, Step
Up Claims Denial Test or the Step Up Cumulative Loss Test is met on such
Distribution Date, 150% of the Delinquency Amount for such Distribution
Date, (iii) 0.50% of the Aggregate Loan Balance of the Mortgage Loans as of
the Cut-Off Date and (iv) three times the Loan Balance of the largest
Mortgage Loan then outstanding.
The Certificate Insurer may, in its sole discretion, at the request of
the holders of 50% or more of the Class R Certificates, modify clause (a) or (b)
above.
"Offered Certificates": The Class A-1, Class A-2, Class A-3, Class A-4
and Class A-5 Certificates.
"Officers' Certificate": With respect to the Seller or the Servicer, a
certificate signed by the Chairman of the Board, the President or a Vice
President (however denominated), and by the Treasurer, the Secretary, an
assistant treasurer or an assistant secretary (however denominated) of the
Seller or the Servicer, as the case may be.
"One-Month LIBOR": With respect to each Accrual Period other than the
initial Accrual Period, the rate determined by the Trustee on the related
Interest Determination Date on the basis of the Class A rates of the Reference
Banks for one-month United States dollar deposits, as such rates appear on the
Telerate Screen 3750, as of 11:00 a.m. (London time) on such Interest
Determination Date. The One-Month LIBOR value for the initial Accrual Period
shall be 6.27% per annum. On each Interest Determination Date, One-Month LIBOR
for the related Accrual Period will be established by the Trustee as follows:
(i) If on such Interest Determination Date two or more Reference Banks
provide such offered quotations, One-Month LIBOR for the related Accrual Period
shall be the arithmetic mean of such offered quotations (rounded upwards if
necessary to the nearest whole multiple of 1/16 of 1%); and
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, One-Month LIBOR for the related Accrual
Period shall be the higher of (x) One-Month LIBOR as determined on the previous
Interest Determination Date and (y) the Reserve Interest Rate.
"Opinion of Counsel": A written opinion of counsel, who (unless such
Opinion of Counsel is required to be an Independent Opinion of Counsel) may be
counsel for the Seller, the Depositor, the Trustee, the Servicer or the
Certificate Insurer (including, except as otherwise expressly provided in this
Agreement, in-house counsel for the Seller, the Servicer, the Depositor, the
Trustee, any Certificateholder or the Certificate Insurer, as the case may be),
and who shall be reasonably acceptable to the parties to which such opinion is
addressed; except that any opinion of counsel relating to (a) qualification of
the Trust as a REMIC or compliance with the REMIC Provisions must be an opinion
of counsel who is a tax counsel experienced in REMIC matters, and (b) the
qualification of any account required to be maintained pursuant to this
Agreement as an Eligible Account or the resignation of the Servicer pursuant to
6.04 hereof must be delivered by an Independent counsel who, as to the opinion
relating to (a), is counsel experienced in federal income tax matters.
"Order": As defined in Section 4.02(e).
"Original Class Certificate Principal Balance": With respect to the
Classes of Regular Certificates listed below, the corresponding amounts set
forth opposite such Class:
Class A-1: $64,000,000
Class A-2: $62,000,000
Class A-3: $54,994,000
Class A-4: $10,000,000
Class A-5: $21,000,000
"OTS": The Office of Thrift Supervision or any successor.
"Overcollateralized Amount": For any Distribution Date, the amount, if
any, by which (i) the Aggregate Loan Balance on the last day of the immediately
preceding calendar month exceeds (ii) the aggregate of the Class Certificate
Principal Balances as of such Distribution Date after giving effect to
distributions to be made thereon on such Distribution Date (except as otherwise
specified).
"Pass-Through Rate": Class A-1:*
Class A-2: 7.605% per annum
Class A-3: 7.770% per annum**
Class A-4: 8.040% per annum**
Class A-5: 7.670% per annum**
On and after the Call Option Date, the Pass-Through Rate on
the following Class of Certificates will increase to the
rates specified below:
Class A-4: 8.540% per annum**
----------
*As to each Class A-1 Certificate and any Distribution Date, the rate per annum
equal to the lesser of (a) One-Month LIBOR on the related Interest Determination
Date plus .14% and (b) the Net WAC Cap. For the Initial Distribution Date, the
Pass-Through Rate on the Class A-1 Certificates shall be 6.27% per annum.
**The Pass-Through Rates for the Class A-3, Class A-4 and Class A-5 Certificates
shall be equal to the lesser of (a) the Net WAC Cap and (b) the respective rates
set forth above.
"Percentage Interest": With respect to any Certificate (other than a
Class R Certificate), a fraction, expressed as a percentage, the numerator of
which is the Initial Certificate Principal Balance represented by such
Certificate and the denominator of which is the Original Class Certificate
Principal Balance of the related Class. With respect to a Class R Certificate,
the portion of the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate; provided, however, that the sum of all such
percentages for the Class R Certificates totals 100%.
"Permitted Investments": As used herein, Permitted Investments shall
include the following:
(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States,
Federal Housing Administration debentures, FHLMC senior debt obligations, and
FNMA senior debt obligations, but excluding any of such securities whose terms
do not provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(ii) federal funds, certificates of deposit, time and demand deposits
and banker's acceptances (in each case having original maturities of not more
than 365 days) of any bank or trust company incorporated under the laws of the
United States or any state thereof, provided that the short-term debt
obligations of such bank or trust company at the date of acquisition thereof
have been rated "A-1+" by S&P and "Prime-1" or better by ▇▇▇▇▇'▇;
(iii) deposits of any bank or savings association which has combined
capital, surplus and undivided profits of at least $100,000,000 which deposits
are held up to the applicable limits insured by the BIF or the SAIF of the FDIC
and a rating, with respect to its long-term, unsecured debt obligations, of "A"
or better by S&P and "A2" or better by ▇▇▇▇▇'▇;
(iv) commercial paper (having original maturities of not more than 180
days) rated "A-1+" by S&P and "Prime-1" or better by ▇▇▇▇▇'▇;
(v) investments in money market funds rated "AAAm" or "AAAm-G" by S&P
and "Aaa" by ▇▇▇▇▇'▇;
(vi) money market funds having ratings in the two highest available
rating category of ▇▇▇▇▇'▇ and one of the two highest available rating
categories of S&P at the time of such investment which invest only in other
Permitted Investments (any such money market funds which provide for demand
withdrawals being conclusively deemed to satisfy any maturity requirements for
Permitted Investments set forth herein) including money market funds of the
Trustee and any such funds that are managed by the Trustee or its affiliates or
which Trustee or any affiliate acts as advisor as long as such money market
funds satisfy the criteria of this subparagraph (vi);
provided, however, that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to obligations underlying
such instrument or (b) both principal and interest payments derived from
obligations underlying such instrument and the interest and principal payments
with respect to such instrument provide a yield to maturity at par greater than
120% of the yield to maturity at par of the underlying obligations; and
provided, further, that no instrument described hereunder may be purchased at a
price greater than par if such instrument may be prepaid or called at a price
less than its purchase price prior to stated maturity. Permitted Investments
shall mature not later than the Business Day prior to the earliest date on which
such monies may be needed to make payments.
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PMI Insurer": Mortgage Guaranty Insurance Corporation, a monoline
private insurance company organized and created under the laws of the State of
Wisconsin, or its successors in interest.
"PMI Mortgage Loans": The list of Mortgage Loans insured by the PMI
Insurer attached hereto as Exhibit F.
"PMI Policy": The Primary Mortgage Insurance Policy (No.
19-058-4-2049) with respect to the PMI Mortgage Loans and all endorsements
thereto dated the Closing Date, issued by the PMI Insurer.
"Policy": The Financial Guaranty Insurance Policy No. 50925-N and all
endorsements thereto, dated the Closing Date, issued by the Certificate Insurer
to the Trustee for the benefit of the Holders of the Offered Certificates.
"Policy Payments Account": As defined in Section 4.02(b) hereof.
"Preference Amount": Any amount previously distributed to the Offered
Certificates that is avoided as a preference pursuant to a final, non-appealable
order of a court of competent jurisdiction under applicable bankruptcy,
insolvency, receivership or similar law and that has been recovered, or is
sought to be recovered from the related Certificateholder by the receiver,
conservator, debtor-in-possession or trustee in bankruptcy, as the case may be.
"Premium Letter": The side letter among the Certificate Insurer, the
Depositor and Mortgage Lenders, dated the Closing Date.
"Premium Rate": The rate set forth in the Premium Letter plus the rate
at which any Premium Supplement (as defined in the Insurance Agreement) is due.
"Prepayment Assumption": As defined in the Prospectus Supplement.
"Prepayment Charge": With respect to any calendar month, any
prepayment premium, penalty or charge payable by a Mortgagor in connection with
any Principal Prepayment on a Mortgage Loan pursuant to the terms of the related
Mortgage Note.
"Prepayment Charge Schedule": As of any date, the list of Prepayment
Charges on the Mortgage Loans included in the Trust Fund on such date, attached
hereto as Exhibit M (including the Prepayment Charge Summary attached thereto).
The Prepayment Charge Schedule shall set forth the following information with
respect to each Prepayment Charge: (i) the Mortgage Loan identifying number;
(ii) a code indicating the type of Prepayment Charge; (iii)the state of
origination of the related Mortgage Loan; (iv) the date on which the first
monthly payment was due on the related Mortgage Loan; (v) the term of the
related Mortgage Loan; and (vi) the principal balance of the related Mortgage
Loan as of the Cut-off Date.
"Prepayment Interest Shortfall": With respect to any Servicer
Remittance Date, for each Mortgage Loan that was the subject during the
preceding calendar month of a Principal Prepayment an amount equal to the
excess, if any, of (i) a full month's interest on the amount of such Principal
Prepayment at a rate per annum equal to the Mortgage Rate (or at such lower rate
as may be in effect for such Mortgage Loan pursuant to application of the Civil
Relief Act) minus the Servicing Fee Rate over (ii) the amount of interest
actually remitted by the Mortgagor in connection with such Principal Prepayment
less the Servicing Fee for such Mortgage Loan in such month.
"Principal Distribution Amount": With respect to any Distribution Date
(other than the final Distribution Date), the sum of (i) the Basic Principal
Distribution Amount and (ii) the Extra Principal Distribution Amount.
"Principal Prepayment": Any payment of principal made by the Mortgagor
on a Mortgage Loan which is received in advance of its scheduled Due Date and
which is not accompanied by an amount of interest representing the full amount
of scheduled interest due on any Due Date subsequent to the prepayment.
"Principal Remittance Amount": With respect to any Distribution Date,
an amount equal to the sum of the amounts specified in Section 3.10(a)(i),
(a)(iii), (a)(vi), (a)(vii), (a)(viii), (a)(x) and (a)(xi) (with respect to the
principal portion of such Delinquency Advances only); provided, however, that
the foregoing shall be limited, in the case of subclause (A) of Section
3.10(a)(i) and (a)(x), to amounts representing scheduled principal payments due
but not received during the related Due Period or any prior Due Period and with
respect to which there was no related Delinquency Advance and, in each other
case, to amounts representing principal that is actually received during the
previous calendar month.
"Property Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are received by the Servicer and are not to be applied to the
restoration of the related Mortgaged Property or released to the Mortgagor in
accordance with Accepted Servicing Procedures, subject to the terms and
conditions of the related Mortgage Note and Mortgage.
"Prospectus Supplement": That certain Prospectus Supplement dated
April 10, 2000 relating to the public offering of the Regular Certificates.
"Purchase Price": With respect to any Mortgage Loan required to be
purchased pursuant to Section 2.06 hereof or to be purchased pursuant to Section
3.15(c) hereof and as confirmed by an Officers' Certificate, an amount equal to
the sum, without duplication, of (i) 100% of the Loan Balance as of the end of
the previous Due Period (or, if such purchase occurs on the first day of any
calendar month, as of the end of such day), (ii) any unreimbursed Servicing
Advances or Delinquency Advances allocable to such Mortgage Loan, (iii) interest
from the date interest was last paid by the Mortgagor through the day before the
Due Date in the Due Period relating to the Distribution Date in which the
Purchase Price will be remitted at a rate per annum equal to the applicable Net
Mortgage Rate (or, if Mortgage Lenders is not the Servicer at the time of such
purchase, at the applicable Mortgage Rate) (to the extent such amounts are not
already counted in (ii)), (iv) in the event the Mortgage Loan is required to be
purchased pursuant to Section 2.06 hereof, expenses reasonably incurred or to be
incurred by the Servicer or the Trustee in respect of the breach or defect
giving rise to the purchase obligation, including any reasonable expenses
arising out of the enforcement of the purchase obligation and (v) the principal
portion of any unpaid scheduled monthly payment which was due during any
previous Due Period for which a Delinquency Advance was not made.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted for
a Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution, (i) have an outstanding Loan Balance (when taken
together with any other Qualified Substitute Mortgage Loan substituted for such
Deleted Mortgage Loan), not in excess of and not substantially less than the
Loan Balance of the Deleted Mortgage Loan or Loans as of the date of
substitution, (ii) have a Mortgage Rate not less than (and not more than one
percentage point in excess of) the Mortgage Rate of the Deleted Mortgage Loan,
(iii) have a remaining term to maturity not more than two years greater than nor
more than two years less than that of the Deleted Mortgage Loan (and in any
event, not later than April 2030), (iv) have a Loan-to-Value Ratio equal to or
lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan, (v) satisfy the
criteria set forth from time to time in the definition of "qualified replacement
mortgage" at Section 860G(a)(4) (or any successor provision) of the Code, (vi)
have the same or a superior lien priority as the Deleted Mortgage Loan, (vii)
comply as of the date of substitution with each representation and warranty set
forth in Section 2.07 hereof, (viii) have the same property type (determined in
accordance with the definition of "Residential Dwelling") as the Deleted
Mortgage Loan, (ix) have the same occupancy status, (x) be of the same or of a
better credit quality (determined in accordance with the Originator's credit
underwriting guidelines as attached hereto as Exhibit M) as the Mortgage Loan
being replaced, (xi) have a Second Loan-to-Value Ratio equal to or greater than
the Second Loan-to-Value Ratio of the Deleted Mortgage Loan (if applicable),
(xii) be covered by the PMI Policy if the Deleted Mortgage Loan was covered by
the PMI Policy; and (xiii) have a fixed Mortgage Rate if the Deleted Mortgage
has a fixed rate and if the Deleted Mortgage Loan is an adjustable rate Mortgage
Loan, has a current interest rate, floor and margin that are not less than the
current interest rate, floor and margin of the Deleted Mortgage Loan. In the
event that one or more mortgage loans are proposed to be substituted for one or
more Deleted Mortgage Loans, the Certificate Insurer may allow the tests set
forth in clauses (i), (ii), (iii), (iv) and (xi) above to be met on a weighted
average basis or other aggregate basis (based on the mortgage loans substituted
in any one Due Period) acceptable to the Certificate Insurer provided that any
such substitution shall not adversely affect the status of the Mortgage Loans as
a REMIC.
"Rating Agency": Each of S&P and ▇▇▇▇▇'▇.
"Realized Loss": As to any Mortgage Loan on which a Final Recovery
Determination has been made, the amount, if any, by which the Loan Balance of
such Mortgage Loan as of the end of the previous Due Period (or, if such Final
Recovery Determination is made on the first day of any calendar month, as of the
end of such day) exceeds the Net Recovery Proceeds allocable to such Loan
Balance for such Mortgage Loan.
"Record Date": With respect to each Distribution Date and any Class of
Regular Certificates, the last Business Day of the month immediately preceding
the month in which such Distribution Date occurs.
"Reference Banks": Deutsche Bank AG, ▇▇▇▇▇▇▇'▇ Bank Plc, The Bank of
Tokyo and National Westminster Bank Plc; provided, however, that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Trustee which are engaged in transactions in United States
dollar deposits in the international Eurocurrency market (i) with an established
place of business in London, England, (ii) not controlling, under the control of
or under common control with the Depositor or any affiliate thereof, (iii) whose
quotations appear on the Telerate Screen 3750 on the relevant Interest
Determination Date and (iv) which have been designated as such by the Trustee.
"Regular Certificate": Any Class A-1, Class A-2, Class A-3, Class ▇-▇,
▇▇▇▇▇ ▇-▇, or Class X Certificate.
"Regular Certificateholder": Any Holder of a Regular Certificate.
"Reimbursement Amount": As of any Distribution Date, the sum of (x)
(i) the aggregate of all Insured Payments previously received by the Trustee and
not previously repaid to the Certificate Insurer pursuant to Section 4.04(b)(iv)
hereof plus (ii) interest accrued on each Insured Payment not previously repaid
calculated at a rate equal to the Late Payment Rate from the date the Trustee
received such Insured Payment, (y) (i) the amount of any Insurance Premium not
paid on the date due and (ii) interest on such amount at the Late Payment Rate
from the date such Insurance Premium was due to be paid and (z) (i) the amount
of any amounts owing and unpaid under the Insurance Agreement plus (ii) interest
on such amount from the date such amount became due at a rate equal to the Late
Payment Rate. The Certificate Insurer shall notify the Trustee, the Depositor
and the Seller of the amount of any Reimbursement Amount at least two Business
Days before the related Distribution Date.
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC Certificate Maturity Date": The latest of the latest possible
maturity date of the regular certificates as identified in Section 2.14.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
"Remittance Report": A report prepared by the Trustee pursuant to
Section 4.06(a) hereof.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.
"REO Disposition": The receipt by the Servicer of all Liquidation
Proceeds, Property Insurance Proceeds and other payments or recoveries
(including proceeds of a final sale) which the Servicer expects to be finally
recoverable from the sale or other disposition of the related REO Property.
"REO Property": A Mortgaged Property acquired by the Servicer in the
name of the Trustee on behalf of the Certificateholders through foreclosure or
deed in lieu of foreclosure, as described in Section 3.22 hereof.
"Request for Release": A release signed by a Servicing Officer, in the
form of Exhibit E-1 or Exhibit E-2 attached hereto.
"Reserve Interest Rate": With respect to any Interest Determination
Date, the rate per annum that the Trustee determines to be either (i) the
arithmetic mean (rounded upwards if necessary to the nearest whole multiple of
1/16 of 1%) of the one-month United States dollar lending rates which banks in
The City of New York selected by the Trustee are quoting on the relevant
Interest Determination Date to the principal London offices of leading banks in
the London interbank market or (ii) in the event that the Trustee can determine
no such arithmetic mean, the lowest one-month United States dollar lending rate
which such New York banks selected by the Trustee are quoting on such Interest
Determination Date to leading European banks.
"Residential Dwelling": Any one of the following: (i) a detached or
semi-detached single-family dwelling, (ii) a two- to four-unit dwelling, (iii) a
townhouse, or (iv) a unit in a condominium or a planned unit development, none
of which is a co-operative unit or a mobile home, but which may be a
pre-fabricated or manufactured unit affixed to a permanent foundation, all in
accordance with the Originator's Underwriting Guidelines attached hereto as
Exhibit M.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors, the President, any vice
president, any assistant vice president, the Secretary, any assistant secretary,
the Treasurer, any assistant treasurer, the Controller and any assistant
controller or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also 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.
"Rolling Delinquency Percentage": With respect to any Distribution
Date, the average of the Delinquency Percentages as of the last day of each of
the three (or one or two, in the case of the first and second Distribution
Dates, respectively) preceding calendar months.
"Rolling Loss Percentage": As of any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of
Realized Losses incurred during the preceding 12 calendar months, and the
denominator of which is the aggregate Loan Balance of the Mortgage Loans as of
the first day of the 12th preceding calendar months.
"S&P": Standard & Poor's Rating Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors, and, if such division shall for
any reason no longer perform the functions of a securities rating agency, "S&P"
shall be deemed to refer to any other "nationally recognized rating
organization," as set forth on the most current list of such organizations
released by the Securities and Exchange Commission and designated by the
Certificate Insurer, notice of which designation shall be given to the Trustee
and the Servicer by the Certificate Insurer.
"SAIF": The Savings Association Insurance Fund of the FDIC.
"Second Loan-to-Value Ratio": With respect to any Mortgage Loan and
any date of determination, the fraction, expressed as a percentage, the
numerator of which is the unpaid principal balance of the second lien on the
related Mortgaged Property and the denominator of which is the Value of such
Mortgaged Property.
"Second Mortgage Loan": Any Mortgage Loan that is secured by a second
lien on or second priority security interest in the related Mortgaged Property.
"Seller": Mortgage Lenders Network USA, Inc., a corporation organized
under the laws of the State of Delaware, or its successor in interest, in its
capacity as seller of the Mortgage Loans.
"Servicer": Mortgage Lenders Network USA, Inc., a corporation
organized under the laws of the State of Delaware, or its successor in interest,
in its capacity as servicer of the Mortgage Loans, which term shall also include
any successor servicer appointed hereunder.
"Servicer Default": One or more of the events described in Section
7.01 hereof.
"Servicer Information": Any information contained in a Liquidation
Report.
"Servicer Loss Test": With respect to any Distribution Date, a test
that is satisfied if the Cumulative Loss Percentage for such Distribution Date
does not exceed the percentage below that corresponds to the period (including
the beginning and ending dates thereof) in which the last day of the calendar
month preceding such Distribution Date falls:
Cumulative Loss
Period Percentage
------ ------------
April 1, 2000 - April 1, 2001 1.25%
April 2, 2001 - April 1, 2002 2.50%
April 2, 2002 - April 1, 2003 3.25%
April 2, 2003 - April 1, 2004 4.00%
April 2, 2004 and thereafter 4.50%
"Servicer Remittance Date": With respect to any Distribution Date, the
18th day of the month of such Distribution Date (or, if such day is not a
Business Day, the next following Business Day).
"Servicer Renewal Notice": Has the meaning set forth in Section 7.07
hereof.
"Servicer Termination Test": With respect to any Distribution Date, a
test which is satisfied if (x) the related Rolling Delinquency Percentage is
less than 15%, (y) the Servicer Loss Test for such Distribution Date is
satisfied and (z) the related Annual Loss Percentage is not greater than 1.75%.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.09 hereof.
"Servicing Advances": The costs and expenses incurred by or on behalf
of the Servicer in connection with (i) the preservation, restoration and
protection of a Mortgaged Property or REO Property, (ii) any enforcement or
judicial proceedings, including foreclosures, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property,
(iv) the payment of any taxes, assessments or insurance premiums, and the
performance of its obligations under Sections 3.01(b)(ii), 3.09, 3.13, 3.15(a)
and 3.22 hereof, and (v) in connection with the liquidation of a Mortgage Loan,
expenditures relating to the purchase or maintenance of the related First Lien
pursuant to Section 3.24 hereof.
"Servicing Fee": With respect to each Mortgage Loan and any Due
Period, an amount equal to one month's interest (or in the event of any payment
of interest which accompanies a Principal Prepayment in full made by the
Mortgagor during such calendar month, interest for the number of days covered by
such payment of interest) at the Servicing Fee Rate on the Loan Balance of such
Mortgage Loan as of the first day of such Due Period. A portion of such
Servicing Fee may be paid to any Subservicer as its servicing compensation.
"Servicing Fee Rate": A rate per annum equal to 0.50%.
"Servicing Officer": Any officer of the Servicer or any Subservicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans, whose name and specimen signature appear on a list of servicing
officers furnished to the Trustee by the Servicer or such Subservicer, as such
list may from time to time be amended. There shall at no time be fewer than two
Servicing Officers.
"Shift Percentage": For any Distribution Date, the percentage
indicated below:
Distribution Date occurring in Shift Percentage
------------------------------ ----------------
May 2000 through April 2003................... 0%
May 2003 through April 2005................... 45%
May 2005 through April 2006................... 80%
May 2006 through April 2007................... 100%
May 2007 and thereafter....................... 300%
"Startup Date": April 14, 2000.
"Step Down Cumulative Loss Test": The Step Down Cumulative Loss Test
will be met with respect to a Distribution Date as follows: (i) for the 31st
through the 41st Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is 1.50% or less; (ii) for the 42nd through the 53rd
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is 2.00% or less; (iii) for the 54th through the 65th Distribution Dates, if the
Cumulative Loss Percentage for such Distribution Date is 2.75% or less; and (iv)
for any Distribution Date after the 65th Distribution Date, if the Cumulative
Loss Percentage for such Distribution Date is 3.75% or less.
"Step Down Rolling Delinquency Test": The Step Down Rolling
Delinquency Test will be met with respect to a Distribution Date if the Rolling
Delinquency Percentage for such Distribution Date is 10.00% or less.
"Step Down Rolling Loss Test": The Step Down Rolling Loss Test will be
met with respect to a Distribution Date if the Annual Loss Percentage is less
than 1.00%.
"Step Down Trigger": For any Distribution Date after the 30th
Distribution Date, the Step Down Trigger will have occurred if each of the Step
Down Cumulative Loss Test, the Step Down Rolling Delinquency Test and the Step
Down Rolling Loss Test is met. In no event will the Step Down Trigger be deemed
to have occurred on or prior to the 30th Distribution Date.
"Step Up Claims Denial Test": The Step Up Claims Denial Test will be
met with respect to any Distribution Date if any of the following events occurs
(i) MGIC has been downgraded below "A" by S&P or ▇▇▇▇▇'▇, (ii) the claims
denials under the PMI Policy for the twelve calendar months preceding the
Distribution Date exceed $50,000 for the 1st through the 12th Distribution
Dates, $100,000 for the 13th through the 24th Distribution Dates, $150,000 for
the 25th through the 36th Distribution Dates, $200,000 for the 37th through the
48th Distribution Dates and $250,000 for the 49th through the 60th Distribution
Dates, (iii) during the twelve calendar month period preceding the Distribution
Date, the percentage of PMI claims denied divided by the percentage of claims
submitted during that twelve month period is greater than 10%.
"Step Up Cumulative Loss Test": The Step Up Cumulative Loss Test will
be met with respect to a Distribution Date as follows: (i) for the 1st through
the 12th Distribution Dates, if the Cumulative Loss Percentage for such
Distribution Date is more than 0.75%; (ii) for the 13th through the 24th
Distribution Dates, if the Cumulative Loss Percentage for such Distribution Date
is more than 1.50%; (iii) for the 25th through the 36th Distribution Dates, if
the Cumulative Loss Percentage for such Distribution Date is more than 2.50%;
(iv) for the 37th through the 48th Distribution Dates, if the Cumulative Loss
Percentage for such Distribution Date is more than 3.75%; and (v) for the 49th
Distribution Date and any Distribution Date thereafter, if the Cumulative Loss
Percentage for such Distribution Date is more than 4.25%.
"Step Up Rolling Delinquency Test": The Step Up Rolling Delinquency
Test will be met with respect to a Distribution Date if the Rolling Delinquency
Percentage for such Distribution Date is more than 10.00%.
"Step Up Rolling Loss Test": The Step Up Rolling Loss Test will be met
with respect to a Distribution Date, if the Annual Loss Percentage is equal to
or more than 1.25%.
"Step Up Trigger": For any Distribution Date, the Step Up Trigger will
have occurred if any one of the Step Up Cumulative Loss Test, the Step Up
Rolling Delinquency Test or the Step Up Rolling Loss Test is met.
"Stepped Down Required Overcollateralized Percentage": For any
Distribution Date for which the Step Down Trigger has occurred, a percentage
equal to the greater of (x) 8.50% and (y) the percentage equivalent of a
fraction, the numerator of which is the Overcollateralized Amount as of the
immediately preceding Distribution Date and the denominator of which is the
Aggregate Loan Balance of the Mortgage Loans and REO Properties as of such
Distribution Date, minus (ii) the percentage equivalent of a fraction, the
numerator of which is the product of (A) the percentage calculated under clause
(i) above, minus 8.50% of the Aggregate Loan Balance of the Mortgage Loans,
multiplied by (B) the number of consecutive Distribution Dates through and
including the Distribution Date for which the Stepped Down Required
Overcollateralization Percentage is being calculated, up to a maximum of six,
for which the Step Down Trigger has occurred, and the denominator of which is
six.
"Subservicer": Any Person with which the Servicer has entered into a
Subservicing Agreement and which meets the qualifications of a Subservicer
pursuant to Section 3.02 hereof.
"Subservicing Account": An account established by a Subservicer which
meets the requirements set forth in Section 3.08 hereof and is otherwise
acceptable to the Servicer.
"Subservicing Agreement": The written contract between the Servicer
and a Subservicer or any successor Subservicer relating to servicing and
administration of certain Mortgage Loans as provided in Section 3.02 hereof.
"Substitution Shortfall Amount": As defined in Section 2.06(d) hereof.
"Tax Matters Person": The Tax Matters Person appointed pursuant to
Section 11.12 hereof.
"Tax Returns": The federal income tax returns for the REMIC on
Internal Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit
Income Tax Return, including Schedule Q thereto, Quarterly Notice to Residual
Interest Holders of the REMIC Taxable Income or Net Loss Allocation, or any
successor forms, to be filed on behalf of the REMIC Trust in its capacity as a
REMIC under the REMIC Provisions, together with any and all other information
reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
"Termination Price": As defined in Section 10.01(b) hereof.
"Transition Expenses": As defined in Section 7.02 hereof.
"Trust": Mortgage Lenders Network Home Equity Loan Trust 2000-1,
Series 2000-1, the trust created hereunder.
"Trust Fund": The corpus of the Trust, consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto, and together with all collections thereon
and proceeds thereof, (ii) any REO Property, together with all collections
thereon and proceeds thereof, (iii) the Trustee's rights with respect to the
Mortgage Loans under all insurance policies required to be maintained pursuant
to this Agreement and any proceeds thereof, (iv) the rights and remedies of the
Trustee against any Person making any representation or warranty to the Trustee
hereunder, to the extent provided herein and (v) each Account, together with
such assets that are deposited therein from time to time and any investments
thereof, together with any and all income, proceeds and payments with respect
thereto.
"Trustee": Norwest Bank Minnesota, National Association, a national
banking association, or any successor trustee appointed as herein provided.
"Trustee Fee": The amount payable to the Trustee on each Distribution
Date pursuant to Section 8.05 as compensation for all services rendered by it in
the execution of the trust hereby created and in the exercise and performance of
any of the powers and duties of the Trustee hereunder, which amount shall equal
one twelfth of the product of (i) the Trustee Fee Rate, multiplied by (ii) the
Aggregate Loan Balance of the Mortgage Loans and any REO Properties as of the
second preceding Due Date (or, in the case of the initial Distribution Date, as
of the Cut-off Date).
"Trustee Fee Rate": 0.02% per annum.
"Underwriter": Prudential Securities Incorporated, as underwriter with
respect to the Offered Certificates.
"United States Person" or "U.S. Person": Shall mean (i) a
citizen or resident of the United States; (ii) a corporation (or entity
treated as a corporation for tax purposes) created or organized in the United
States or under the laws of the United States or of any state thereof,
including, for this purpose, the District of Columbia; (iii) a partnership (or
entity treated as a partnership for tax purposes) organized in the United
States or under the laws of the United States or of any state thereof,
including, for this purpose, the District of Columbia (unless provided
otherwise by future Treasury regulations); (iv) an estate whose income is
includible in gross income for United States income tax purposes regardless of
its source; or (v) a trust, if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more U.S. Persons have authority to control all substantial decisions of the
trust. Notwithstanding the last clause of the preceding sentence, to the
extent provided in Treasury regulations, certain trusts in existence on August
20, 1996, and treated as U.S. Persons prior to such date, may elect to
continue to be U.S. Persons.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such
that the complete restoration of such property is not fully reimbursable by
application of the proceeds of the hazard insurance policies required to be
maintained pursuant to Section 3.13 hereof.
"Upper Tier Regular Interest". As described in the Preliminary
Statement.
"Upper Tier REMIC". As described in the Preliminary Statement.
"Value": With respect to any Mortgaged Property, the value thereof as
determined by an independent appraisal made at the time of the origination of
the related Mortgage Loan; except that, with respect to any Mortgage Loan that
is a purchase money mortgage loan, the lesser of (i) the value thereof as
determined by an independent appraisal made at the time of the origination of
such Mortgage Loan and (ii) the sales price of the related Mortgaged Property.
"Voting Percentage": With respect to a Regular Certificate, a
fraction, expressed as a decimal, the numerator of which is the Certificate
Principal Balance represented by such Regular Certificate and the denominator of
which is the Class Certificate Principal Balance of the related Class. With
respect to a Class R Certificate, the Percentage Interest set forth on such
Certificate.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. Except as otherwise
expressly provided for herein, Voting Rights shall be allocated among Holders of
the Regular Certificates in proportion to such Certificates' respective
Certificate Principal Balances as of such date; provided, however, that any
Certificate registered in the name of the Servicer, the Depositor or the Trustee
or any of their respective affiliates shall not be included in the calculation
of Voting Rights; when none of the Regular Certificates are outstanding, 100% of
the Voting Rights shall be allocated Holders of the Class of Class R
Certificates in accordance with such Holders' respective Percentage Interests in
the Certificates of such Class.
"Written Order to Authenticate": A written order in the form of
Exhibit L hereto by which the Depositor directs the Trustee to issue the
Certificates.
Section 1.02. Accounting.
Unless otherwise specified herein, for the purpose of any definition
or calculation, whenever amounts are required to be netted, subtracted or added
or any distributions are taken into account such definition or calculation and
any related definitions or calculations shall be determined without duplication
of such functions.
ARTICLE II.
ESTABLISHMENT OF THE TRUST;
PURCHASE AND SALE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Establishment of the Trust.
The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, an express
trust to be known, for convenience, as "Mortgage Lenders Home Equity Loan Trust
2000-1, Series 2000-1" and does hereby appoint Norwest Bank Minnesota, National
Association, as Trustee in accordance with the provisions of this Agreement.
Section 2.02. Purchase and Sale of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and otherwise convey to the Trust
without recourse, but subject to the terms of this Agreement, all right, title
and interest of the Depositor, including any security interest therein for the
benefit of the Depositor, in and to (i) the Mortgage Loans identified on the
Mortgage Loan Schedule delivered on the Closing Date (the "Mortgage Loans"),
including, without limitation, all scheduled principal and interest payments due
on or after the Cut-off Date and (ii) the other assets of the Trust Fund.
In consideration of such sale of the Mortgage Loans, the Trustee shall
issue to or upon the order of the Depositor, the Certificates.
Section 2.03. Grant of Security Interest.
In the event that any conveyance pursuant to Section 2.02 hereof is
deemed by a court of competent jurisdiction to be a loan, the parties intend
that the Depositor shall be deemed to have granted to the Trustee on behalf of
the Certificateholders and the Certificate Insurer a security interest in the
related Mortgage Loans, including, without limitation, all interest accrued
thereon and that this Agreement shall constitute a security agreement under
applicable law. The Depositor and the Trustee shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the Mortgage Loans,
such security interest would be deemed to be a perfected security interest of
first priority under applicable law and will be maintained as such throughout
the term of the Agreement.
Except as may otherwise expressly be provided herein, none of the
Seller, the Depositor, the Servicer or the Trustee shall (and the Servicer shall
ensure that no Subservicer shall) assign, sell, dispose of or transfer any
interest in the Trust Fund or any portion thereof, or permit the Trust Fund or
any portion thereof to be subject to any lien, claim, mortgage, security
interest, pledge or other encumbrance of any other Person.
In the event that the parties hereto have failed to transfer the
entire legal ownership in and to each Mortgage Loan to the Trustee on behalf of
the Certificateholders and the Certificate Insurer, the parties hereto intend
that this document operate to transfer the entire equitable ownership interest
in and to each Mortgage Loan to the Trustee on behalf of the Certificateholders.
Section 2.04. Document Delivery Requirements.
(a) In connection with each conveyance pursuant to Section 2.02
hereof, the Seller does hereby agree to deliver to, and deposit with, the
Custodian, as custodian for the Trustee, no later than two Business Days prior
to the Closing Date, the following documents or instruments with respect to each
Mortgage Loan (a "Mortgage File") so transferred and assigned:
(i) the original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of Norwest Bank Minnesota, National
Association, as Trustee under the Pooling and Servicing Agreement, dated as of
April 1, 2000, for the Mortgage Lenders Network Home Equity Loan Trust 2000-1,
Series 2000-1, without recourse", with all prior and intervening endorsements
showing a complete chain of endorsement from the originator of the Mortgage Loan
to the Seller;
(ii) the original Mortgage with evidence of recording thereon
(or, if the original Mortgage has not been returned from the applicable public
recording office or is not otherwise available, a copy of the Mortgage certified
by a Responsible Officer of the Seller or by the closing attorney or by an
officer of the title insurer or agent of the title insurer which issued the
related title insurance policy or commitment therefor to be a true and complete
copy of the original Mortgage submitted for recording) and, if the Mortgage was
executed pursuant to a power of attorney, the original power of attorney with
evidence of recording thereon (or, if the original power of attorney has not
been returned from the applicable public recording office or is not otherwise
available, a copy of the power of attorney certified by a Responsible Officer of
the Seller or by the closing attorney or by an officer of the title insurer or
agent of the title insurer which issued the related title insurance policy or
commitment therefor, to be a true and complete copy of the original power of
attorney submitted for recording);
(iii) the original executed Assignment of the Mortgage,
acceptable for recording except with respect to any currently unavailable
recording information, from the Seller to the Trustee in the following form:
"Norwest Bank Minnesota, National Association, as Trustee under the Pooling and
Servicing Agreement, dated as of April 1, 2000, Mortgage Lenders Network Home
Equity Loan Trust 2000-1, Series 2000-1" or in blank;
(iv) the original Assignment and any intervening Assignments of
the Mortgage, with evidence of recording thereon, showing a complete chain of
assignment from origination of the Mortgage Loan to the Seller (or, if any such
Assignment has not been returned from the applicable public recording office or
is not otherwise available, a copy of such Assignment certified by a Responsible
Officer of the Seller or by the closing attorney or by an officer of the title
insurer or agent of the title insurer which issued the related title insurance
policy or commitment therefor to be a true and complete copy of the original
Assignment submitted for recording);
(v) the original, or a copy certified by the Seller or the
originator of the Mortgage Loan to be a true and complete copy of the original,
of each assumption, modification, written assurance or substitution agreement,
if any; and
(vi) an original, or a copy certified by the Seller to be a true
and complete copy of the original, of a lender's title insurance policy,
together with all endorsements or riders that were issued with or subsequent to
the issuance of such policy, insuring the priority of the Mortgage as first or
second lien on the Mortgaged Property represented therein as a fee simple
interest vested in the Mortgagor, or in the event such original title policy is
unavailable, a written commitment or uniform binder or preliminary report of
title issued by the title insurance or escrow company.
(b) With respect to any Mortgage referred to in Section 2.04(a)(ii)
above as to which the original Mortgage is not available as of the Closing Date,
and with respect to any Assignment referred to in Section 2.04(a)(iii) or
2.04(a)(iv) above as to which the original Assignment is not available as of the
Closing Date, the Seller shall deliver, prior to the Closing Date, as the case
may be, a copy of such Mortgage or such Assignment, as the case may be,
certified by the Seller to be a true and complete copy, to the Custodian and
shall also deliver the original Mortgage, or where the original Mortgage is
unavailable a copy thereof certified by the applicable public recording office,
and the original Assignment, or where the original Assignment is unavailable a
copy thereof certified by the applicable public recording office, to the
Custodian within five Business Days after receipt thereof by the Seller but in
no event later than 360 days (or such longer period, as approved by the
Certificate Insurer in writing with respect to specific Mortgage Loans upon the
request of the Seller) following the date of origination of the related Mortgage
Loan or the date of such Assignment to the Seller, as the case may be. The
failure of the Seller to deliver to the Custodian (x) any original Mortgage
under Section 2.04(a)(ii) above (or where the original is unavailable a copy
thereof certified by the applicable public recording office) or (y) any original
Assignment under Section 2.04(a)(iii) above and (iv) (or where the original is
unavailable a copy thereof certified by the applicable public recording office)
shall not be deemed a breach of this Agreement for any purpose whatsoever until
the expiration of five Business Days after receipt thereof by the Seller or such
360-day period (or such longer period, as approved by the Certificate Insurer in
writing with respect to specific Mortgage Loans upon the request of the Seller)
whichever is shorter.
With respect to any lender's title insurance policy referred to in
Section 2.04(a)(vi) above, Seller agrees to deliver such documents with respect
to the Mortgage Loans to the Custodian within fifteen (15) days following the
Closing Date.
The Seller shall record (or to cause one of its affiliates to record)
all assignments with respect to each Mortgage Loan required to be contained in
the Mortgage File in the public recording office for the jurisdiction in which
the related Mortgaged Property is located; provided, however, that, if the
Trustee, the Certificate Insurer and each Rating Agency has received an Opinion
of Counsel, Memorandum of Law or other assurance, in each case satisfactory in
form to the Certificate Insurer and each Rating Agency, to the effect that the
recordation of such assignments in any specific jurisdiction is not necessary to
protect the Trustee's interest in the related Mortgage, the Seller shall not be
required to record assignments in such jurisdiction; provided, further, that
notwithstanding the delivery of any opinion of counsel, each assignment of the
Mortgage Loan shall be submitted for recording by the Seller in the manner
described above, at no expense to the Trust Fund, or the Trustee, upon the
earliest to occur of (i) reasonable direction by Holders of Certificates
entitled to at least 25% of the Voting Rights or the Certificate Insurer, (ii)
the occurrence of a servicing transfer pursuant to Section 7.02 of this
Agreement, (iii) the occurrence of a bankruptcy, insolvency or foreclosure
relating to the Seller, (iv) the occurrence of a Servicer Termination Event, and
(v) if the Seller is not the Servicer and with respect to any one assignment of
Mortgage, the occurrence of a bankruptcy, insolvency, or foreclosure relating to
the Mortgagor under the related Mortgage. All recording fees relating to the
recordation of the assignments as described above shall be paid by the Seller or
an affiliate of the Seller. Such assignments with respect to each Mortgage Loan
must be delivered to the recording office of the appropriate jurisdiction within
10 days after the Closing Date, and the failure of the related assignment to
contain evidence of recording thereon within one year after the Closing Date
will constitute a breach of this Agreement.
The Trustee shall cause the Custodian to promptly complete the
assignment of the Mortgages originated by the Seller in the following form:
"Norwest Bank Minnesota, National Association, as Trustee under the Pooling and
Servicing Agreement, dated as of April 1, 2000, Mortgage Lenders Network Home
Equity Loan Trust 2000-1, Series 2000-1."
The Trustee shall cause the Custodian to complete the assignment of
the Mortgages purchased by the Seller from F.C. Capital Corp. within fourteen
(14) days and return to the Seller such Mortgages to be recorded.
The Seller shall record the Mortgages purchased by the Seller from
F.C. Capital Corp. within five (5) business days of receipt from the Custodian.
The Seller shall deliver each recorded Assignment referred to in
Section 2.04(a)(iii) above or, where the original is unavailable, a copy thereof
certified by the applicable public recording office to be a true and complete
copy of the original, to the Custodian no later than the earlier of (i) five
Business Days after receipt thereof and (ii) within 360 days after the Closing
Date (or such longer period, as approved by the Certificate Insurer in writing
with respect to specific Mortgage Loans upon the request of the Seller). Any
failure of the Seller to deliver to the Custodian, prior to the expiration of
five Business Days after receipt thereof by the Seller or such 360-day period,
whichever is shorter (or any such longer period as the Certificate Insurer may
have approved in accordance with the terms set forth above), any such recorded
Assignment, or such certified copy if such recorded Assignment has not been
received by it, shall be deemed a breach of this Agreement for any purpose. In
the event that any such Assignment is lost or returned unrecorded because of a
defect therein, the Seller shall promptly prepare a substitute Assignment or
cure such defect, as the case may be, and thereafter cause each such Assignment
to be duly recorded. The Trustee shall cause the Custodian to promptly complete
the assignment of the Mortgages purchased by the Seller from F.C. Capital Corp.
after such Mortgages have been recorded and received by the Custodian "Norwest
Bank Minnesota, National Association, as Trustee under the Pooling and Servicing
Agreement, dated as of April 1, 2000, Mortgage Lenders Network Home Equity Loan
Trust 2000-1, Series 2000-1."
The Trustee shall cause the Custodian to promptly upon receipt thereof
by the Custodian (and in any event no longer than 30 days following the Closing
Date), with respect to each Mortgage Note and Assignment of Mortgage delivered
in blank in accordance with Section 2.04(a)(i) and (iii) above, respectively,
endorse, or cause to be endorsed, each such Mortgage Note and assign each such
Assignment in the form described therein.
The Servicer shall promptly upon receipt thereof (and in no event
later than the earlier of (i) five Business Days following such receipt and (ii)
360 days after the Closing Date (or such longer period, as approved by the
Certificate Insurer in writing with respect to specific Mortgage Loans upon the
request of the Seller)), deliver to the Custodian (a) the original recorded
Mortgage in those instances where a certified copy thereof was delivered to the
Custodian; (b) the original recorded Assignment or Assignments of the Mortgage
showing a complete chain of assignment from the originator of the Mortgage Loan
to the Seller in those instances where certified copies thereof were delivered
to the Custodian; (c) the original policy of title insurance or a copy certified
by the Seller to be a true and complete copy in those instances where a
commitment (binder) (including any marked additions thereto or deletions
therefrom) to issue such policy was delivered to the Custodian; and (d) any
other original documents constituting a part of a Mortgage File received with
respect to any Mortgage Loan, including, but not limited to, any original
documents evidencing an assumption or modification of any Mortgage Loan.
In the event that the Certificate Insurer approves in writing any
extension of time for delivery of any document as provided for in this Section
2.04(b), a copy of such written approval shall be sent to the Trustee and the
Rating Agencies by the Seller.
All original documents relating to the Mortgage Loans that are not
delivered to the Custodian are and shall be held by the Seller or the Servicer,
as the case may be, in trust for the benefit of the Trustee on behalf of the
Certificateholders. In the event that any such original document is required
pursuant to the terms of this Section 2.04 to be a part of a Mortgage File, such
document shall be delivered promptly to the Custodian. Any original document
that is not required pursuant to the terms of this Section to be a part of a
Mortgage File delivered to or held by the Custodian shall be delivered promptly
to the Servicer.
In connection with the delivery of documentation provided by this
Section 2.04, the Seller hereby appoints the Trustee its attorney with full
power and authority to act in its stead for the purpose of executing and
certifying assignments and endorsing and certifying promissory notes which make
a part of each Mortgage File to cure any deficiencies in such documentation.
In addition to the foregoing, the Depositor shall cause the
Certificate Insurer to deliver on the Closing Date the Policy to the Trustee for
the benefit of the Certificateholders.
If the Seller has not delivered all required documentation with
respect to any Mortgage Loan within the time periods, if any, specified in this
Agreement (including, without limitation, the extension of time approved in
writing by the Certificate Insurer or any Rating Agency), the Seller shall be
required to take action with respect to such Mortgage Loan as and to the extent
provided in Section 2.06 hereof.
Section 2.05. Acceptance by Trustee.
The Trustee, agrees to acknowledge (i) receipt by the Custodian on its
behalf on the Closing Date, in good faith without notice of adverse claims,
subject to the provisions of Sections 2.02 and 2.04 hereof and to any exceptions
noted on the Custodian's certification in the form annexed hereto as Exhibit E-1
to be delivered to the Seller, the Depositor, the Servicer, the Trustee and the
Certificate Insurer on the Closing Date, of (x) the documents referred to in
Section 2.04(a)(i), (ii), (iii) and (iv) above (except that the documents
referred to in Sections 2.04(a)(i) and (iii) may be endorsed or assigned in
blank upon receipt) with respect to the Mortgage Loans listed on the Mortgage
Loan Schedule to be delivered to the Custodian on the Closing Date, and (y) the
Certificate Account and the amounts on deposit therein and (ii) the assignment
to the Trustee of all the other assets included in clauses (i) and (iii) of the
definition of "Trust Fund" herein, and the Trustee declares that the Custodian
will hold such documents and such other documents constituting the Mortgage
Files as are delivered to it, and all such assets and such other assets included
in the definition of "Trust Fund" as are delivered to it, on the Trustee's
behalf, in trust for the exclusive use and benefit of all present and future
Certificateholders and the Certificate Insurer.
If the Seller has not delivered all required documentation with
respect to any Mortgage Loan within the time periods specified in this Agreement
(as such may have been extended pursuant to Section 2.04(b) hereof), the Seller
shall be required to take action with respect to such Mortgage Loan as and to
the extent provided in Section 2.06 hereof.
Section 2.06. Repurchase or Substitution of Mortgage Loans by the Seller or
the Servicer.
(a) Upon discovery or receipt of notice of any materially defective
document in, or that a required document is missing (after expiration of the
applicable time period set forth in Section 2.04 hereof) from, a Mortgage File
or of the breach by the Seller of any representation, warranty or covenant under
this Agreement or the Mortgage Loan Purchase Agreement in respect of any
Mortgage Loan (i) that materially adversely affects the value of such Mortgage
Loan or the interest therein of the Certificateholders and the Certificate
Insurer, or (ii) under Exhibit B of the Mortgage Loan Purchase Agreement
representation (lvii) the Trustee shall promptly notify the Seller, the
Depositor, the Certificate Insurer and the Servicer of such defect, missing
document or breach and request that the Seller deliver such missing document or
cure such defect or breach within 60 days after the date on which the Seller was
notified of such missing document or breach (which period may be extended by the
Certificate Insurer if in its reasonable judgment it believes that the Seller is
proceeding diligently to cure any such breach or missing document) and, if the
Seller does not, deliver such missing document or cure such defect or breach in
all material respects (and to the Certificate Insurer's complete satisfaction in
the case of a breach of representation (lvii) in Exhibit B of the Mortgage Loan
Purchase Agreement) during such period, the Seller shall repurchase the related
Mortgage Loan from the Trust at the Purchase Price within 90 days after the date
on which the Seller was first notified. The Purchase Price for the repurchased
Mortgage Loan shall be deposited into the Collection Account by the Seller, and
the Trustee, upon (i) receipt of an Officers' Certificate of the Servicer as to
the making of such deposit and (ii) confirmation that such deposit has been
made, shall release or cause to be released to the Seller the related Mortgage
File, and the Trustee shall execute and deliver such instruments of transfer or
assignment as are furnished by the Seller, in each case without recourse, as
shall be reasonably necessary to vest in the Seller any Mortgage Loan released
pursuant hereto, and the Trustee shall not have any further responsibility or
liability (except as to its own negligence or willful misconduct) with regard to
such Mortgage File and such Mortgage Loan.
In lieu of repurchasing any such Mortgage Loan as provided above, the
Seller may cause such Mortgage Loan to be removed from the Trust (in which case
it shall become a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans in the manner and subject to the limitations set forth
in Section 2.06(d) hereof. It is understood and agreed that the obligation of
the Seller to cure or to repurchase (or to substitute for) any Mortgage Loan as
to which a document is missing, a material defect in a constituent document
exists or as to which a breach has occurred and is continuing shall constitute
the sole remedy respecting such omission, defect or breach available to the
Trustee on behalf of the Certificateholders and the Certificate Insurer.
(b) (i) Except as otherwise provided in Section 2.06(e) hereof, within
90 days after the earlier of discovery by the Seller or receipt of notice by the
Seller of the breach of the substance of any representation or warranty of the
Seller set forth in Section 2.07 or Section 2.08 hereof with respect to any
Mortgage Loan (without giving effect to any qualification contained in such
representation and warranty relating to the Seller's knowledge) which materially
adversely affects the value of such Mortgage Loan or the interest therein of the
Certificateholders, the Seller shall (x) cure such breach in all material
respects, (y) subject to the restrictions set forth in Section 2.06(d) hereof
repurchase the Mortgage Loan from the Trustee at the Purchase Price or (z)
remove such Mortgage Loan from the Trust (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans in the manner and subject to the limitations set forth in Section 2.06(d)
hereof. If any such breach is a breach of any of the representations and
warranties included in subsection (xxxiv), (xlv), (xlvi)(e) of Exhibit B to the
Mortgage Loan Purchase Agreement, and the Seller is unable to cure such breach,
the Seller shall repurchase or substitute the smallest number of Mortgage Loans
as shall be required to make such representation or warranty true and correct.
The Purchase Price for any repurchased Mortgage Loan shall be deposited into the
Collection Account by the Seller, and the Trustee, upon (x) receipt of an
Officers' Certificate of the Seller as to the making of such deposit and (y)
confirmation that such deposit has been made, shall release or cause to be
released to the Seller the related Mortgage File and the Trustee shall execute
and deliver such instruments of transfer or assignment as furnished by the
Seller, in each case without recourse, as shall be necessary to vest in the
Seller title to any Mortgage Loan released pursuant hereto, and the Trustee
shall not have any further responsibility or liability (except as to its own
negligence or willful misconduct) with regard to such Mortgage File and such
Mortgage Loan.
(ii) If any Mortgagor on a Mortgage Loan fails to make the first
payment after origination (not including any payments withheld from loan
proceeds) as determined in accordance with the terms of the related Mortgage
Note within 90 days after the Due Date of such first payment, the Seller shall,
prior to the end of the month related to the next succeeding Distribution Date,
repurchase such Mortgage Loan from the Trustee at the Purchase Price.
(c) Within 90 days after the earlier of discovery by the Servicer or
receipt of notice by the Servicer of the breach of any representation, warranty
or covenant of the Servicer set forth in Section 2.09 hereof, which breach
materially and adversely affects the value of any Mortgage Loan or the interests
of the Certificateholders and the Certificate Insurer therein, the Servicer
shall (i) cure such breach in all material respects or (ii) subject to the
restrictions set forth in Section 2.06(d) hereof, purchase any affected Mortgage
Loan from the Trust at the Purchase Price. The Purchase Price for the purchased
Mortgage Loan shall be deposited by the Servicer into the Collection Account,
and the Trustee, upon (i) receipt of an Officers' Certificate of the Servicer as
to the making of such deposit and (ii) confirmation that such deposit has been
made, shall release or cause to be released to the Servicer the related Mortgage
File, and the Trustee shall execute and deliver such instruments of transfer or
assignment as furnished by the Seller, in each case without recourse, as shall
be necessary to vest in the Servicer title to any Mortgage Loan released
pursuant hereto, and the Trustee shall not have any further responsibility or
liability (except as to its own negligence or willful misconduct) with regard to
such Mortgage File and such Mortgage Loan.
(d) Any substitution of Qualified Substitute Mortgage Loans for
Deleted Mortgage Loans made pursuant to Section 2.06(a) or Section 2.06(b)
hereof must be effected prior to the date that is two years after the Startup
Date or such other period as may be specified therefor in the REMIC Provisions.
With respect to any Deleted Mortgage Loan for which the Seller
substitutes a Qualified Substitute Mortgage Loan or Loans, such substitution
shall be effected by the Seller by delivering to the Custodian for such
Qualified Substitute Mortgage Loan or Loans the Mortgage Note, the Mortgage, the
related Assignment, and such other documents and agreements, with all necessary
endorsements thereon, as are required by Section 2.04 hereof, together with an
Officers' Certificate providing that each such Qualified Substitute Mortgage
Loan satisfies the definition thereof and specifying the Substitution Shortfall
Amount (as described below), if any, in connection with such substitution. The
Custodian, on behalf of the Trustee, shall acknowledge receipt of such Qualified
Substitute Mortgage Loan or Loans and, within ten Business Days thereafter,
shall review such documents (or shall cause such documents to be reviewed) as
specified in Section 2.04 hereof and shall deliver to the Seller, the Depositor,
the Servicer, the Trustee and the Certificate Insurer, with respect to such
Qualified Substitute Mortgage Loan or Loans, a certification, in each case as
set forth in the Custody Agreement. For the Distribution Date relating to the
month in which a substitution occurred, Monthly Payments due with respect to
Qualified Substitute Mortgage Loans during the related Due Period are not part
of the Trust Fund and will be retained by the Seller. For the Distribution Date
relating to the month in which such substitution occurred, distributions to
Certificateholders will reflect the Monthly Payment due on such Deleted Mortgage
Loan during the related Due Period, and the Seller shall thereafter be entitled
to retain all amounts subsequently received in respect of such Deleted Mortgage
Loan. The Seller shall give or cause to be given written notice to the
Certificate Insurer, Certificateholders and the Depositor that such substitution
has taken place, and the Trustee shall amend the Mortgage Loan Schedule to
reflect the removal of such Deleted Mortgage Loan from the Trust and the
substitution of the Qualified Substitute Mortgage Loan or Loans. Upon such
substitution, such Qualified Substitute Mortgage Loan or Loans shall be subject
to the terms of this Agreement in all respects, including, but not limited to,
the representations and warranties set forth in Section 2.07 hereof, as of the
date of substitution.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Trustee
will determine, based upon information supplied by the Servicer, and inform the
Seller of, the amount (the "Substitution Shortfall Amount"), if any, by which
the aggregate Loan Balance of all such Qualified Substitute Mortgage Loans as of
the date of substitution is less than the aggregate Loan Balance of all such
Deleted Mortgage Loans as of such date plus the aggregate amount of all
unreimbursed Servicing Advances and Delinquency Advances relating to such
Deleted Mortgage Loans as of such date. On the date of such substitution, the
Seller will deposit or cause to be deposited from the Seller's own funds into
the Collection Account pursuant to Section 3.10(a)(viii) hereof an amount equal
to the Substitution Shortfall Amount, if any, without reimbursement therefor,
and the Trustee, upon (i) receipt of (A) the related Qualified Substitute
Mortgage Loan or Loans and (B) an Officers' Certificate of the Seller as to the
deposit of such Substitution Shortfall Amount into the Collection Account and
(ii) confirmation that such deposit has been made, shall release or cause to be
released to the Seller the related Mortgage File or Files and the Trustee shall
execute and deliver such instruments of transfer or assignment as are furnished
by the Seller, in each case without recourse, as shall be necessary to vest in
the Seller title to any Deleted Mortgage Loan released pursuant hereto and the
Trustee shall not have any further responsibility or liability (except as to its
own acts) with regard to such Mortgage Loan.
Notwithstanding any contrary provision of this Agreement, with respect
to any Mortgage Loan, no substitution pursuant to this Section 2.06 shall be
made unless the Seller obtains an Independent Opinion of Counsel, addressed to
the Trustee, the Seller, the Depositor, the Servicer and the Certificate
Insurer, to the effect that such substitution would not (i) result in the
imposition of taxes on "prohibited transactions" of the Trust, as defined in
Section 860F of the Code, (ii) result in the imposition of taxes on
contributions to the Trust under Section 860G(d) of the Code, or (iii) cause the
Trust to fail to qualify as a REMIC at any time that any Certificates are
outstanding.
(e) Upon discovery by the Seller, the Depositor, the Servicer, the
Trustee or the Certificate Insurer that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code, the
Person discovering such fact shall promptly (and in any event within five
Business Days after the discovery) give written notice thereof to the other
Persons set forth in this sentence. In connection therewith, the Seller shall
repurchase the affected Mortgage Loan within 60 days after the earlier of such
discovery by the Seller and the receipt of notice thereof in the same manner as
would be required in the event of an uncured breach of representation or
warranty contained in Section 2.07 hereof. The Trustee shall reconvey to the
Seller the Mortgage Loan to be released pursuant hereto in the same manner, and
on the same terms and conditions, as it would reconvey a Mortgage Loan
repurchased for breach of a representation or warranty contained in Section 2.07
hereof.
Section 2.07. Representations and Warranties with Respect to the
Mortgage Loans.
The Seller hereby represents and warrants to the Trustee for the
benefit of the Certificateholders and the Certificate Insurer that, as of the
Closing Date or as of such other date specifically provided herein, the
representations and warranties made by the Seller pursuant to Section 3.01 of
the Mortgage Loan Purchase Agreement are true and correct as of the Closing
Date.
It is understood and agreed that the representations and warranties
set forth in this Section 2.07 shall survive delivery of the respective Mortgage
Files to the Custodian and shall inure to the benefit of the Depositor, the
Servicer, each Subservicer, the Certificateholders, the Trustee and the
Certificate Insurer, notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Seller, the Depositor, the Servicer or
the Trustee of a breach of any of the foregoing representations and warranties
that materially and adversely affects the value of any Mortgage Loan or the
interests of the Certificateholders and the Certificate Insurer therein (without
giving effect to any qualification contained in such representation or warranty
relating to the Seller's knowledge), the party discovering such breach shall
give prompt written notice to the other parties, and in no event later than two
Business Days after the date of such discovery. It is understood and agreed that
the obligations of the Seller set forth in Section 2.06(b) hereof to cure any
breach or to substitute for or repurchase a defective Mortgage Loan constitute
the sole remedies available to the Certificateholders, the Servicer, the Trustee
and the Certificate Insurer respecting a breach of the representations and
warranties contained in this Section 2.07.
Section 2.08. Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trustee, the
Certificateholders, the Servicer, the Depositor and the Certificate Insurer that
as of the Closing Date or as of such date specifically provided herein:
(a) The Seller is a corporation licensed as a residential mortgage
lender duly organized, validly existing and in good standing under the laws of
the State of Delaware and has, and had at all relevant times, full corporate
power to originate the Mortgage Loans, to own its property, to carry on its
business as currently conducted and to enter into and perform its obligations
under this Agreement and to create the Trust pursuant hereto;
(b) The execution and delivery of this Agreement by the Seller and its
performance of and compliance with the terms of this Agreement will not
violate the Seller's articles of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Seller is a
party or which may be applicable to the Seller or any of its assets;
(c) The Seller has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement to be consummated by
it, has duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement. This Agreement,
assuming due authorization, execution and delivery by the Trustee, the Servicer,
and the Depositor, constitutes a valid, legal and binding obligation of the
Seller, enforceable against it in accordance with the terms hereof, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting the
rights of creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at law);
(d) The Seller is not in violation of, and the execution and delivery
of this Agreement by the Seller and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or other governmental agency having jurisdiction, which violation
would materially and adversely affect the condition (financial or otherwise) or
operations of the Seller or its properties or materially and adversely affect
the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations of,
the Seller pending or, to the knowledge of the Seller, threatened, before any
court, administrative agency or other tribunal (A) that, if determined
adversely, would prohibit its entering into this Agreement or render the
Certificates invalid, (B) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by this Agreement or
(C) that, if determined adversely, would prohibit or materially and adversely
affect the performance by the Seller of its obligations under, or the validity
or enforceability of, this Agreement or the Certificates;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of, or compliance by the Seller with, this Agreement
or the Certificates, or for the consummation of the transactions contemplated by
this Agreement, except for such consents, approvals, authorizations and orders,
if any, that have been obtained prior to the Closing Date;
(g) The Seller did not sell the Mortgage Loans to the Trust with any
intent to hinder, delay or defraud any of its creditors; the Seller will not be
rendered insolvent as a result of the sale of the Mortgage Loans to the Trust;
(h) As of the Closing Date, the Seller had good title to, and was the
sole owner of, each Mortgage Loan free and clear of any Lien other than any such
Lien released simultaneously with the sale contemplated herein, and immediately
upon each transfer and assignment herein contemplated, the Seller will have
taken all steps necessary so that the Trust will have good title to, and will be
the sole owner of, each Mortgage Loan free and clear of any Lien (except for
such Liens as may exist consistent with the representations and warranties made
in paragraph (c) of Exhibit C to the Mortgage Loan Purchase Agreement);
(i) The Seller acquired title to the Mortgage Loans in good faith,
without notice of any adverse claim;
(j) No Officers' Certificate, statement, report or other document
prepared by the Seller and furnished or to be furnished by it pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading;
(k) The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Seller pursuant to the Mortgage Loan Purchase Agreement are
not subject to the bulk transfer laws or any similar statutory provisions in
effect in any applicable jurisdiction;
(l) The Seller is duly licensed where required as a "Licensee" or is
otherwise qualified in each state in which it transacts business and is not in
default of such state's applicable laws, rules and regulations, except where the
failure to so qualify or such default would not have a material adverse effect
on the ability of the Seller to conduct its business or perform its obligations
hereunder;
(m) The Seller is solvent, is able to pay its debts as they become due
and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Agreement or by the performance of its obligations hereunder; no petition
of bankruptcy (or similar insolvency proceeding) has been filed by or against
the Seller prior to the date hereof;
(n) As of the date of the Prospectus Supplement, the information under
the captions "THE MORTGAGE POOL" and "THE SELLER AND THE SERVICER--Underwriting
Standards; Representations" will contain no untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; and
(o) The Seller is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended.
It is understood and agreed that the representations and warranties
set forth in this Section 2.08 shall survive delivery of the respective Mortgage
Files to the Custodian on behalf of the Trustee and shall inure to the benefit
of the Certificateholders, the Depositor, the Servicer, the Trustee and the
Certificate Insurer. Upon discovery by any of the Seller, the Depositor, the
Servicer, each Subservicer, the Trustee or the Certificate Insurer of a breach
of any of the foregoing representations and warranties that materially and
adversely affects the value of any Mortgage Loan or the interests of the
Certificateholders therein, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the other parties. The obligations of the Seller set forth in
Section 2.06(b) hereof to cure any breach or to substitute for or repurchase an
affected Mortgage Loan shall constitute the sole remedies available to the
Certificateholders, the Servicer, the Trustee or the Certificate Insurer
respecting a breach of the representations and warranties contained in this
Section 2.08.
Section 2.09. Representations, Warranties and Covenants of the Servicer.
The Servicer hereby represents and warrants to and covenants with the
Trustee, the Certificateholders, the Depositor, the Seller and the Certificate
Insurer that as of the Closing Date or as of such date specifically provided
herein:
(i) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Servicer is in compliance with the laws of each state in which it is acting as
Servicer with respect to a Mortgage Loan to the extent necessary to perform all
servicing obligations with respect to the related Mortgaged Property hereunder.
The Servicer has the power and authority to execute and deliver this Agreement
and to perform its obligations in accordance herewith. The execution, delivery
and performance of this Agreement (including all instruments of transfer to be
delivered pursuant to this Agreement) by the Servicer and the consummation of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action. This Agreement evidences the valid and binding
obligation of the Servicer enforceable against the Servicer in accordance with
its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or the application of equitable principles in any proceeding, whether
at law or in equity. The consummation of the transactions contemplated hereby
will not result in the breach of any terms or provisions of the articles of
incorporation or by-laws of the Servicer or result in the breach of any term or
provision of, or conflict with or constitute a default under or result in the
acceleration of any obligation under, any material agreement, indenture or loan
or credit agreement or other material instrument to which the Servicer or its
property is subject, or result in the violation of any law, rule, regulation,
order, judgment or decree to which the Servicer or its property is subject;
(ii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency, that are necessary in
connection with the execution and delivery by the Servicer of this Agreement,
have been duly taken, given or obtained, as the case may be, are in full force
and effect, are not subject to any pending proceedings (administrative, judicial
or otherwise) with respect to which the time within which any appeal therefrom
may be taken or review thereof may be obtained has expired or no review thereof
may be obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement on the part of
the Servicer and the performance by the Servicer of its obligations under this
Agreement;
(iii) There is no action, suit, proceeding or investigation
pending or, to the best of the Servicer's knowledge, threatened against the
Servicer that, either in any one instance or in the aggregate, should reasonably
be expected to result in any material adverse change in the business,
operations, financial condition, properties or assets of the Servicer or in any
material impairment of the right or ability of the Servicer to carry on its
business substantially as now conducted, or in any material liability on the
part of the Servicer or that would draw into question the validity of this
Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Servicer contemplated herein, or that
should be reasonably expected to impair the ability of the Servicer to perform
under the terms of this Agreement;
(iv) The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default should reasonably be expected to
have consequences that would materially and adversely affect the condition
(financial or other) or operations of the Servicer or its properties or to have
consequences that should reasonably be expected to adversely affect its
performance hereunder;
(v) The collection practices used by the Servicer are in all
material respects legal and customary in the mortgage loan servicing business
for comparable mortgage loans;
(vi) The information set forth in the Prepayment Charge Schedule
(including the Prepayment Charge Summary attached thereto) is complete, true and
correct in all material respects on the date or dates when such information is
furnished and each Prepayment Charge is permissible and enforceable in
accordance with its terms (except to the extent that the enforceability thereof
may be limited by bankruptcy, insolvency, moratorium, receivership and other
similar laws relating to creditors' rights generally or the collectability
thereof may be limited due to acceleration in connection with a foreclosure)
under applicable law; and
(vii) The Servicer will waive a Prepayment Charge only under the
following circumstances: (i) such waiver is standard and customary in servicing
similar Mortgage Loans and (ii) either (A) such waiver would, in the reasonable
judgment of the Servicer, maximize recovery of total proceeds taking into
account the value of such Prepayment Charge and the related Mortgage Loan and,
if such waiver is made in connection with a refinancing of the related Mortgage
Loan, such refinancing is related to a default or a reasonably foreseeable
default or (B) such waiver is made in connection with a refinancing of the
related Mortgage Loan unrelated to a default or a reasonably foreseeable default
where (x) the related mortgagor has stated to the Servicer or an applicable
subservicer an intention to refinance the related Mortgage Loan and (y) the
Servicer has concluded in its reasonable judgment that the waiver of such
Prepayment Charge would induce such mortgagor to refinance with the Servicer.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.09 shall survive delivery of the
respective Mortgage Files to the Custodian and shall inure to the benefit of the
Depositor, each Subservicer, the Certificateholders, the Trustee and the
Certificate Insurer. Upon discovery by any of the Seller, the Depositor, the
Servicer, the Trustee or the Certificate Insurer of a breach of any of the
foregoing representations, warranties and covenants that materially and
adversely affects the value of any Mortgage Loan or the interests of the
Certificateholders or the Certificate Insurer therein, the party discovering
such breach shall give prompt written notice (but in no event later than two
Business Days following such discovery) to the other parties. The obligations of
the Servicer set forth in (x) Section 2.06(c) hereof to cure any breach or to
purchase an affected Mortgage Loan, (y) Section 2.06(d)(i) hereof to indemnify
and hold harmless the Trust and (z) Section 3.25 hereof to indemnify and hold
harmless the Seller, the Trustee, the Depositor, the Certificateholders and the
Certificate Insurer shall constitute the sole remedies available to the Seller,
the Certificateholders, the Depositor, the Trustee or the Certificate Insurer
respecting a breach of the representations, warranties and covenants contained
in this Section 2.09.
Section 2.10. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Seller, the
Servicer, the Trustee, the Certificateholders and the Certificate Insurer, as of
the Closing Date or as of such date specifically provided herein, that:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has, and had at
all relevant times, full power to own its property, to carry on its business as
currently conducted, to enter into and perform its obligations under this
Agreement and to create the Trust pursuant hereto;
(b) The execution and delivery of this Agreement by the Depositor and
its performance of and compliance with the terms of this Agreement will not
violate the Depositor's certificate of incorporation or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach or acceleration of, any
material contract, agreement or other instrument to which the Depositor is a
party or which may be applicable to the Depositor or any of its assets;
(c) The Depositor has the full power and authority to enter into and
consummate the transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement, and has duly executed
and delivered this Agreement. This Agreement, assuming due authorization,
execution and delivery by the Trustee, the Seller and the Servicer, constitutes
a valid, legal and binding obligation of the Depositor, enforceable against it
in accordance with the terms hereof, except as such enforcement may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium or other
similar laws relating to or affecting the rights of creditors generally, and by
general equity principles (regardless of whether such enforcement is considered
in a proceeding in equity or at law);
(d) The Depositor is not in violation of, and the execution and
delivery of this Agreement by the Depositor and its performance and compliance
with the terms of this Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any federal,
state, municipal or other governmental agency having jurisdiction, which
violation would materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties or materially and
adversely affect the performance of its duties hereunder;
(e) There are no actions or proceedings against, or investigations of,
the Depositor pending with regard to which the Depositor has received service of
process, or, to the knowledge of the Depositor, pending or threatened, before
any court, administrative agency or other tribunal (A) that, if determined
adversely, would prohibit its entering into this Agreement or render the
Certificates invalid, (B) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by this Agreement or
(C) that, if determined adversely, would prohibit or materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, this Agreement or the Certificates;
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Depositor of, or compliance by the Depositor with, this
Agreement or the Certificates, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the Closing
Date;
(g) The Depositor is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its obligations
hereunder; it will not be rendered insolvent by the execution and delivery of
this Agreement or its obligations hereunder; no petition of bankruptcy (or
similar insolvency proceeding) has been filed by or against the Depositor prior
to the date hereof;
(h) The Depositor did not sell the Mortgage Loans to the Trust with
any intent to hinder, delay or defraud any of its creditors; the Depositor will
not be rendered insolvent as a result of the sale of the Mortgage Loans to the
Trust;
(i) As of the Closing Date, the Depositor had good title to, and was
the sole owner of, each Mortgage Loan free and clear of any Lien other than any
such Lien released simultaneously with the sale contemplated herein, and,
immediately upon each transfer and assignment herein contemplated, the Depositor
will have taken all steps necessary so that the Trust will have good title to,
and will be the sole owner of, each Mortgage Loan free and clear of any lien
(except for such liens as may exist consistent with the representations and
warranties made in (xi) and (xvii) of Exhibit B to the Mortgage Loan Purchase
Agreement;
(j) The Depositor acquired title to each of the Mortgage Loans in good
faith, without notice of any adverse claim;
(k) No Officers' Certificate, statement, report or other document
prepared by the Depositor and furnished or to be furnished by it pursuant to
this Agreement or in connection with the transactions contemplated hereby
contains any untrue statement of material fact or omits to state a material fact
necessary to make the statements contained herein or therein not misleading;
(l) The Depositor is not required to be registered as an "investment
company" under the Investment Company Act of 1940, as amended; and
(m) The transfer, assignment and conveyance of the Mortgage Notes and
the Mortgages by the Depositor pursuant to this Agreement are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.10 shall survive delivery of the
respective Mortgage Files to the Custodian on behalf of the Trustee and shall
inure to the benefit of the Servicer, each Subservicer, the Trustee, the
Certificateholders and the Certificate Insurer. Upon discovery by any of the
Seller, the Depositor, the Servicer, the Certificate Insurer or a Responsible
Officer of the Trustee (who must have actual knowledge) of a breach of any of
the representations and warranties set forth in this Section 2.10(h), (i) and
(j) with respect to any Mortgage Loan which materially and adversely affects the
value of any Mortgage Loan or the interests of the Certificateholders or the
Certificate Insurer therein, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the other parties.
Section 2.11. Execution of Certificates.
(a) The Trustee acknowledges the assignment to the Trust of the
Mortgage Loans and the delivery to it (or the Custodian on its behalf) of the
Mortgage Files relating thereto, subject to the provisions of Section 2.04
hereof, and, concurrently with such delivery, the Trustee has executed,
authenticated and delivered to or upon the order of the Depositor, in exchange
for such property, receipt of which is hereby acknowledged, Certificates in
authorized denominations evidencing ownership of the Trust.
(b) In connection with the issuance of the original Certificates, the
Depositor shall furnish the Trustee with a Written Order to Authenticate in the
form set forth as Exhibit L hereto (a) directing the Trustee to issue the
original Certificates to the Persons designated in the Written Order to
Authenticate and (b) informing the Trustee of the Percentage Interest with
respect to the original Regular Certificates and Class R Certificates.
Section 2.12. [Reserved].
Section 2.13. [Reserved].
Section 2.14. Designation of Interests in the REMIC.
(a) The Preliminary Statement describes the Upper Tier REMIC and the
Lower Tier REMIC and designates the Upper Tier Regular Interests, the Lower Tier
Regular Interests, and the residual interests in each of the Upper Tier REMIC
and the Lower Tier REMIC. The "latest possible maturity date" for federal income
tax purposes of all REMIC interests created hereby is the latest date referenced
in Section 10.01(a). The fiscal year of the REMIC shall be the calendar year.
(b) The Closing Date is hereby designated as the "startup day" of each
REMIC created hereby within the meaning of Section 860G(a)(9) of the Code.
(c) Each REMIC created hereby shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual basis.
(d) The Trustee shall file an election pursuant to Treasury Regulation
Section 1.860D-1(d) of REMIC status for each of the Lower Tier REMIC and the
Upper Tier REMIC. Any inconsistencies or ambiguities in this Agreement or in the
administration of the REMICs created hereby shall be resolved in a manner that
preserves the validity of such elections.
(e) With respect to each REMIC created hereby, the Servicer shall
provide to the Trustee and the Trustee shall provide to the Internal Revenue
Service (the "IRS") and to the Person described in Section 860E(e)(3) and (6) of
the Code the information described in Treasury Regulation Section
1.860D-1(b)(5)(ii), or any successor regulation thereto, and the Trustee shall
be reimbursed by such Person for the cost of providing such information. Such
information will be provided in the manner described in Treasury Regulation
Section 1.860E-2(a)(5), or any successor regulation thereto. The Trustee shall
have no responsibility or liability for incorrect information supplied to the
IRS where such information was supplied to the Trustee by the Servicer, and the
Trustee shall have no responsibility or liability for information required to be
supplied to the IRS and not so supplied where such information was known to the
Servicer and not supplied by it despite the Trustee's request for such
information.
(f) The Trustee will apply for an Employer Identification Number from
the IRS via a form SS-4 or any other acceptable method for all tax entities.
ARTICLE III.
ADMINISTRATION AND SERVICING
OF THE TRUST
Section 3.01. Administration of the Trust; Servicing of the Mortgage
Loans.
(a) The parties hereto intend that the Trust shall constitute, and
that the affairs of the Trust shall be conducted so as to qualify each of the
Lower Tier REMIC and the Upper Tier REMIC as a REMIC in accordance with the
REMIC Provisions. In furtherance of such intention, each of the parties hereto
covenants and agrees that it shall not knowingly take any actions or omit to
take any actions that would disqualify either of the Lower Tier REMIC or the
Upper Tier REMIC for REMIC election or status and the Trustee covenants and
agrees that it shall act, in its capacity as agent of the Tax Matters Person and
as agent for the REMICs created hereby that in such capacity it shall: (i)
prepare or cause to be prepared, execute and file, in a timely manner, an annual
Tax Return and any other Tax Return required to be filed by the Trust
established hereunder using a calendar year as the taxable year for each of the
REMICs established hereunder; (ii) in the related first such Tax Return, make
(or cause to be made) an election with respect to each REMIC established
hereunder satisfying the requirements of the REMIC Provisions, on behalf of each
REMIC established hereunder, to be treated as a REMIC; (iii) prepare and
forward, or cause to be prepared and forwarded, to the Certificateholders all
information, reports or Tax Returns required with respect to the REMICs
established hereunder as, when and in the form required to be provided to the
Certificateholders and to the Internal Revenue Service and any other relevant
governmental taxing authority in accordance with the REMIC Provisions and any
other applicable federal, state or local laws, including, without limitation,
information reports relating to "original issue discount" as defined in the Code
based upon the Prepayment Assumption and calculated by using the "Issue Price"
(within the meaning of Section 1275 of the Code) of the Certificates of the
related Class; (iv) not knowingly take any action or omit to take any action
that would cause the termination of the REMIC status of either REMIC, except as
provided under this Agreement; (v) pay, from the sources specified in the last
paragraph of this Section 3.01(a), the amount of any and all other federal,
state and local taxes imposed on the Trust, its assets or transactions,
including, without limitation, the tax on "prohibited transactions" imposed by
Section 860F of the Code, the tax on "contributions" imposed by Section 860G(d)
of the Code and the tax on "net income from foreclosure property" imposed by
Section 860G(c) of the Code when and as the same shall be due and payable (but
such obligation shall not prevent the Trustee or any other appropriate Person
from contesting any such tax in appropriate proceedings and shall not prevent
the Trustee from withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings); (vi) represent the Trust and each REMIC in any
administrative or judicial proceedings relating to an examination or audit by
any governmental taxing authority, request an administrative adjustment as to a
taxable year of the REMICs, enter into settlement agreements with any
governmental taxing agency, extend any statute of limitations relating to any
tax item of the Trust or either REMIC, and otherwise act on behalf of the Trust
in relation to any tax matter involving the Trust; (vii) comply with all
statutory or regulatory requirements with regard to its conduct of activities
pursuant to the foregoing clauses of this Section 3.01(a), including, without
limitation, providing all notices and other information to the Internal Revenue
Service and Holders of Class R Certificates required of a "tax matters person"
pursuant to subtitle F of the Code and the Treasury Regulations thereunder; and
(viii) make available information necessary for the computation of any tax
imposed (A) on a transferor of Class R Certificates to certain Disqualified
Organizations or (B) on pass-through entities, any interest in which is held by
a Disqualified Organization. The obligations of the Servicer pursuant to this
Section 3.01(a) shall survive the termination or discharge of this Agreement.
In order to enable the Trustee to perform its duties as set forth
herein, the Seller shall provide or cause to be provided to the Servicer or its
designee, within ten (10) days after the Closing Date, all information or data
that the Trustee or its designee reasonably determines to be relevant for tax
purposes as to the valuations and offering prices of the Certificates,
including, without limitation, the price, yield, Prepayment Assumption and
projected cash flows of the Certificates and the Mortgage Loans. Thereafter, the
Seller shall provide to the Trustee, promptly upon request therefor, any such
additional information or data that the Trustee may from time to time reasonably
request in order to enable the Trustee to perform its duties as set forth
herein. The Seller shall indemnify the Trustee and hold it harmless for any
loss, liability, damage, claim or expense of the Trustee arising from any
failure of it to provide, or to cause to be provided, on a timely basis in
response to the reasonable requests of the Trustee made pursuant to this
paragraph, accurate information or data to the Trustee. The indemnification
provisions hereunder shall survive the termination of this Agreement.
In the event that any tax is imposed on "prohibited transactions" of
either REMIC established hereunder as defined in Section 860F(a)(2) of the Code,
on the "net income from foreclosure property" as defined in Section 860G(c) of
the Code, on any gain recognized pursuant to Section 860F(c) of the Code, on any
contribution to the Trust after the Startup Date pursuant to Section 860G(d) of
the Code, or any other tax is imposed, if not paid as otherwise provided for
herein, such tax shall be paid by (i) the Trustee, if any such tax arises out of
or results from the willful malfeasance, bad faith or negligence in the
performance by the Trustee of any of its obligations hereunder, (ii) the
Servicer or the Depositor, as applicable, if such tax arises out of or results
from a breach by the Servicer or the Depositor of any of their respective
obligations under this Agreement or (iii) in all other cases, or in the event
that the Servicer, the Trustee or the Depositor fails to honor its obligations
under the preceding clauses (i) or (ii), any such tax will be paid with amounts
otherwise to be distributed to the Holders of the Class R Certificates pursuant
to Section 4.04(b) hereof or, in the event of an insufficiency in such amounts,
such tax shall be paid directly by such Class R Certificateholders.
(b) (i) The Servicer shall service and administer the Mortgage Loans
in accordance with the terms of this Agreement and the respective Mortgage Loans
and in accordance with the instructions of the Certificate Insurer, and upon
receipt of any such instructions from the Certificate Insurer, shall be fully
protected against any liability arising from, and shall be allowed to
conclusively rely upon, such instructions. Unless otherwise specified herein
with respect to specific obligations of the Servicer, the Servicer shall service
and administer the Mortgage Loans with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect to all comparable
mortgage loans that it services for itself and others, giving due consideration
to its customary standards, policies and procedures in performing its duties as
Servicer, to the extent not in conflict with the provisions of this Agreement,
but without regard to:
(A) any relationship that the Servicer, any Subservicer
or any Affiliate of the Servicer or any Subservicer may have
with the related Mortgagor;
(B) the ownership of any Certificate by the Servicer or
any affiliate of the Servicer
(C) the Servicer's obligation to make Delinquency
Advances or Servicing Advances; or
(D) the Servicer's or any Subservicer's right to
receive compensation for its services hereunder or with
respect to any particular transaction.
To the extent consistent with the foregoing, the Servicer also shall
seek to maximize the timely and complete recovery of principal and interest on
the Mortgage Notes. Subject only to the above-described servicing standards and
the terms of this Agreement and the respective Mortgage Loans, the Servicer
shall have full power and authority, acting alone and/or through Subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. The Servicer shall promptly notify the Depositor, the Trustee, the
Certificate Insurer and each Rating Agency in writing of (A) any event,
circumstance or occurrence which may materially and adversely affect the ability
of the Servicer to service any Mortgage Loan or otherwise to perform and carry
out its duties, responsibilities and obligations under and in accordance with
this Agreement and (B) any attempt by a court or by a regulatory authority of
which it has actual knowledge to assert jurisdiction over the Trust.
Without limiting the generality of the foregoing, the Servicer, in its
own name or in the name of a Subservicer, is hereby authorized and empowered,
when the Servicer believes it appropriate in its best judgment and subject to
the requirements of Section 3.07 hereof, to execute and deliver, on behalf of
the Certificateholders and the Trust or any of them, and upon notice to the
Trustee, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, and all other comparable instruments, with respect
to the Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed in lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trust and Certificateholders. The Servicer shall
service and administer the Mortgage Loans in accordance with applicable state
and federal law and shall provide to the Mortgagors any reports required to be
provided to them thereby. The Servicer shall also comply in the performance of
this Agreement with all reasonable rules and requirements of each insurer under
any standard hazard insurance policy. Subject to Section 3.16 hereof, the
Trustee shall execute, at the written direction of the Servicer, and furnish to
the Servicer and any Subservicer any limited or special powers of attorney and
other documents reasonably acceptable to the Trustee to enable the Servicer or
any Subservicer to carry out their servicing and administrative duties
hereunder, including, without limitation, limited or special powers of attorney
with respect to any REO Property, and the Trustee shall not be accountable, or
have any liability, for the actions of the Servicer or any Subservicers under
such powers of attorney.
(ii) Subject to Section 3.24 hereof and in accordance with the
standards of the preceding paragraph, the Servicer shall make, or cause to be
made, Servicing Advances as necessary for the purpose of effecting the payment
of taxes and assessments on the Mortgaged Properties which Servicing Advances
shall be made in a timely fashion so as to not adversely affect the value of the
Mortgaged Property or the interests of the Certificateholders and which
Servicing Advances shall be reimbursable in the first instance from related
collections from the Mortgagors pursuant to Section 3.09 hereof, and further as
provided in Section 3.11 hereof; provided, however, that the Servicer shall not
be required to make any Nonrecoverable Servicing Advance, as determined by the
Servicer in its reasonable good faith business judgment. Any cost incurred by
the Servicer or by Subservicers in effecting the timely payment of taxes and
assessments on a Mortgaged Property shall not, for the purpose of calculating
distributions to Certificateholders, be added to the Loan Balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
(iii) Notwithstanding anything in this Agreement to the contrary,
the Servicer shall not make any future advances to the Mortgagor with respect to
a Mortgage Loan, and the Servicer shall not (a) permit any modification with
respect to any Mortgage Loan that would change the Mortgage Rate, reduce or
increase the principal balance or change the maturity date on such Mortgage
Loan, unless the Mortgagor is in default with respect to the Mortgage Loan or
such default is, in the judgment of the Servicer, reasonably foreseeable or (b)
permit any modification, waiver or amendment of any term of any Mortgage Loan
that would both effect an exchange or reissuance of such Mortgage Loan under
Section 1001 of the Code (or Treasury regulations promulgated thereunder) and
cause any REMIC established hereunder to fail to qualify as a REMIC under the
Code or the imposition of any tax on "prohibited transactions" or "contributions
after the startup date" under the REMIC Provisions.
(iv) All accounting and loan servicing records pertaining to each
Mortgage Loan shall be maintained in such manner as will permit the Trustee, the
Depositor, the Certificateholders, the Certificate Insurer or their duly
authorized representatives and designees to examine and audit and make legible
reproductions of records during reasonable business hours. All such records
shall be maintained until the termination of this Agreement or such longer
period as is required under applicable law, including, but not limited to, all
transaction registers and loan ledger histories.
The Servicer may delegate its responsibilities under this Agreement;
provided, however, that no such delegation shall release the Servicer from the
responsibilities or liabilities arising under this Agreement and no delegation
that would result in the delegee being a Subservicer is permitted except
pursuant to Section 3.02.
(c) The Servicer shall not take any action to solicit the refinancing
of any Mortgage Loan included in the Trust Fund, except under the circumstances
specifically set forth herein. It is understood and agreed that promotions
undertaken by the Servicer which are directed to the general public at large, or
designated segments thereof, including without limitation mass mailings based on
commercially acquired mailing lists, newspaper, radio and television
advertisements and offers to refinance made following receipt by Servicer of
notice that the borrower was planning to refinance with another lender shall not
constitute solicitation under this Section.
Section 3.02. Subservicing Agreements Between Servicer and Subservicers.
(a) The Servicer may with the consent of the Certificate Insurer enter
into Subservicing Agreements with Subservicers for the servicing and
administration of the Mortgage Loans; provided, however, that such agreements
would not result in a withdrawal or a downgrading by any Rating Agency of the
rating on any Class of Certificates. The Trustee is hereby authorized to
acknowledge, at the request of the Servicer, any Subservicing Agreement that
meets the requirements applicable to Subservicing Agreements set forth in this
Agreement and that is otherwise permitted under this Agreement.
Each Subservicer shall be (i) authorized to transact business in the
state or states where the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law to enable the
Subservicer to perform its obligations hereunder and under the Subservicing
Agreement, (ii) a FHLMC or FNMA approved mortgage servicer and (iii) have equity
of at least $5,000,000. Each Subservicing Agreement must impose on the
Subservicer requirements conforming to the provisions set forth in Section 3.08
and provide for servicing of the Mortgage Loans consistent with the terms of
this Agreement and be approved in writing by the Certificate Insurer. The
Servicer will examine each Subservicing Agreement and will be familiar with the
terms thereof. The Servicer and the Subservicers may enter into and make
amendments to the Subservicing Agreements or enter into different forms of
Subservicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of this
Agreement and be approved in writing by the Certificate Insurer, and that no
such amendment or different form shall be made or entered into which could be
reasonably expected to be materially adverse to the interests of the Certificate
Insurer or Certificateholders without the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights; provided, further, that the
consent of the Holders of Certificates entitled to at least 66% of the Voting
Rights shall not be required (i) to cure any ambiguity or defect in a
Subservicing Agreement, (ii) to correct, modify or supplement any provisions of
a Subservicing Agreement, or (iii) to make any other provisions with respect to
matters or questions arising under a Subservicing Agreement, which, in each
case, shall not be inconsistent with the provisions of this Agreement. Any
variation without the consent of the Certificate Insurer from the provisions set
forth in Section 3.08 relating to insurance or priority requirements of
Subservicing Accounts, or credits and charges to the Subservicing Accounts or
the timing and amount of remittances by the Subservicers to the Servicer, are
conclusively deemed to be inconsistent with this Agreement and therefore
prohibited. The Servicer shall deliver to the Trustee copies of all Subservicing
Agreements, and any amendments or modifications thereof, promptly upon the
Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Servicer, for the
benefit of the Trustee, the Depositor, the Certificateholders and the
Certificate Insurer, shall enforce the obligations of each Subservicer under
the related Subservicing Agreement and the Originator under the Mortgage Loan
Purchase Agreement including, without limitation, any obligation to make
advances in respect of delinquent payments as required by a Subservicing
Agreement or to purchase a Mortgage Loan on account of missing or defective
documentation or on account of a breach of a representation, warranty or
covenant, as described in Section 2.06. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Subservicing
Agreements and the pursuit of other appropriate remedies, shall be in such
form and carried out to such extent and at such time as the Servicer, in its
good faith business judgment, would require were it the owner of the related
Mortgage Loans. The Servicer shall pay the costs of such enforcement at its
own expense, and shall be reimbursed therefor only (i) from a general recovery
resulting from such enforcement, to the extent, if any, that such recovery
exceeds all amounts due in respect of the related Mortgage Loans, or (ii) from
a specific recovery of costs, expenses or attorneys' fees against the Person
against which such enforcement is directed. Enforcement of the Mortgage Loan
Purchase Agreement against the Seller shall be effected by the Servicer to the
extent it is not the originator, and otherwise by the Trustee in accordance
with the foregoing provisions of this paragraph.
Section 3.03. Successor Subservicers, Termination of Subservicing
Agreement.
Each Subservicing Agreement shall provide that the Subservicer will
not resign without the consent of the Certificate Insurer. The Servicer shall be
entitled to terminate any Subservicing Agreement and the rights and obligations
of any Subservicer pursuant to any Subservicing Agreement in accordance with the
terms and conditions of such Subservicing Agreement with the written consent of
the Certificate Insurer. In the event of resignation or termination of any
Subservicer, all servicing obligations of such Subservicer shall be assumed
simultaneously by the Servicer without any act or deed on the part of such
Subservicer or the Servicer, and the Servicer shall either service directly the
related Mortgage Loans or shall enter, with the consent of the Certificate
Insurer, into a Subservicing Agreement with a successor Subservicer pursuant to
Section 3.02.
Any Subservicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee at the request of the
Certificate Insurer, without cost to the Trust, in the event that the Servicer
shall, for any reason, no longer be the Servicer (including termination due to a
Servicer Default).
Section 3.04. Liability of the Servicer.
Notwithstanding any Subservicing Agreement or any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and a
Subservicer, or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee, the
Certificateholders and the Certificate Insurer for the servicing and
administering of the Mortgage Loans in accordance with the provisions of this
Article III 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 Servicer alone were servicing and administering the Mortgage Loans.
The Servicer shall be entitled to enter into any agreement with a Subservicer
for indemnification of the Servicer by such Subservicer and nothing contained in
this Agreement shall be deemed to limit or modify such indemnification.
Section 3.05. Independent Contractor Relationship; No Contractual
Relationship Between Subservicers and Trustee or
Certificateholders.
The relationship of the Servicer to the Seller, the Depositor and the
Trustee under this Agreement is intended by the parties to be that of an
independent contractor and not that of a joint venturer, partner or agent.
Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such shall be deemed to be between the Subservicer and the
Servicer alone, and the Trustee, the Certificateholders and the Certificate
Insurer shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Sections 3.03 and 3.06 The Servicer shall be solely liable for all fees
owed by it to any Subservicer, irrespective of whether the Servicer's
compensation pursuant to this Agreement is sufficient to pay such fees.
Section 3.06. Assumption or Termination of Sub-Servicing Agreements
by Trustee.
In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of the occurrence of a Servicer Default), the
Trustee or any designee consented to by the Certificate Insurer, or if a
Certificate Insurer Default has occurred and is continuing, consented to by the
Majority Certificateholders, shall thereupon assume all of the rights and
obligations of the Servicer under each Subservicing Agreement that the Servicer
may have entered into, unless the Trustee (with the consent of the Certificate
Insurer) elects to terminate any Subservicing Agreement in accordance with its
terms as provided in Section 3.03 or unless the Trustee is directed by the
Certificate Insurer to terminate any Sub-Servicing Agreement, and each
Subservicing Agreement shall so provide. Upon such assumption, the Trustee, its
designee or the successor servicer for the Trustee appointed pursuant to Section
7.02 shall be deemed, subject to Section 3.03, to have assumed all of the
Servicer's interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if each Subservicing Agreement had
been assigned to the assuming party, except that (i) the Servicer shall not
thereby be relieved of any liability or obligations under any Subservicing
Agreement that arose before it ceased to be the Servicer and (ii) none of the
Trustee, its designee or any successor Servicer shall be deemed to have assumed
any liability or obligation of the Servicer that arose before it ceased to be
the Servicer.
Section 3.07. Collection of Certain Mortgage Loan Payments; Interest
Rate and Monthly Payment Adjustments.
(a) The 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 the terms
and provisions of any applicable insurance policies, follow such collection
procedures as it follows with respect to mortgage loans comparable to the
Mortgage Loans held for its own account. The Servicer shall not materially amend
or modify these procedures, policies and practices with respect to the Mortgage
Loans (other than as required by applicable laws and regulations) without the
prior consent of the Certificate Insurer, and a copy of any such amendment or
modification shall be furnished to the Trustee and the Certificate Insurer.
Consistent with the foregoing, the Servicer may in its discretion (i) waive any
late payment charge, charges for checks returned for insufficient funds,
prepayment fees, if any, or other fees that may be collected in the ordinary
course of servicing the Mortgage Loans, (ii) if a Mortgagor is in default or
appears about to be in default because of a Mortgagor's financial condition,
arrange with the Mortgagor a schedule for the payment of delinquent payments due
on the related Mortgage Loan or (3) modify payments of monthly principal and
interest on any Mortgage Loan becoming subject to the terms of the Soldiers' and
Sailors' Civil Relief Act of 1940, as amended (the "Relief Act"), in accordance
with the Servicer's general policies for comparable mortgage loans subject to
the Relief Act; provided, however, that the Servicer shall not, without the
prior written consent of the Certificate Insurer, permit any waiver,
modification or variance of a Mortgage Loan which would (1) change the Mortgage
Rate, (2) forgive the payment of any principal or interest, (3) impair the
priority of the lien represented by the related Mortgage, (A) extend any
Mortgage Loan more than once in a calendar year or (B) grant more than three
extensions with respect to any Mortgage Loan or (4) extend the final maturity
date of the Mortgage Loan beyond three months beyond the original final maturity
date of each Mortgage Loan but in no event beyond April 25, 2031, in any case
except to the extent required under the Relief Act unless (i) in its judgment, a
material default on the Mortgage Loan has occurred or a payment default is
reasonably foreseeable and (ii) in its judgment, such modification, waiver or
amendment is reasonably likely to produce a greater recovery with respect to the
Mortgage Loan on a present value basis than would liquidation; and provided
further, that the Servicer shall not waive any prepayment charge provision
included in a Mortgage Note unless the Servicer determines, in its best
reasonable judgment, that the related Mortgagor will be in imminent default of
all future payments of principal and interest under the terms of the related
Mortgage Note. The Servicer will not consent to the placement of a deed of trust
or mortgage, as applicable, on any Mortgaged Property that has a priority equal
to or higher than the lien securing the related Mortgage Loan unless such
Mortgage Loan is prepaid in full. No partial release of a Mortgage Loan shall be
made if it would cause the Loan-to-Value Ratio or the Combined Loan-to-Value
Ratio of the Mortgage Loan (taking into account the partial release) to be
higher than the Loan-to-Value Ratio or the Combined Loan-to-Value Ratio of the
Mortgage Loan at origination.
(b) The Servicer shall enforce each Mortgage Loan and shall timely
calculate, record, report and apply all Mortgage Rate adjustments in accordance
with the related Mortgage Note. The Servicer's records shall, at all times,
reflect the then-current Mortgage Rate and Monthly Payment and the Servicer
shall timely notify the Mortgagor of any changes to the Mortgage Rate and the
Monthly Payment.
Section 3.08. Subservicing Accounts.
In those cases where a Subservicer is servicing a Mortgage Loan
pursuant to a Subservicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Subservicing
Account"). The Sub-Servicing Account shall be in the name of the Trustee for the
benefit of the Certificateholders and the Certificate Insurer, and shall be an
Eligible Account and shall comply with all requirements of this Agreement
relating to the Collection Account. The Subservicer shall deposit in the
clearing account in which it customarily deposits payments and collections on
mortgage loans in connection with its mortgage loan servicing activities on a
daily basis, and in no event more than one Business Day after the Subservicer's
receipt thereof, all proceeds of Mortgage Loans received by the Subservicer,
less its servicing compensation to the extent permitted by the Subservicing
Agreement, and shall thereafter deposit such amounts in the Subservicing
Account, in no event more than two Business Days after the receipt of such
amounts. The Subservicer shall thereafter deposit such proceeds in the
Collection Account or remit such proceeds to the Servicer for deposit in the
Collection Account not later than two Business Days after the deposit of such
amount in the Subservicing Account. For purposes of this Agreement, the Servicer
shall be deemed to have received payments on the Mortgage Loans when the
Subservicer receives such payments.
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.
The Servicer shall establish and maintain, or cause to be established
and maintained one or more accounts (the "Servicing Accounts"), into which all
collections from the Mortgagors (or related advances from Subservicers) for the
payment of taxes, assessments, hazard insurance premiums and comparable items
for the account of the Mortgagors ("Escrow Payments") shall be deposited and
retained. Servicing Accounts shall be Eligible Accounts. The Servicer shall
deposit in the clearing account in which it customarily deposits payments and
collections on mortgage loans in connection with its mortgage loan servicing
activities on a daily basis, and in no event more than one Business Day after
the Servicer's receipt thereof, all Escrow Payments collected on account of the
Mortgage Loans and shall thereafter deposit such Escrow Payments in the
Servicing Accounts, in no event more than two Business Days after the receipt of
such Escrow Payments, all Escrow Payments collected on account of the Mortgage
Loans for the purpose of effecting the timely payment of any such items as
required under the terms of this Agreement. Withdrawals of amounts from a
Servicing Account may be made only to (i) effect timely payment of taxes,
assessments, hazard insurance premiums and comparable items; (ii) reimburse the
Servicer (or a Subservicer to the extent provided in the related Subservicing
Agreement) out of related collections for any advances made pursuant to Section
3.01(b) hereof (with respect to taxes and assessments) and Section 3.13 hereof
(with respect to hazard insurance); (iii) refund to Mortgagors any sums as may
be determined to be overages; (iv) pay interest, if required and as described
below, to Mortgagors on balances in the Servicing Account; or (v) clear and
terminate the Servicing Account at the termination of the Servicer's obligations
and responsibilities in respect of the Mortgage Loans under this Agreement in
accordance with Section 10.01 hereof. As part of its servicing duties, the
Servicer or Subservicers shall pay to the Mortgagors interest on funds in
Servicing Accounts, to the extent required by law and, to the extent that
interest earned on funds in the Servicing Accounts is insufficient, to pay such
interest from its or their own funds, without any reimbursement thereof.
Section 3.10. Collection Account.
(a) The Servicer shall establish and maintain, or cause to be
established and maintained, one or more accounts to conform to the definition of
Collection Account, held on behalf of the Trustee, as Trustee for Mortgage
Lenders Network Home Equity Loan Trust 2000-1, in trust for the benefit of the
Certificateholders and the Certificate Insurer, as their interests may appear.
The establishment of the Collection Account shall be evidenced by a
certification of the Servicer in the form attached hereto as Exhibit G. The
Servicer shall deposit or cause to be deposited in the clearing account in which
it customarily deposits payments and collections on mortgage loans in connection
with its mortgage loan servicing activities on a daily basis, and in no event
more than one Business Day after the Servicer's receipt thereof, and shall
thereafter deposit in the Collection Account, in no event more than two Business
Days after the Servicer's receipt thereof, as and when received or as otherwise
required hereunder, the following payments and collections received or required
to be made by it subsequent to the applicable Cut-off Date with respect to any
Mortgage Loan (other than in respect of principal or interest on any Mortgage
Loan due on or before such Cut-off Date), or payments (other than Principal
Prepayments) received by it on or prior to such Cut-off Date which are due after
such Cut-off Date.
(i) (A) all payments on account of scheduled principal (including
amounts deemed to represent scheduled principal with respect to REO Property)
that are due subsequent to the applicable Cut-off Date, and (B) all Principal
Prepayments, in each case on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee) that are due subsequent to the applicable Cut-off Date;
(iii) any Net Recovery Proceeds;
(iv) any amounts required to be deposited pursuant to Section
3.23 hereof by the Servicer in connection with any Prepayment Interest
Shortfalls in respect of the Mortgage Loans;
(v) any amounts required to be deposited by the Servicer in
connection with any losses on investment of funds in the Collection Account
pursuant to subsection (b) below;
(vi) any amounts required to be deposited by the Servicer
pursuant to the fourth paragraph of Section 3.13 hereof in respect of any
blanket policy deductibles;
(vii) all Purchase Prices paid by the Seller or the Servicer in
respect of the Mortgage Loans;
(viii) all Substitution Shortfall Amounts paid by the Seller or
the Servicer in respect of the Mortgage Loans;
(ix) all prepayment penalties, if any, collected during the
related Due Period;
(x) all Delinquency Advances with respect to the Mortgage Loans,
as required by Section 4.06 hereof; and
(xi) all payments of claims under any PMI Policy.
For purposes of the immediately preceding sentence, the Cut-off Date with
respect to any Qualified Substitute Mortgage Loan shall be deemed to be the date
of substitution, but the unpaid principal balance of such Qualified Substitute
Mortgage Loan shall not include the principal portion of any Monthly Payment
made, or the scheduled principal portion of any Monthly Payment that was due to
be made but was not received by the Servicer, in such month of substitution.
Notwithstanding any other provision herein, the amounts of principal
and interest payments due on the Mortgage Loans on or before the applicable
Cut-off Date need not be deposited into the Collection Account by the Servicer.
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 late payment charges,
penalty interest, extension fees, modification fees, assumption fees or
insufficient-funds charges need not be deposited by the Servicer into the
Collection Account.
(b) Not later than 12:00 noon, New York time, on each Servicer
Remittance Date the Servicer shall deposit in the Collection Account the amount
of any net loss incurred in connection with the investment of funds in the
Collection Account since the prior Servicer Remittance Date; such amounts shall
be funded from the Servicer's own funds without any right to reimbursement. The
Servicer shall give prompt notice to each of the Rating Agencies, the Trustee
and the Underwriter of the amount of any such net loss.
(c) Funds in the Collection Account shall be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12 hereof.
The Servicer shall give written notice to the Trustee, the Underwriter, the
Certificateholders, the Seller, the Depositor and the Certificate Insurer of the
location of the Collection Account on or before the Closing Date, and prior to
any change thereof.
(d) Funds held in the Collection Account at any time may be delivered
by the Servicer to the Trustee for deposit in the Certificate Account and for
all purposes of this Agreement shall be deemed to be a part of the Collection
Account.
Section 3.11. Withdrawals from the Collection Account.
The Servicer shall, from time to time, make withdrawals from the
Collection Account for any of the following purposes:
(i) to deposit into the Certificate Account prior to 3:00 p.m.,
New York time, on the Servicer Remittance Date immediately preceding each
Distribution Date (after having received Delinquency Advances for such period)
the related Interest Remittance Amount and the Principal Remittance Amount net
of amounts to be paid as follows:
(A) to pay to the Servicer or the Seller, as the case
may be, with respect to each Mortgage Loan that has
previously been purchased or replaced pursuant to Section
2.06 or Section 3.15(c) hereof all amounts received thereon
in any month subsequent to the month of such purchase or
substitution, as the case may be;
(B) to reimburse the Servicer for any Delinquency
Advance or Servicing Advance previously made that the
Servicer has determined to be a Nonrecoverable Delinquency
Advance or a Nonrecoverable Servicing Advance; and
(C) to reimburse the Seller, the Depositor and the
Servicer for losses, liabilities, costs and expenses
reimbursable to them pursuant to Section 6.03 hereof;
(ii) to pay to the Servicer (x) when collected on the related
Mortgage Loan, all recovered and previously unreimbursed Delinquency Advances
and Servicing Advances (but only to the extent received from the related
Mortgagor), and (y) any interest or investment income earned on funds deposited
in the Collection Account (net of investment losses);
(iii) to reimburse the Trustee for expenses reasonably incurred
in respect of any breach or defect giving rise to the purchase obligation under
Section 2.06 hereof that were included in the Purchase Price of the Mortgage
Loan, including any expenses arising out of the enforcement of the purchase
obligation, but only to the extent included in the related Purchase Price;
(iv) to withdraw any amount not required to be deposited into the
Collection Account, which amount shall include all interest payments as to which
the related Due Date occurs on or prior to the applicable Cut-off Date and
amounts payable to the Servicer from the REO Account pursuant to Section
3.22(d);
(v) to clear and terminate the Collection Account pursuant to
Section 10.01 hereof; and
(vi) in the event of a prepayment or satisfaction of a Mortgage
Loan, to pay the refunds and expenses to which the Mortgagor is entitled as set
forth on requests submitted by the Servicer, which requests shall be
substantially in the form of Exhibit O attached hereto.
Section 3.12. Investment of Funds in the Accounts.
(a) The Servicer may direct in writing any depository institution
maintaining the Collection Account or Certificate Account to invest the funds
held therein in one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, (i) if such Permitted
Investments are not obligations of the institution maintaining the account from
which the funds are required to be withdrawn, no later than the Business Day
immediately preceding the earliest date on which such funds may be required to
be withdrawn from such account pursuant to this Agreement but in no event later
than the Business Day immediately preceding the next Servicer Remittance Date or
Distribution Date, as applicable, and (ii) if such Permitted Investments are
obligations of the institution maintaining the account from which the funds are
required to be withdrawn, no later than the earliest date on which such funds
may be required to be withdrawn from such account pursuant to this Agreement,
the date on which the Seller so designates, but in no event later than the next
Distribution Date. All such Permitted Investments shall be held to maturity,
unless payable on demand.
If the Servicer, with respect to the Collection Account or the
Certificate Account, does not provide investment directions to the depository
institution with respect to the funds on deposit therein, such funds shall be
invested in the Permitted Investments specified in clause (v) of the definition
thereof, which may be administered by an affiliate of such depository
institution.
Any investment of funds on deposit in any Account shall be made in the
name of the Trustee or in the name of a nominee of the Trustee, in each case in
trust for the benefit of the Certificateholders. With respect to any Account
held by the Trustee, the Trustee shall have sole control (except with respect to
investment direction) over each such investment, and any certificate or other
instrument evidencing any such investment shall be delivered directly to the
Trustee or its agent, together with any document of transfer necessary to
transfer title to such investment to the Trustee or its nominee. In the event
amounts from funds on deposit in any Account are at any time invested in a
Permitted Investment payable on demand, the Trustee shall:
(i) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Permitted Investment
may otherwise mature hereunder in an amount equal to the lesser of (1) all
amounts then payable thereunder and (2) the amount required to be withdrawn on
such date; and
(ii) demand payment of all amounts due thereunder promptly by a
Responsible Officer of the Trustee having actual knowledge that such Permitted
Investment would not constitute a Permitted Investment.
(b) All net income and net gain realized from investment of funds
deposited in the Collection Account and the Certificate Account shall be for the
benefit of the Servicer and shall be subject to its withdrawal in accordance
with Section 3.11 and Section 4.04(a)(ii) hereof, respectively.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee shall take such action as it is directed in writing by
the Servicer or the Seller, as appropriate, to take in order to enforce such
payment or performance, including the initiation and prosecution of appropriate
proceedings; provided, however, that the Trustee shall be indemnified and
reimbursed for any related costs, expenses, losses or liabilities as provided in
Section 8.05 hereof.
Section 3.13. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.
(a) The Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance with extended coverage on the related Mortgaged Property in an
amount which is at least equal to the lesser of the Loan Balance of such
Mortgage Loan and the amount necessary to fully compensate for any damage or
loss to the improvements that are a part of such property on a replacement cost
basis, in each case in an amount not less than such amount as is necessary to
avoid the application of any co-insurance clause contained in the related hazard
insurance policy. The Servicer shall also cause to be maintained hazard
insurance with extended coverage on each REO Property in an amount which is at
least equal to the lesser of (i) the maximum insurable value of the improvements
which are part of such property and (ii) the Loan Balance of the related
Mortgage Loan at the time it became an REO Property, plus accrued interest at
the Mortgage Rate and related Servicing Advances. The Servicer will comply in
the performance of this Agreement with all reasonable rules and requirements of
each insurer under any such hazard policies.
Any amounts to be collected by the Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the related
Mortgaged Property or amounts to be released to the Mortgagor in accordance with
the procedure that the Servicer would follow in servicing loans for its own
account, subject to the terms and conditions of the related Mortgage and
Mortgage Note) shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.11 hereof.
Any cost incurred by the Servicer in maintaining any such insurance
shall not, for the purpose of calculating distributions to Certificateholders,
be added to the Loan Balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit. It is understood and agreed 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. If the Mortgaged
Property or REO Property is located at any time in an area identified in the
Federal Register by the Federal Emergency Management Agency as having special
flood hazards and flood insurance has been made available, the Servicer will
cause to be maintained a flood insurance policy in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (i) the Loan Balance of
the related Mortgage Loan and, (ii) the maximum amount of such insurance
available for the related Mortgaged Property under the national flood insurance
program (assuming that the area in which such Mortgaged Property is located is
participating in such program).
In the event that the Servicer shall obtain and maintain (at its own
expense) a blanket policy with an insurer that is acceptable to each Rating
Agency and the Certificate Insurer, insuring against hazard losses on all of the
Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first two sentences of this Section 3.13, it
being understood and agreed that such policy may contain a deductible clause in
which case the Servicer shall, in the event that there shall not have been
maintained on the related Mortgaged Property or REO Property a policy complying
with the first two sentences of this Section 3.13, and there shall have been one
or more losses which would have been covered by such policy, deposit into the
Collection Account from its own funds the amount not otherwise payable under the
blanket policy because of such deductible clause. In connection with its
activities as administrator and servicer of the Mortgage Loans, the Servicer
agrees to prepare and present, on behalf of itself, the Trustee and the
Certificateholders, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.
(b) The Servicer shall keep in force during the term of this Agreement
a policy or policies of insurance covering errors and omissions for failure in
the performance of the Servicer's obligations under this Agreement, which policy
or policies shall be in such form and amount that would meet the requirements of
FNMA or FHLMC if either of them were the purchaser of the Mortgage Loans, unless
the Servicer has obtained a waiver of such requirements from FNMA or FHLMC. The
Servicer shall also maintain a fidelity bond in the form and amount that would
meet the requirements of FNMA or FHLMC, unless the Servicer has obtained a
waiver of such requirements from FNMA or FHLMC. The Servicer shall be deemed to
have complied with this provision if an affiliate of the Servicer has such
errors and omissions and fidelity bond coverage and, by the terms of such
insurance policy or fidelity bond, the coverage afforded thereunder extends to
the Servicer. The Servicer hereby agrees that it shall not cancel, amend or
modify such fidelity bond or errors and omissions policy in a manner materially
adverse to the Certificate Insurer without the consent of the Certificate
Insurer. The Servicer shall also cause each Subservicer to maintain a policy of
insurance covering errors and omissions and a fidelity bond which would meet the
requirements set forth above.
Section 3.14. Enforcement of Due-on-Sale Clauses.
In any case in which property subject to a Mortgage is voluntarily
conveyed by the Mortgagor, the Servicer will enforce any related due-on-sale
clause to the extent permitted by the related Mortgage Note and Mortgage and by
all applicable laws and regulations, but only to the extent the Servicer does
not believe that such enforcement will (1) adversely affect or jeopardize
coverage under any related insurance policy, (2) result in legal action by the
Mortgagor, or (3) materially increase the risk of default or delinquency on, or
materially impair the security for, such Mortgage Loan.
Section 3.15. Realization upon Defaulted Mortgage Loans; Options to
Purchase Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with
Acceptable Servicing Procedures, to 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 pursuant to Section 3.07 hereof. The
Servicer shall be responsible for all costs and expenses incurred by it in any
such proceedings; provided, however, that such costs and expenses will be
recoverable as Servicing Advances by the Servicer as contemplated in Section
3.11. The foregoing is subject to the provision that, in any case in which
Mortgaged Property shall have suffered damage from an Uninsured Cause, the
Servicer shall not be required to expend its own funds toward the restoration of
such property unless it shall determine in its discretion that such restoration
will increase the proceeds of liquidation of the related Mortgage Loan after
reimbursement to itself for such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.15 or
any other provision of this Agreement, with respect to any Mortgage Loan as to
which the Servicer has received actual notice of, or has actual knowledge of,
the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trustee, either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Fund or the Certificateholders would be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended from
time to time, or any comparable law, unless the Servicer has also previously
determined, based on its reasonable judgment and a report prepared by a Person
who regularly conducts environmental audits using customary industry standards,
that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Fund to take such actions as are necessary to
bring the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous
substances, hazardous materials, hazardous wastes, or petroleum-based
materials for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any federal, state or
local law or regulation, or that if any such materials are present for
which such action could be required, that it would be in the best
economic interest of the Trust Fund to take such actions with respect
to the affected Mortgaged Property.
The cost of the environmental audit report contemplated by this Section 3.15
shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Collection Account as provided in Section 3.11.
If the Servicer determines, as described above, that it is in the best
economic interest of the Trust Fund to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable environmental
laws, or to take such action with respect to the containment, clean-up or
remediation of hazardous substances, hazardous materials, hazardous wastes or
petroleum-based materials affecting any such Mortgaged Property, then the
Servicer shall take such action as it deems to be in the best economic interest
of the Trust Fund; provided that any amounts disbursed by the Servicer pursuant
to this Section 3.15(b) shall constitute Servicing Advances, (to the extent such
amounts do not constitute Nonrecoverable Servicing Advances). The cost of any
such compliance, containment, cleanup or remediation shall be advanced by the
Servicer, subject to the Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11.
(c) The Servicer may at its option purchase from the Trust Fund any
Mortgage Loan as to which the related Mortgagor has failed to make full Monthly
Payments as required under the related Mortgage Note for three consecutive
months or any Mortgage Loan as to which enforcement proceedings have been
brought by the Servicer at any time following the Cut-off Date and prior to such
Deposit Date at a price equal to the Purchase Price by transferring such amount
to the Trustee for deposit into the Certificate Account on such Deposit Date;
provided however, repurchases in excess of 3% of the Aggregate Loan Balance of
the Mortgage Loans as of the Cut-Off Date will require the prior written consent
of the Certificate Insurer and repurchases up to 3% of the Aggregate Loan
Balance of the Mortgage Loans as of the Cut-off Date will require prompt
notification to the Certificate Insurer identifying the Mortgage and related
Purchase Price. The Servicer may only repurchase Mortgage Loans, pursuant to the
preceding sentence, in order of delinquency, from most delinquent to least or
from highest projected loss (as shown on the Servicer's monthly report) to the
lowest projected loss. The Trustee, upon receipt of written certification from
the Servicer of deposit of the Purchase Price into the Certificate Account,
shall release or cause to be released to the Servicer the related Mortgage File
and the Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as the Servicer shall furnish and as
shall be necessary to vest in the Servicer title to any Mortgage Loan released
pursuant hereto. Upon ultimate disposition of any such Mortgage Loans, the
Servicer shall provide to the Certificate Insurer a report of such disposition,
which report shall contain the information that would have been included in the
Liquidation Report had the Mortgage Loan remained in the Trust Fund.
(d) On any Deposit Date following the Determination Date as of which
the aggregate Certificate Principal Balance is equal to or less than 10% of the
original Certificate Principal Balance, if the holders of more than 50% of the
Class R Certificates shall not have directed the Servicer to redeem the Offered
Certificates pursuant to this Agreement, the Servicer, in its sole discretion,
may purchase from the Trust Fund all, but not less than all, of the Mortgage
Loans then included in the Trust Fund at a price equal to the Purchase Price for
each such Mortgage Loan by transferring such amount to the Trustee for deposit
in the Certificate Account on such Deposit Date. In the event that the Class R
Certificateholders fail to exercise the option to purchase the Offered
Certificates or the Servicer fails to exercise the option to purchase the
Mortgage Loans then included in the Trust Fund, the Certificate Insurer may
purchase the Mortgage Loans then included in the Trust Fund in the same manner
as the Servicer. Upon the receipt by the Trustee of the Purchase Price for any
Mortgage Loan as to which the Servicer has exercised its option to purchase
pursuant to this paragraph, the Trustee shall release to the Servicer the
Mortgage File pertaining to each such Mortgage Loan and the Trustee shall
execute and deliver such instruments of transfer and all other documents
furnished by the Servicer as are necessary to transfer their respective
interests in such Mortgage Loans to the Servicer. For purposes of this
Agreement, any purchase effected in accordance with this paragraph shall be
deemed to be a prepayment of each Mortgage Loan so purchased.
In the event that title to any Mortgaged Property is acquired as REO
Property by the Trustee in foreclosure or by deed in lieu of foreclosure, the
deed or certificate of sale shall be issued to the Trustee, or to its nominee,
on behalf of the Certificateholders and the Certificate Insurer, and the
Servicer shall manage, conserve, protect and operate each such REO Property for
the Certificateholders solely for the purpose of its prompt disposition and
sale. The Servicer shall use its best efforts to dispose of each such REO
Property as expeditiously as possible consistent with the goal of maximizing net
Liquidation Proceeds (taking into account any unreimbursed Delinquency Advances
and Monthly Advances made or expected to be made with respect to such REO
Property). None of the Issuer, the Indenture Trustee or the Servicer, acting on
behalf of the Trust Fund, shall provide financing from the Trust Fund to any
purchaser of any such REO Property.
Section 3.16. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan or the receipt by the
Servicer of a notification that payment in full shall be escrowed in a manner
customary for such purposes, the Servicer will immediately notify or cause to be
notified the Trustee, the Custodian and the Certificate Insurer by a
certification in the form of Exhibit E-2 (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File.
Upon receipt of such certification and request, the Trustee shall cause the
Custodian to promptly release the related Mortgage File to the Servicer. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to any Account or shall be otherwise chargeable
to the Trust, the Trustee, the Certificateholders or the Certificate Insurer.
From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, the Trustee shall, upon request of the Servicer and
delivery to the Custodian of a Request for Release in the form of Exhibit E-1
cause the Custodian to release the related Mortgage File to the Servicer, and
the Trustee shall, at the direction of the Servicer, execute such documents as
shall be necessary to the prosecution of any such proceedings. Such Request for
Release shall obligate the Servicer to return each and every document previously
requested from the Mortgage File to the Custodian when the need therefor by the
Servicer no longer exists, unless the Mortgage Loan has been liquidated and the
Liquidation Proceeds or Property Insurance Proceeds relating to the Mortgage
Loan (net of the amounts, if any, described in clauses (w), (x), (y) and (z) of
Section 3.10(a)(v) hereof) have been deposited in the Collection Account or the
Mortgage File or such document has been delivered to an attorney, or to a public
trustee or other public official as required by law, for purposes of initiating
or pursuing legal action or other proceedings for the foreclosure of the
Mortgaged Property either judicially or non-judicially, and the Servicer has
delivered to the Custodian a certificate of a Servicing Officer certifying as to
the name and address of the Person to which such Mortgage File or such document
was delivered and the purpose or purposes of such delivery. Upon receipt of a
certificate of a Servicing Officer stating that such Mortgage Loan was
liquidated and that all amounts received or to be received in connection with
such liquidation which are required to be deposited into the Collection Account
have been so deposited, a copy of the Request for Release shall be released by
the Custodian to the Servicer.
Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Servicer any court pleadings, requests for trustee's
sale or other documents necessary to the foreclosure or trustee's sale in
respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity. Each such
certification shall include a request that such pleadings or documents be
executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 3.17. Servicing Compensation.
As compensation for the activities of the Servicer hereunder, the
Servicer shall be entitled to retain the Servicing Fee with respect to each
Mortgage Loan, payable solely from payments of interest on the related Mortgage
Loan, in respect of such Mortgage Loan.
Additional servicing compensation in the form of penalty interest,
assumption fees, modification fees, insufficient-funds charges, late payment
charges or otherwise shall be retained by the Servicer only to the extent such
fees or charges are received by the Servicer (such amounts, "Additional
Servicing Compensation"). The Servicer shall also be entitled pursuant to
Sections 3.11(a)(ii) and 4.04(a)(ii) hereof to interest or other investment
income earned from the investment of funds on deposit in the Collection Account
and the Certificate Account, respectively, as additional servicing compensation.
The Servicer shall be required to pay all expenses incurred by it in connection
with its servicing activities hereunder (including, without limitation, (x)
payment of premiums for the insurance required by Section 3.13 hereof, to the
extent such premiums are not paid by the related Mortgagors or by a Subservicer
and (y) servicing compensation of each Subservicer) and shall not be entitled to
reimbursement therefor except as specifically provided herein.
Section 3.18. Reports to the Trustee; Collection Account Statements.
(a) Not later than twenty days after each Distribution Date, the
Servicer shall forward to the Trustee, the Certificate Insurer and the Depositor
the most current available bank statement for the Collection Account. Copies of
such statement shall be provided by the Trustee to any Certificateholder and to
any Person identified to the Trustee as a prospective transferee of a
Certificate, upon request at the expense of the requesting party, provided such
statement is delivered by the Servicer to the Trustee.
(b) If funds in the Collection Account during a Due Period have been
invested in investments other than bank deposits of the depository institution
maintaining the Collection Account or money market funds (as described in the
definition of Permitted Investments), then, on or before the related
Distribution Date, the Servicer shall forward to the Trustee and the Seller a
statement in the form annexed hereto as Exhibit I setting forth the activity in
the Collection Account during the preceding calendar month.
(c) On the Business Day following each Determination Date, the
Servicer shall deliver to the Trustee and the Certificate Insurer by telecopy
(or by such other means as the Servicer and the Trustee (or the Certificate
Insurer) may agree from time to time) a servicing report with respect to the
related Distribution Date. In addition, the Servicer shall deliver to Bloomberg,
by electronic medium, a copy of the servicing report. On the same date, the
Servicer shall forward to the Trustee and the Certificate Insurer by overnight
mail a computer readable magnetic tape containing the loan level information
with respect to the related Distribution Date. Such report will include (i) the
amount of Delinquency Advances to be made by the Servicer in respect of the
related Distribution Date, the aggregate amount of Delinquency Advances
outstanding after giving effect to such Delinquency Advances, the aggregate
amount of Nonrecoverable Delinquency Advances, the Cumulative Claims Denial and
any Prepayment Charges in respect of such Distribution Date and (ii) such other
information with respect to the Mortgage Loans as the Trustee may reasonably
require to perform the calculations necessary to make the distributions
contemplated by Section 4.04 and to prepare the statements to Certificateholders
and the Certificate Insurer contemplated by Section 4.05. The Trustee shall not
be responsible to recompute, recalculate or verify any information provided to
it by the Servicer.
Section 3.19. Statement as to Compliance and Financial Statements.
The Servicer will deliver to the Trustee, the Depositor, the Seller
and the Certificate Insurer not later than 90 days following the end of each
calendar year of the Servicer, an Officers' Certificate stating, as to each
signatory thereof, that (i) a review of the activities of the Servicer during
the preceding year and of performance under this Agreement has been made under
such officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all of its obligations under
this Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
Copies of any such Officers' Certificate and financial statements
shall be provided by the Trustee to the Certificate Insurer, any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Servicer to the Trustee.
The Servicer shall deliver to the Trustee, with a copy to the
Certificate Insurer, each Rating Agency and the Underwriter, promptly after
having obtained knowledge thereof, but in no event later than ten Business Days
thereafter, written notice by means of an Officer's Certificate of any event
that with the giving of notice or the lapse of time, or both, would become an
Event of Default. Without duplication of the foregoing, the Servicer will
deliver to the Indenture Trustee a copy of any information it provides to the
Note Insurer under Section 2.02(f) of the Insurance Agreement.
Delivery of such reports, information and documents to the Indenture
Trustee is for informational purposes only and the Indenture Trustee's receipt
of such shall not constitute constructive notice of any information contained
therein or determinable from information contained herein, including the
Servicer's compliance with any of its covenants hereunder (as to which the
Indenture Trustee is entitled to rely exclusively on Officers' Certificates).
Section 3.20. Independent Public Accountants' Servicing Report.
Not later than 90 days following the end of each fiscal year
(beginning with the 2000 fiscal year) of the Servicer, the Servicer, at its
expense, shall cause a nationally recognized firm of independent certified
public accountants to furnish to the Servicer a report stating that (i) it has
obtained a letter of representation regarding certain matters from the
management of the Servicer which includes an assertion that the Servicer has
complied with certain minimum residential mortgage loan servicing standards,
identified in the Uniform Single Attestation Program for Mortgage Bankers
established by the Mortgage Bankers Association of America, with respect to the
servicing of residential mortgage loans during the most recently completed
fiscal year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering its report, such firm may rely, as to matters relating
to the direct servicing of residential mortgage loans by Subservicers, upon
comparable reports of firms of independent certified public accountants rendered
on the basis of examinations conducted in accordance with the same standards
(rendered within one year of such report) with respect to those Subservicers.
Immediately upon receipt of such report, the Servicer shall furnish a copy of
such report to the Trustee.
In the event such firm requires the Trustee to agree to the procedures
performed by such firm, the Servicer shall direct the Trustee in writing to so
agree; it being understood and agreed that the Trustee will deliver such letter
of agreement in conclusive reliance upon the direction of the Servicer, and the
Trustee shall not make any independent inquiry or investigation as to, and shall
have no obligation or liability in respect of, the sufficiency, validity or
correctness of such procedures.
Section 3.21. Access to Certain Documentation.
The Servicer shall provide to the OTS, the FDIC and any other federal
or state banking or insurance regulatory authority that may exercise authority
over any Certificateholder or the Certificate Insurer, access to the
documentation regarding the Mortgage Loans required by applicable state and
federal laws and regulations. The Servicer shall similarly provide to the
Trustee, the Depositor and the Certificate Insurer such access to the
documentation regarding the Mortgage Loans as such Persons may reasonably
require. Such access shall in each case be afforded without charge, but only
upon reasonable request and during normal business hours at the offices of the
Servicer or of a Subservicer, as applicable, designated by it.
Section 3.22. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be taken
in the name of the Trust on behalf of the Certificateholders. The Servicer, on
behalf of the Trust, shall sell any REO Property within three years after the
Trust acquires ownership of such REO Property for purposes of Section 860G(a)(8)
of the Code, unless the Servicer has delivered to the Trustee, the Depositor and
the Certificate Insurer an Independent Opinion of Counsel, addressed to the
Trustee, the Depositor, the Servicer and the Certificate Insurer, to the effect
that holding such REO Property for more than three years after its acquisition
will not result in the imposition of taxes on "prohibited transactions" of the
Trust as defined in Section 860F of the Code or cause the related REMIC Trust to
fail to qualify as a REMIC under federal law at any time that any Certificates
are outstanding. The Servicer shall manage, conserve, protect and operate each
REO Property for the Certificateholders and the Certificate Insurer solely for
the purpose of its prompt disposition and sale in a manner which does not cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by the Trust
of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" which is
subject to taxation under the REMIC Provisions.
(b) The Servicer shall segregate and hold all funds collected and
received in connection with the operation of any REO Property separate and apart
from its own funds and general assets and shall establish and maintain, or cause
to be established and maintained, with respect to REO Properties an account held
in trust for the Trustee for the benefit of the Certificateholders and the
Certificate Insurer (the "REO Account"), which shall be an Eligible Account. The
Servicer shall be permitted to allow the Collection Account to serve as the REO
Account, subject to separate ledgers for each REO Property. The Servicer shall
be entitled to retain or withdraw any interest income paid on funds deposited in
the REO Account.
(c) The Servicer shall have full power and authority, subject only to
the specific requirements and prohibitions of this Agreement, to do any and all
things in connection with any REO Property as are consistent with the manner in
which the Servicer manages and operates similar property owned by the Servicer
or any of its affiliates, all on such terms and for such period as the Servicer
deems to be in the best interests of Certificateholders and the Certificate
Insurer.
Notwithstanding the foregoing, the Servicer shall not:
(i) permit the Trust to enter into, renew or extend any new lease
with respect to any REO Property, if the New Lease by its terms will give rise
to any income that does not constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iii) authorize or permit any construction on any REO Property,
other than the completion of a building or other improvement thereon, and then
only if more than ten percent of the construction of such building or other
improvement was completed before default on the related Mortgage Loan became
imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or
(iv) allow any Person to Directly Operate any REO Property on any
date more than 90 days after its date of acquisition by the Trust;
unless, in any such case, the Servicer has obtained an Independent Opinion of
Counsel, addressed to itself, the Trustee and the Certificate Insurer, to the
effect that such action will not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code at
any time that it is held by the Trust, in which case the Servicer may take such
actions as are specified in such Opinion of Counsel.
The Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that the Independent Contractor pay all costs and expenses incurred in
connection with the operation and management of such REO Property, including
those listed above and remit all related revenues (net of such costs and
expenses) to the Servicer as soon as practicable, but in no event later than
thirty days following the receipt thereof by such Independent Contractor;
(iii) none of the provisions of this Section 3.22(c) relating to
any such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Servicer of any of its duties and obligations to
the Trustee on behalf of the Certificateholders with respect to the operation
and management of any such REO Property; and
(iv) the Servicer shall be obligated with respect thereto to the
same extent as if it alone were performing all duties and obligations in
connection with the operation and management of such REO Property.
The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall be solely liable for all fees owed by
it to any such Independent Contractor, irrespective of whether the Servicer's
compensation is sufficient to pay such fees; provided, however, that to the
extent that any payments made by such Independent Contractor would constitute
Servicing Advances if made by the Servicer, such amounts shall be reimbursable
as Servicing Advances made by the Servicer.
(d) In addition to the withdrawals permitted under Section 3.22(c),
the Servicer may from time to time make withdrawals from the REO Account for any
REO Property: (i) to pay itself or any Subservicer unpaid Servicing Fees in
respect of the related Mortgage Loan; and (ii) to reimburse itself or any
Subservicer for unreimbursed Servicing Advances and Delinquency Advances made in
respect of such REO Property or the related Mortgage Loan. On the Servicer
Remittance Date, the Servicer shall withdraw from each REO Account maintained by
it and deposit into the Collection Account, for distribution on the related
Distribution Date in accordance with Section 4.04, the income from the related
REO Property received during the prior calendar month, net of any withdrawals
made pursuant to Section 3.22(c) or this Section 3.22(d).
(e) Subject to the time constraints set forth in Section 3.22(a), each
REO Disposition shall be carried out by the Servicer at such price and upon such
terms and conditions as the Servicer shall deem necessary or advisable, as shall
be normal and usual in its Accepted Servicing Procedures.
(f) The proceeds from the REO Disposition, net of any amount required
by law to be remitted to the Mortgagor under the related Mortgage Loan and net
of any payment or reimbursement to the Servicer or any Subservicer as provided
above, shall be deposited in the Collection Account in no event more than two
Business Days after the Servicer's receipt thereof for distribution on the
related Distribution Date in accordance with Section 4.04. Any REO Disposition
shall be for cash only (unless changes in the REMIC Provisions made subsequent
to the Startup Day allow a sale for other consideration).
(g) The Servicer shall file information returns with respect to the
receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall be
in form and substance sufficient to meet the reporting requirements imposed by
such Sections 6050H, 6050J and 6050P of the Code.
Section 3.23. Prepayment Interest Shortfalls.
The Servicer shall deposit into the Collection Account on or before
12:00 noon, New York time, on each Servicer Remittance Date an amount equal to
the lesser of (i) the aggregate of the Prepayment Interest Shortfalls resulting
from Principal Prepayments during the related Due Period and (ii) its aggregate
Servicing Fee received in such Due Period.
Section 3.24. First Liens.
Subject to the remainder of this Section 3.24, if the Servicer is
notified that any holder of a First Lien has accelerated or intends to
accelerate the obligations secured by the First Lien, or has declared or intends
to declare a default under the mortgage or the promissory note secured thereby,
or has filed or intends to file an election to have the Mortgaged Property sold
or foreclosed, the Servicer shall take, on behalf of the Trust, whatever actions
are necessary to protect the interests of the Certificateholders, and/or to
preserve the security of the related Mortgage Loan, subject to the application
of the REMIC Provisions. The Servicer shall advance the necessary funds to cure
the default or reinstate the First Lien, if such advance would have the effect
of increasing the Net Recovery Proceeds.
No advance shall be required to be made under this Section 3.24 if
such advance would, if made, constitute a Nonrecoverable Servicing Advance.
Section 3.25. Reports to the Securities and Exchange Commission.
Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards, file with the Commission via the Electronic
Data Gathering and Retrieval System (▇▇▇▇▇), a Form 8-K with a copy of the
statement to the Certificateholders for such Distribution Date as an exhibit
thereto. Prior to January 30, 2001, the Trustee shall, in accordance with
industry standards, file a Form 15 Suspension Notification with respect to the
Trust Fund, if applicable. Prior to March 30, 2001, the Trustee shall file a
Form 10-K, in substance conforming to industry standards, with respect to the
Trust Fund. The Depositor hereby grants to the Trustee a limited power of
attorney to execute and file each such document on behalf of the Depositor. Such
power of attorney shall continue until either the earlier of (i) receipt by the
Trustee from the Depositor of written termination of such power of attorney and
(ii) the termination of the Trust Fund. The Depositor agrees to promptly furnish
to the Trustee, from time to time upon request, such further information,
reports, and financial statements within its control related to this Agreement
and the Mortgage Loans as the Trustee reasonably deems appropriate to prepare
and file all necessary reports with the Securities and Exchange Commission. The
Trustee shall have no responsibility to file any items other than those
specified in this section.
Section 3.26. Claims Upon the PMI Policy.
The Servicer shall, on behalf of the Trustee, prepare and file on a
timely basis with the PMI Insurer, with a copy to the Trustee and the
Certificate Insurer, all claims which may be made under the PMI Policy with
respect to the PMI Loans. Consistent with all rights and obligations hereunder,
the Servicer shall take all actions required under the PMI Policy as a condition
to the payment of any such claim. Any amount received from the PMI Insurer with
respect to any such PMI Mortgage Loan shall be deposited by the Servicer as part
of the Principal Remittance Amount, no later than two Business Days following
receipt thereof, into the Collection Account for distribution on the related
Distribution Date.
ARTICLE IV.
FLOW OF FUNDS
Section 4.01. Establishment of Accounts.
The Trustee, on behalf of the Trust, shall establish on the Closing
Date, and thereafter maintain, the Certificate Account and the Policy Payments
Account, each of which shall conform to the definition of Eligible Account and
shall be held by the Trustee for the benefit of the Certificateholders and the
Certificate Insurer, as their interests may appear.
Section 4.02. The Certificate Insurance Policy.
(a) Not later than 3:00 p.m., New York time, on the third Business Day
immediately preceding each Distribution Date, the Trustee shall determine the
Available Funds for such Distribution Date.
To the extent any Available Funds Shortfall will exist for any
Distribution Date after giving effect to the distributions specified in Section
4.04(b) hereof (calculating such distributions without giving effect to any
Insured Payment to be made on such Distribution Date), the Trustee shall
complete a notice in the form attached to the Policy (the "Notice") and shall
submit such Notice to the Certificate Insurer no later than 10:00 a.m., New York
time, on the second Business Day preceding such Distribution Date. Such Notice
may be delivered by electronic facsimile (in which case the original shall be
sent by overnight courier). The Notice shall constitute a claim for an Insured
Payment pursuant to the Policy for an amount equal to the Available Funds
Shortfall. Upon receipt of Insured Payments on behalf of the Certificateholders,
the Trustee shall deposit such Insured Payments in the Policy Payments Account,
and shall thereafter transfer such Insured Payments to the Certificate Account
for distribution solely to the related Certificateholders in accordance with
Section 4.04(b).
(b) The Trustee, on behalf of the Trust, shall establish a separate
special purpose trust account for the benefit of the Holders of the Offered
Certificates and the Certificate Insurer (the "Policy Payments Account") over
which the Trustee shall have exclusive control and sole right of withdrawal. The
Trustee shall deposit any amount paid under the Policy into the Policy Payments
Account and distribute such amount only for purposes of payment to the Holders
of Offered Certificates of the Insured Payment for which a claim was made and
such amount may not be applied to satisfy any costs, expenses or liabilities of
the Servicer, the Trustee or the Trust. Amounts paid under the Policy shall be
transferred to the Certificate Account in accordance with the next succeeding
paragraph and thereafter disbursed by the Trustee to the Holders of the Offered
Certificates in accordance with Section 4.04(b). It shall not be necessary for
such payments to be made by checks or wire transfers separate from the checks or
wire transfers used to pay any other amounts distributed pursuant to Section
4.04(b). However, the amount of any payment of principal of or interest on the
Offered Certificates to be paid from funds transferred from the Policy Payments
Account shall be noted in the statement to be furnished to related Holders of
the Offered Certificates pursuant to Section 4.05. Funds held in the Policy
Payments Account shall not be invested by the Trustee.
On any Distribution Date with respect to which a claim has been made
under the Policy, the amount of any funds received by the Trustee as a result of
such claim, to the extent required to pay amounts owed to Certificateholders on
such Distribution Date, shall be withdrawn from the Policy Payments Account and
deposited in the Certificate Account and applied by the Trustee, together with
the other funds to be deposited in the Certificate Account, directly to the
amounts owed to Certificateholders on the related Certificates. Funds received
by the Trustee as a result of any claim under the Policy shall be deposited by
the Trustee in the Policy Payments Account and then transferred to the
Certificate Account and used solely for payment to the related Holders of the
related Certificates and may not be applied to satisfy any costs, expenses or
liabilities of the Servicer, the Trustee or the Trust. Any funds remaining in
the Policy Payments Account on the first Business Day following a Distribution
Date shall be remitted to the Certificate Insurer, pursuant to the instructions
of the Certificate Insurer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Certificate from moneys
received under the Policy. The Certificate Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon one
Business Day's prior notice to the Trustee.
(d) The Trustee shall receive, as attorney-in-fact of each Holder of a
Class A Certificate, any Insured Payment from the Certificate Insurer and
disburse the same to each Holder of a Class A Certificate in accordance with the
provisions of this Article IV. Insured Payments disbursed by the Trustee from
proceeds of the Policy shall not be considered payment by the Trust nor shall
such payments discharge the obligation of the Trust with respect to such Offered
Certificates, and the Certificate Insurer shall be subrogated to the rights of
the Certificateholders to the extent of the payment and shall be entitled to
receive the Reimbursement Amount pursuant to Section 4.04(b)(iv). By acceptance
of a Certificate, each Holder of a Certificate agrees and recognizes that to the
extent the Certificate Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Trustee), to the Class A
Certificateholders, the Certificate Insurer will be entitled to receive the
Reimbursement Amount pursuant to Section 4.04(b)(iv).
(e) If the Trustee receives a certified copy of an order of the
appropriate court (an "Order") that any prior distribution made on the Offered
Certificates of principal or current interest has been voided in whole or in
part as a Preference Payment under applicable bankruptcy, insolvency,
receivership or similar law, the Trustee shall so notify the Certificate
Insurer, shall comply with the provisions of the Policy to obtain payment by the
Certificate Insurer of such voided distribution and shall, at the time it
provides notice to the Certificate Insurer, notify each Holder of the affected
Certificates by mail (i) that, subject to the terms of the Policy, the
Certificate Insurer will disburse the voided distribution directly to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order following such Certificateholder's making timely delivery to the
Trustee of (a) a certificate of such Certificateholder that such Order has been
entered and is not subject to any stay and (b) an assignment duly executed and
delivered by such Certificateholder, in such form as is reasonably required by
the Certificate Insurer and provided to such Certificateholder by the
Certificate Insurer, irrevocably assigning to the Certificate Insurer all rights
and claims of such Certificateholder relating to or arising under the affected
Certificates against the debtor that made such Preference Payment, or otherwise
with respect to such preference payment, and (ii) that, if any such voided
distribution payment is recovered from such Certificateholder pursuant to such
Order, such Certificateholder will be entitled to payment pursuant to the
Policy. A copy of the Policy shall be made available to each affected
Certificateholder through the Trustee, and the Trustee shall furnish to the
Certificate Insurer or its fiscal agent, if any, its records evidencing the
payments that have been made by the Trustee, and subsequently recovered from
Certificateholders and the dates on which such payments were made.
(f) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Offered
Certificates. Each Holder of a Class A Certificate, by its purchase of such
Certificate, the Servicer and the Trustee agree that the Certificate Insurer (so
long as no Certificate Insurer Default exists) may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without limitation, (i) the
direction of any appeal of any order relating to such Preference Claim and (ii)
the posting of any surety, supersede as or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to, and each Holder, the Servicer and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of the Servicer, the Trustee and each Holder in the
conduct of any such Preference Claim, including, without limitation, all rights
of any party to any adversary proceeding or action with respect to any court
order issued in connection with any such Preference Claim.
(g) It is understood and agreed that the intention of the parties is
that the Certificate Insurer shall not be entitled to reimbursement on any
Distribution Date for amounts previously paid by it unless on such Distribution
Date the Class A Certificateholders shall also have received the full amount of
the Insured Distribution Amount for such Distribution Date.
Section 4.03. Deposits into, and Transfers Among, the Accounts.
(a) The Trustee shall deposit into the Certificate Account, upon
receipt, the amount referred to in Section 3.11(i), the Termination Price
received by the Trustee in connection with a termination of the Trust pursuant
to Article X hereof.
(b) Prior to 1:00 p.m. New York time on any Distribution Date, the
Trustee shall make all transfers required in order to make the payments required
pursuant to Section 4.04 hereof.
Section 4.04. Flow of Funds and Distributions.
(a) No later than 1:00 p.m., New York time, on each Distribution Date
(or as described below), the Trustee shall apply the amounts on deposit in the
Certificate Account in the following order of priority:
(i) to pay the PMI Insurer the premium due, and any related
Kentucky and West Virginia state premium taxes, on the PMI Policy;
(ii) to pay to the Trustee the Trustee Fee and any Transition
Expenses (not to exceed $50,000 in the aggregate);
(iii) to pay the Backup Servicer the Backup Servicer Fee;
(iv) to pay the Servicer any interest or investment income earned
on funds deposited in the Certificate Account (net of investment losses); and
(v) the Trustee shall distribute all remaining amounts then on
deposit in the Certificate Account (the "Available Funds") in the order and
priority set forth in Section 4.04(b) below.
(b) On each Distribution Date, the Trustee shall withdraw (a) from the
Certificate Account, the Available Funds and (b) from the Policy Payments
Account, the amount of any Insured Payment and shall distribute the same in the
following order of priority:
(i) to the Certificate Insurer, the Insurance Premium for such
Distribution Date (to the extent such payment will not cause an Insured Payment
to be required)
(ii) to the holders of each Class of Offered Certificates, their
pro rata share (based on the amount of interest each Class of Certificates is
entitled to receive) of the related Interest Distribution Amount for such
Distribution Date;
(iii) to the holders of the Offered Certificates, an amount equal
to the Basic Principal Distribution Amount, in the order of priority specified
below;
(iv) to the Certificate Insurer, the Reimbursement Amount for
such Distribution Date (to the extent such payment will not cause an Insured
Payment to be required);
(v) to holders of the Offered Certificates, in the order of
priority described below, an amount equal to the Extra Principal Distribution
Amount;
(vi) to the Trustee for Transition Expenses in excess of $50,000;
and
(vii) to the Class X Certificate an amount equal to the interest
accrued on the Class X Certificate for the accrual period immediately preceding
the Distribution Date and any amounts representing OC Release Amounts.
Except as otherwise specified below, all distributions of principal to
holders of the Certificates shall be made in the following priority:
first, to the Class A-5 Certificates, in an amount equal to the
Class A-5 Priority Distribution Amount;
second, to the Class A-1 Certificates, until their Class
Certificate Principal Balance is reduced to zero;
third, to the Class A-2 Certificates, until their Class
Certificate Principal Balance is reduced to zero;
fourth, to the Class A-3 Certificates, until their Class
Certificate Principal Balance is reduced to zero;
fifth, to the Class A-4 Certificates, until their Class
Certificate Principal Balance is reduced to zero; and
sixth, to the Class A-5 Certificates, until their Class
Certificate Principal Balance is reduced to zero;
On each Distribution Date, any remaining amounts after giving effect
to the distributions specified above will be paid to the holders of the Class R
Certificates.
Notwithstanding the foregoing, in the event an OC Deficit exists on
any Distribution Date (or would exist on such Distribution Date after the
distributions on such date) and the aggregate amount distributable as principal
(including any draws made under the Certificate Insurance Policy) on the Offered
Certificates is not sufficient to reduce such OC Deficit to zero, then all
amounts that are distributable as principal of the Certificates on such
Distribution Date will be allocated concurrently to the outstanding Classes of
Certificates, pro rata, on the basis on their respective Class Certificate
Principal Balances.
(c) Whenever in the administration of the Trust the Trustee comes into
possession of money or other property not otherwise required to be paid to the
Holders of the Regular Certificates, the Certificate Insurer, the Servicer or
any other Person, or not required to be otherwise applied at any time pursuant
to the provisions of this Agreement, the Trustee shall promptly distribute such
money or other property to the Class R Certificateholders.
(d) Payments to the Certificateholders of each Class on each
Distribution Date will be made to the Certificateholders of the respective Class
of record on the related Record Date (other than as provided in Section 4.04(g)
or Section 10.01 hereof respecting the final distribution on such Class), and
shall be made to each such Certificateholder (x) by wire transfer of immediately
available funds to the account of such Certificateholder at a bank or other
entity having appropriate facilities therefor, if such Certificateholder is the
registered owner of a Class R Certificate, or the registered owner of a Class of
Regular Certificates evidencing a Percentage Interest aggregating at least 10%
hereof, and shall have so notified the Trustee in writing in the case of the
first Distribution Date, by the Closing Date, and, in the case of all subsequent
Distribution Dates, at least five Business Days prior to the Record Date
immediately prior to such Distribution Date; or (y) otherwise by check mailed by
first class mail to the address of such Certificateholder appearing in the
Certificate Register. Payments to the Certificate Insurer on any Distribution
Date will be made by wire transfer of immediately available funds to the account
designated by the Certificate Insurer (initially, in the Premium Letter).
(e) The rights of the Certificateholders to receive distributions from
the proceeds of the Trust in respect of the Certificates, and all interests of
the Certificateholders in and to such distributions, shall be as set forth in
this Agreement. In no event shall the Holders of any Class of Certificates, the
Trustee, the Seller, the Depositor, the Servicer or the Certificate Insurer in
any way be responsible or liable to the Holders of any other Class of
Certificates in respect of amounts properly previously distributed on the
Certificates.
(f) Except as otherwise provided in Section 10.01 hereof, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date, the Trustee shall, no
later than four days prior to the related Distribution Date, send, by overnight
delivery or by registered mail, to each Holder on such date of such Class of
Certificates and to the Certificate Insurer a notice to the effect that:
(i) the Trustee expects that the final distribution with respect
to such Class of Certificates will be made on such Distribution Date and
requests that such Holder send its Certificates to the Trustee immediately
following such final Distribution Date,
(ii) no interest shall accrue on such Certificates from and after
the end of the related Due Period, and upon the Trustee's making of such final
distribution with respect to such Class of Certificates, such Certificates will
be absolutely null and void and of no further effect thereafter, and
(iii) such final distribution will only be made upon presentment
of the Certificates to the Trustee at its Corporate Trust Office or at such
other address set forth in such notice.
(g) Within one Business Day of the Trustee's receipt of any payment
disbursed to it by the Certificate Insurer in respect of any Preference Amount
recovered from the Class A Certificateholders, the Trustee shall distribute such
payment to such Certificateholders. If any such distribution is to be made on a
Distribution Date, it shall be so made before giving effect to any distribution
to be made on such date pursuant to Section 4.04(b). The Trustee shall
distribute to the respective Class A Certificateholder any payment disbursed to
it by the Certificate Insurer in respect of any previous distribution to a Class
A Certificateholder that was avoided as a preference pursuant to a final,
non-appealable order of a court of competent jurisdiction under applicable
bankruptcy, insolvency, receivership or similar law, and that such
Certificateholder has repaid to the receiver, conservator, debtor-in-possession
or trustee in bankruptcy, as the case may be.
(h) With respect to each Account, the Servicer shall deliver to the
Trustee for deposit into such Account the amount of any losses incurred in
connection with the investment of funds in such Account within one Business Day
after receipt from the Trustee of notice of any such losses. The Trustee shall
not be responsible for and shall be indemnified by the Servicer against any
expenses or liability incurred with respect to such investment losses.
Section 4.05. Statements to Certificateholders.
On each Distribution Date the Trustee shall make available to each
Holder of a Regular Certificate and forward by first-class mail to the
Certificate Insurer a statement, which shall be based upon the loan level
information and Servicing Report provided by the Servicer and upon which the
Trustee shall conclusively rely, without independent verification, as to the
distributions made on such Distribution Date, setting forth the following
information to the extent the Servicer has provided information to the Trustee
under Section 3.18(c) sufficient to enable to Trustee to perform the calculation
required:
(a) the amount of the distributions, separately identified, with
respect to the Regular Certificates;
(b) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Principal Prepayments and
monthly scheduled payments of principal or other recoveries of principal
included therein and separately identifying any amounts applied as OC Increase
Amounts;
(c) the amount of such distributions allocable to interest and the
calculation thereof;
(d) the Aggregate Loan Balance as of the end of the related Due
Period;
(e) the Class Certificate Principal Balance of each Class of Regular
Certificates after giving effect to any payment of principal on such
Distribution Date;
(f) the amount of any Insured Payment included in the amounts
distributed to the Holders of Offered Certificates on such Distribution Date;
(g) the principal amount of each Class A Certificate (based on a
Certificate in the original principal amount of $1,000) which will be
outstanding and the Class Certificate Principal Balance of each Class of Regular
Certificates, in each case after giving effect to any payment of principal on
such Distribution Date;
(h) the amount of any OC Release Amount;
(i) the Net WAC Cap;
(j) the amount, if any, of Realized Losses for the previous calendar
month;
(k) the Overcollateralized Amount, if any, remaining after giving
effect to all distributions on such Distribution Date;
(l) the total of any Substitution Shortfall Amounts or Purchase Price
amounts paid or received by the Servicer with respect to the preceding month;
(m) the weighted average Mortgage Rate of the Mortgage Loans as of the
last day of the related Due Period;
(n) the current weighted average of the remaining terms of the
Mortgage Loans;
(o) the amount of Servicing Fee paid to or retained by the Servicer;
(p) the amount of Trustee Fee paid to the Trustee;
(q) the amount of any Delinquency Advances and Servicing Advances for
the related Due Period;
(r) the number of Mortgage Loans outstanding;
(s) the cumulative number and Loan Balances of liquidated Mortgage
Loans;
(t) the amount of cumulative Realized Losses and its percentage of the
Cut-off Date Pool Balance;
(u) the Cut-off Date Loan Balance of each Mortgage Loan which was
modified or extended pursuant to Section 2.11 or 3.07 hereof;
(v) the Principal Distribution Amount for such Distribution Date;
(w) the Reimbursement Amount, if any;
(x) whether the Stepdown Requirement has been satisfied and whether
the Servicer Termination Test has been violated;
(y) the Pass-Through Rate for the Class A-1 Certificates for such
Distribution Date;
(z) the amount distributed to the Residual Certificateholders;
(aa) the amount of payments received under the PMI Policy and the
number of Mortgage Loans to which such payments related; and
(bb) the dollar amount of PMI claims denied during the Due Period.
Items (a), (b), (c) and (e) above shall also be presented on the basis
of a certificate having a $1,000 denomination.
The Trustee will make the monthly statements (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders and other parties to the Pooling and
Servicing Agreement via the Trustee's internet website and its fax-on-demand
service. The Trustee's fax-on-demand service may be accessed by calling (301)
815-6610. The Trustee's website will be located at "▇▇▇.▇▇▇▇▇▇▇.▇▇▇". Assistance
in using the website or the fax-on-demand service can be obtained by calling the
Trustee's customer service desk at (▇▇▇) ▇▇▇-▇▇▇▇. Parties that are unable to
use the above distribution options are entitled to have a paper copy mailed to
them via first class mail by calling the customer service desk and indicating
such. The Trustee shall have the right to change the way monthly statements are
distributed in order to make such distribution more convenient and/or more
accessible to the above parties and the Trustee shall provide timely and
adequate notification to all above parties regarding any such changes.
Notwithstanding the foregoing, the Trustee shall furnish such statement to the
Certificate Insurer by first-class mail, unless otherwise agreed by the
Certificate Insurer.
In addition, on each Distribution Date the Trustee shall distribute to
each Holder, together with the information described above, the following
information based solely upon the information provided to the Trustee pursuant
to Section 3.18(c) hereof upon which the Trustee may conclusively rely without
independent verification:
(A) the number of, and aggregate Loan Balances (including the percent
of the aggregate Loan Balances of such Mortgage Loans to the aggregate
Loan Balances of all Mortgage Loans) of, Mortgage Loans (i) 30-59 days
Delinquent, (ii) 60-89 days Delinquent and (iii) 90 days or more
Delinquent (which statistics shall include Mortgage Loans in
foreclosure and bankruptcy but which shall exclude REO Properties), as
of the close of business on the last day of the calendar month next
preceding such Distribution Date and the aggregate Loan Balances of
all Mortgage Loans as of such date;
(B) the number of, and aggregate Loan Balances of, all Mortgage Loans
in foreclosure proceedings (other than any Mortgage Loans described in
clause (C) below) and the percent of the aggregate Loan Balances of
such Mortgage Loans to the aggregate Loan Balances of all Mortgage
Loans, all as of the close of business on the last day of the calendar
month next preceding such Distribution Date;
(C) the number of, and the Aggregate Loan Balance of, the Mortgage
Loans in bankruptcy proceedings and the percent of the Aggregate Loan
Balance of such Mortgage Loans to the Aggregate Loan Balance of all
Mortgage Loans, all as of the close of business on the last day of the
calendar month next preceding such Distribution Date;
(D) the number of REO Properties, the Aggregate Loan Balance of the
related Mortgage Loans, and the percent of the Aggregate Loan Balance
of such Mortgage Loans to the Aggregate Loan Balance of all Mortgage
Loans, all as of the close of business on the last day of the calendar
month next preceding such Distribution Date;
(E) for each Mortgage Loan which is an REO Property, the Loan Balance
of such Mortgage Loan, the loan number of such Mortgage Loan, the
Value of the Mortgaged Property, the value established by any new
appraisal, the estimated cost of disposing of the Mortgage Loan and
the amount of any unreimbursed Delinquency Advances and Servicing
Advances;
(F) for each Mortgage Loan which is in foreclosure, the Loan Balance
of such Mortgage Loan, the Value of the Mortgaged Property, the
Loan-to-Value Ratio and the loan-to-value ratio on the original Value
as of the close of business on the last day of the calendar month next
preceding such Distribution Date and the last paid-to-date, based; and
(G) the principal balance of each Mortgage Loan that was modified or
extended pursuant to Section 2.10 or 3.01 hereof.
Within a reasonable period of time (which shall not be more than 45
days) after the end of each calendar year, the Trustee shall furnish to each
Person who at any time during the calendar year was a Holder of a Regular
Certificate a statement containing the information set forth in subclauses (a)
through (c) above, aggregated for such calendar year or applicable portion
thereof during which such Person was a Certificateholder.
On each Distribution Date the Trustee shall forward to the Certificate
Insurer, the Depositor, the Trustee, the Seller, each Holder of a Class R
Certificate, the Servicer and Bloomberg (at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇) a copy of the reports forwarded to
the Regular Certificateholders on such Distribution Date, and a report of the
amounts, if any, actually distributed with respect to the Class R Certificates
on such Distribution Date.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to any Person who at any time during the
calendar year was a Holder of a Class R Certificate a statement containing the
information provided pursuant to the previous paragraph aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder.
The Trustee upon written request shall forward to any
Certificateholder within five Business Days after the furnishing or receipt
thereof by the Trustee, as the case may be, copies of any (i) directions,
notices, certificates, opinions or reports furnished hereunder by the Trustee to
the Certificate Insurer, the Seller, the Trustee, the Depositor or the Rating
Agencies, (ii) directions, notices, certificates, reports, opinions or any other
information or document furnished to the Trustee by the Certificate Insurer, the
Servicer, the Seller, the Depositor or the Rating Agencies and (iii) anything
requested in writing by any Certificateholder which the Trustee otherwise sends
to some other Person pursuant to this Agreement (excluding, however, routine
items sent to Mortgagors, taxing or local property records authorities and
similar items) which, in the case of clause (iii), such Certificateholder is not
otherwise receiving; provided, however, that any such documents or information
requested under clause (iii) shall be at the expense of the requesting
Certificateholder; and provided, further, that the Trustee shall not be required
to provide any document or information which it is otherwise legally prohibited
from providing.
Section 4.06. Remittance Reports.
(a) [Reserved]
(b) On or before 12:00 noon, New York time, on the Servicer Remittance
Date, the Servicer shall deposit into the Collection Account, for inclusion in
the Available Funds for the next Distribution Date, in immediately available
funds, the amount equal to the aggregate of all payments of principal and
interest, net of the Servicing Fee, that were due during the related Due Period
on the Mortgage Loans and that were delinquent on the related Determination
Date, (any such deposit made by the Servicer, a "Delinquency Advance"). The
Servicer is permitted to fund its payment of Delinquency Advances from amounts
then on deposit in the Collection Account representing collections on the
Mortgage Loans relating to the then-current or any subsequent Due Period; any
such amounts shall be replaced by Servicer on or prior to the next Servicer
Remittance Date. The Servicer shall be required to make Delinquency Advances
from its own funds (subject to reimbursement from subsequent collections on the
related Mortgage Loans, when available) to the extent that such amounts in the
Collection Account are insufficient.
(c) The obligation of the Servicer to make Delinquency Advances (other
than Nonrecoverable Delinquency Advances) is mandatory with respect to any
Mortgage Loan or REO Property, and shall continue until a Final Recovery
Determination or an REO Disposition in connection therewith or the purchase or
repurchase thereof from the Trust pursuant to any applicable provision of this
Agreement.
(d) Notwithstanding anything herein to the contrary, no Delinquency
Advance or Servicing Advance shall be required to be made hereunder by the
Servicer with respect to reduction in the amount of the monthly payments on the
Mortgage Loans due to bankruptcy proceedings or the application of the Civil
Relief Act, or if such Delinquency Advance or Servicing Advance would, if made,
constitute a Nonrecoverable Delinquency Advance or Nonrecoverable Servicing
Advance, respectively.
Any Delinquency Advances previously made in respect to any Mortgage
Loan that are at any time deemed by the Servicer to be nonrecoverable from
related late collections, insurance proceeds or liquidation proceeds may be
reimbursed to the Servicer out of any funds in the Collection Account prior to
the distributions on the Certificates.
Section 4.07. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Trustee
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate to such Certificateholders
the amount withheld. Any amounts so withheld shall be deemed to have been
distributed to the related Certificateholders for all purposes of this
Agreement.
ARTICLE V.
THE CERTIFICATES
Section 5.01. The Certificates.
The Certificates consist of the Regular Certificates and the Class R
Certificates. The Certificates in the aggregate will represent the entire
beneficial ownership interest in the Mortgage Loans and all other assets
included in the Trust Fund.
The Certificates will be substantially in the forms annexed hereto as
Exhibits A, B, C and D. The Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-5, Certificates shall be issued upon original issuance as Book-Entry
Certificates. The Class R Certificates and Class X Certificates shall be issued
at all times as Definitive Certificates. The Offered Certificates are issuable
only in denominations of $1,000 and integral multiples of $1,000 in excess
thereof. The Class R Certificates are issuable only in denominations
representing Percentage Interests of at least 10%.
Upon original issue, the Certificates shall be executed by the Trustee
and authenticated and delivered by the Trustee, upon the Written Order to
Authenticate and upon receipt of the documents specified in Section 2.04 hereof.
The Certificates shall be executed by manual or facsimile signature on behalf of
the Trustee by an authorized signatory. Certificates bearing the manual or
facsimile signatures of individuals who were at any time the proper officers of
the Trustee shall bind the Trustee, notwithstanding that such individuals or any
of them shall have ceased to hold such offices prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of such
Certificates. No Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication substantially in the form provided herein
executed by the Trustee by manual signature, and such certificate of
authentication shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
Interest shall accrue on the Regular Certificates (other than the
Class A-1 Certificates) on the basis of a 360-day year consisting of twelve
30-day months, except as otherwise provided herein. Interest shall accrue on the
Class A-1 Certificates on the actual number of days in each Accrual Period and a
360-day year, except as otherwise provided herein.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at the office or agency
appointed by the Trustee in accordance with the provisions of Section 8.12
hereof a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Trustee shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
The Depositor, each Certificateholder, the Trustee and the Certificate Insurer
shall have the right to inspect the Certificate Register or to obtain a copy
thereof at all reasonable times, and to rely conclusively upon a certificate of
the Trustee as to the information set forth in the Certificate Register. The
Trustee shall furnish or cause to be furnished to the Depositor, the Trustee and
the Certificate Insurer and to any Certificateholder a listing of the names and
addresses of the Certificateholders on reasonable request.
(b) (i) The Class X and Class R Certificates have not been registered
or qualified under the 1933 Act or any state securities laws or "blue sky" laws.
No transfer, sale, pledge or other disposition of any Class X or the Class R
Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the 1933 Act and effective registration
or qualification under applicable state securities laws or "blue sky" laws, or
is made in a transaction which does not require such registration or
qualification. In the event that a transfer is to be made in reliance upon an
exemption from the 1933 Act, the Trustee shall not register such transfer
unless:
(A) each Class X and Class R Certificateholder desiring
to effect such disposition and such Certificateholder's
prospective transferee certifies to the Trustee in writing
the facts surrounding such disposition, which certification
shall be substantially in the form of Exhibit J hereto; or
(B) any Class X or Class R Certificateholder desiring
to effect such disposition delivers to the Trustee an
Opinion of Counsel satisfactory to the Trustee that such
transfer may be made pursuant to an exemption from the 1933
Act, which Opinion of Counsel shall not be an expense of the
Trustee.
None of the Seller, the Depositor, the Servicer, or the Trustee is
obligated under this Agreement to register the Class X or Class R Certificates
under the 1933 Act or any other securities law or to take any action not
otherwise required under this Agreement to permit the transfer of Class X
Certificates or Class R Certificates without such registration or qualification.
Any Class X or Class R Certificateholder desiring to effect such transfer shall,
and does hereby agree to, promptly indemnify and reimburse the Trustee, the
Seller, the Depositor and the Servicer for costs and expenses incurred in
connection with any liability that results if the transfer is not so exempt or
is not made in accordance with such applicable federal and state laws.
(i) Notwithstanding anything to the contrary herein, the Trustee
shall not register the acquisition or transfer of any Class R Certificate unless
it shall have received (a) a representation, in form substantially identical to
the one set forth in Exhibit J-1 hereto, to the effect that the acquiror or
transferee of such Certificate is not an employee benefit plan or arrangement
subject to Section 406 of ERISA or a plan subject to Section 4975 of the Code,
or a Person acting on behalf of any such plan or arrangement or using the assets
of any such plan or arrangement to effect such acquisition or transfer or (b) if
the acquiror is an insurance company, a representation that the acquiror is an
insurance company that is purchasing such Certificate with funds contained in an
"insurance company general account" (as such term is defined in Section V(e) of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60")) and that the
acquisition and holding of such Certificates are covered under PTCE 95-60. The
representations described above shall be deemed to have been made to the Trustee
by the acquirer's or transferee's acceptance of a Class R Certificate. In the
event that such representation is violated, such attempted transfer or
acquisition shall be void and of no effect.
(c) Notwithstanding anything to the contrary contained herein, except
for the transfer on the Closing Date of the Class R Certificates to the Seller,
prior to registration of any transfer, sale or other disposition of a Class R
Certificate, the proposed transferee shall provide to the Servicer, the Seller,
the Class R Certificateholders and the Trustee: (i) an affidavit substantially
in the form of Exhibit L hereto to the effect that such transferee is not a
Disqualified Organization or a non-U.S. Person or an agent (including a broker,
nominee or middleman) of a non-U.S. Person or a Disqualified Organization; and
(ii) a certificate which acknowledges that (A) each Class R Certificate has been
designated as a residual interest in the REMIC created hereby, (B) the
transferee will include in its income the entire net income of the REMIC created
hereby and that such income may be an "excess inclusion", as defined in the
Code, that, with certain exceptions, cannot be offset by other losses or
benefits from any tax exemption, (C) the transferee expects to have the
financial means to satisfy all of its tax obligations including those relating
to holding Class R Certificates, and (D) no purpose of the acquisition of a
Class R Certificate is to avoid or impede the assessment or collection of tax.
Notwithstanding the registration in the Certificate Register of any transfer,
sale or other disposition of a Class R Certificate to a Disqualified
Organization or a non-U.S. Person or an agent (including a broker, nominee or
middleman) of a Disqualified Organization or a non-U.S. Person, such
registration shall be deemed to be of no legal force or effect whatsoever and
such Person shall not be deemed to be a Certificateholder for any purpose
hereunder, including, but not limited to, the receipt of distributions in
respect of such Class R Certificate. If any purported transfer shall be in
violation of the provisions of this Section 5.02(c), then the prior Holder of
the Class R Certificate purportedly transferred shall, upon discovery that the
transfer of the Class R Certificate was not in fact permitted by this Section
5.02(c), be restored to all rights as Holder thereof retroactive to the date of
the purported transfer of the Class R Certificate. The Trustee, the Depositor
(except in its capacity as transferor of such Certificate), the Seller and the
Servicer shall have no liability to any Person for any registration or transfer
of a Class R Certificate that is not permitted by this Section 5.02(c) or for
making payments due on such Class R Certificate to the purported Holder thereof
or taking any other action with respect to such purported Holder under the
provisions of this Agreement if the Trustee, the Seller and the Servicer have
received the affidavit and certificate referenced above. The prior Holder shall
be entitled to recover from any purported Holder of a Class R Certificate that
was in fact not a permitted transferee under this Section 5.02(c) at the time it
became a Holder, all payments made on the Class R Certificate to such purported
Holder. The Holder of a Class R Certificate, by its acceptance thereof, shall be
deemed for all purposes to have consented to the provisions of this Section
5.02(c) and to any amendment of this Agreement deemed necessary by counsel to
the Seller to ensure that the transfer of a Class R Certificate to a
Disqualified Organization or any other Person will not cause the REMIC created
hereby to cease to qualify as a REMIC or cause the imposition of a tax upon such
REMIC.
(d) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate (duly endorsed, or accompanied by an
executed assignment, as specified in the Certificate) at any agency or office
appointed by the Trustee for such purpose pursuant to Section 8.12 hereof, the
Trustee shall execute, authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of the same Class of a
like aggregate Percentage Interest.
(e) At the option of the Certificateholders, each Certificate may be
exchanged for other Certificates of the same Class with authorized denominations
and a like aggregate Percentage Interest, upon surrender of such Certificate to
be exchanged at any office or agency appointed by the Trustee for such purpose
pursuant to Section 8.12 hereof. Whenever any Certificates are so surrendered
for exchange the Trustee shall execute, authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Trustee) be duly endorsed by, or be accompanied by
an assignment in the form attached to the Certificate or by a written instrument
of transfer in a form reasonably satisfactory to the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(f) No service charge to the Certificateholders shall be made for any
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
(g) All Certificates surrendered for transfer and exchange shall be
canceled and destroyed by the Trustee in accordance with its customary
procedures.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) there is delivered to each of the Trustee and the
Certificate Insurer such security or indemnity (provided that an unsecured
letter of indemnity in a form reasonably satisfactory to the Trustee from a
Holder which is an insurance company having long-term unsecured debt which is
rated at least investment grade (or having a comparable claim-paying ability
rating) and having a minimum net worth of $100,000,000 shall satisfy such
requirement) as may be required by them to save each of them harmless, then, in
the absence of actual knowledge by a Responsible Officer of the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of the same
Class and of like denomination and Percentage Interest. Upon the issuance of any
new Certificate under this Section, the Trustee may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith. Any replacement Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 5.04. Persons Deemed Certificateholders.
The Seller, the Depositor, the Servicer, the Trustee and the
Certificate Insurer and any agent of any of them may treat the Person in whose
name any Certificate is registered in the Certificate Register as the
Certificateholder for the purpose of receiving distributions pursuant to Section
4.04 hereof and for all other purposes whatsoever, and none of the Seller, the
Depositor, the Servicer, the Trustee, the Certificate Insurer or any agent of
any of them shall be affected by notice to the contrary.
Section 5.05. Book-Entry Certificates.
At such time, if any, as any Class of Regular Certificates shall be
registered on the Certificate Register in the name of the Depository or its
nominee, such Class shall be issued in the form of one or more typewritten
Certificates representing Book-Entry Certificates to be delivered to the
Depository by or on behalf of the Depositor. Any Certificate Owner owning a
beneficial interest Book-Entry Certificates shall be entitled to receive
definitive, fully registered Certificates ("Definitive Certificates")
representing such Certificate Owner's interest in such Certificates pursuant to
Section 5.07 hereof. Following the issuance of Book-Entry Certificates with
respect to any Regular Certificates and until such time, if any, as Definitive
Certificates shall have been issued to the Certificate Owners of such
Certificates:
(a) the provisions of this Section 5.05 shall be in full force and
effect;
(b) the Depositor, the Servicer, the Trustee and the Certificate
Insurer may deal with the Depository and the Depository Participants for all
purposes (including the making of distributions) as the authorized
representative of the respective Certificate Owners of such Certificates;
(c) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, with respect to any
Book-Entry Certificates, the Depository will make book-entry transfers among the
Depository Participants and receive and transmit distributions of principal and
interest on such Certificates to such Depository Participants;
(d) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(e) the Trustee may rely, and shall be fully protected in relying,
upon information furnished by the Depository with respect to its Depository
Participants; and
(f) to the extent that the provisions of this Section 5.05 conflict
with any other provisions of this Agreement, the provisions of this Section 5.05
shall control.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Certificates evidencing a specified percentage of the Voting Rights, such
consent or direction may be given by a combination of Certificate Owners (acting
through the Depository and the Depository Participants) owning Book-Entry
Certificates, and Certificateholders owning Definitive Certificates, evidencing
in the aggregate such specified percentage of the Voting Rights.
Section 5.06. Notices to Depository.
Whenever any notice or other communication is required to be given to
Holders of any Class of Certificates represented in whole or in part by
Book-Entry Certificates, the Trustee shall, with respect to such Book-Entry
Certificates, give all such notices and communications to the Depository rather
than to the related Certificate Owners.
Section 5.07. Definitive Certificates.
After any issuance of Regular Certificates as Book-Entry Certificates,
upon the request of any Certificate Owner that its interest in such Book-Entry
Certificates be exchanged for Definitive Certificates, such Certificate Owner,
upon presentation of appropriate documentation to the Trustee as required by
this Article V and subject to the rules and procedures of the Depository, shall
be entitled to be issued one or more Definitive Certificates in an aggregate
denomination equal to that of such Book-Entry Certificates. Additionally, after
any issuance of Regular Certificates as Book-Entry Certificates, if (a) the
Depositor advises the Trustee that the Depository is no longer willing or able
to discharge properly its responsibilities under the Depository Agreement with
respect to such Certificates and the Trustee or the Depositor is unable to
locate a qualified successor, (b) the Depositor, at its sole option, advises the
Trustee that it elects to terminate the book-entry system with respect to such
Certificates through the Depository or (c) after the occurrence and continuation
of a Servicer Default, Certificate Owners of any Class of Certificates
evidencing at least 51% of the Percentage Interests represented by the
Book-Entry Certificates of such Class advise the Trustee and the Depository in
writing through the Depository Participants that the continuation of a
book-entry system with respect to such Certificates through the Depository (or
its successor) is no longer in the best interests of the Certificate Owners with
respect to such Certificates, then the Trustee shall notify all Certificate
Owners of the availability of Definitive Certificates to Certificate Owners
requesting the same.
The Depositor shall provide the Trustee with an adequate inventory of
certificates to facilitate the issuance and transfer of Definitive Certificates.
Upon surrender to the Trustee of any Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall execute, authenticate and deliver the Definitive Certificates
that are to replace such Book-Entry Certificates. Neither the Depositor nor the
Trustee shall be liable for any delay in delivery of such instructions and each
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of such Definitive Certificates, all references
herein to obligations imposed upon or to be performed by the Depository shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates, and the Trustee shall recognize
the Holders of such Definitive Certificates as Certificateholders hereunder.
ARTICLE VI.
THE SELLER, THE DEPOSITOR AND THE SERVICER
Section 6.01. Liability of the Seller, the Depositor and the Servicer.
The Seller, the Depositor and the Servicer each shall be severally
liable in accordance herewith only to the extent of the obligations specifically
imposed by this Agreement and undertaken herein by the Seller, the Depositor and
the Servicer, respectively.
Section 6.02. Merger or Consolidation of the Seller or the Servicer.
Subject to the following paragraph, the Seller shall keep in full
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation. The Servicer shall keep in full effect
its existence, rights and franchises as a corporation organized under the laws
of the State of Delaware (or under the laws of such other jurisdiction as may in
the future issue a charter for the Servicer). The Seller and the Servicer each
shall (and the Servicer shall require each Subservicer in the related
Subservicing Agreement to) obtain and preserve its qualification to do business
as a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement,
the Certificates or any of the Mortgage Loans and to perform its respective
duties under this Agreement.
The Seller or the Servicer may be merged or consolidated with or into
any Person, or transfer all or substantially all of its assets, or substantially
all of its assets pertaining to the loan origination or servicing business,
respectively, to any Person, in which case any Person resulting from any merger
or consolidation to which the Seller or the Servicer shall be a party, or any
Person succeeding to the business of the Seller or the Servicer, shall be the
successor of the Seller or the Servicer, as the case may be, 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 surviving Person to the Servicer shall satisfy
the requirements of Sections 6.06 and 7.02 hereof with respect to the
qualifications of a successor Servicer.
Section 6.03. Limitation on Liability of the Seller, the Depositor,
the Servicer, any Subservicer and Others.
None of the Seller, the Depositor or the Servicer, or any of the
directors, officers, employees or agents of the Seller, the Depositor or the
Servicer, any Subservicer or members or affiliates of the Depositor shall be
under any liability to the Trust or the Certificateholders for any action taken,
or for refraining from the taking of any action, in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Seller, the Depositor, the Servicer or any such Person
against the remedies provided herein for the breach of any warranties,
representations or covenants made herein, or against any specific liability
imposed on the Seller, the Depositor or the Servicer herein, or against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties of the Servicer, the Depositor
or the Seller, as the case may be, or by reason of reckless disregard of
obligations and duties of the Servicer, the Depositor or the Seller, as the case
may be, hereunder. The Seller, the Depositor, the Servicer and any director,
officer, employee or agent of the Seller, the Depositor or the Servicer, or any
member or affiliate of the Depositor may rely in good faith on any document of
any kind which, prima facie, is properly executed and submitted by any Person
respecting any matters arising hereunder.
The Servicer, each Subservicer, the Seller and the Depositor and any
director, officer, employee or agent of the Servicer, the Seller or the
Depositor and any member or affiliate of the Depositor shall be indemnified by
the Trust and held harmless against any loss, liability or expense incurred in
connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement or
the Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except to the extent any such loss,
liability or expense is otherwise reimbursable pursuant to this Agreement) and
any loss, liability or expense incurred by reason of willful misfeasance, bad
faith or negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder. Except as otherwise
provided herein, none of the Seller, the Depositor or the Servicer shall be
under any obligation to appear in, prosecute or defend any legal action that is
not related to its respective duties under this Agreement; provided, however,
that, except as otherwise provided herein, any of the Seller, the Depositor or
the Servicer may, with the prior consent of the Trustee, and the Certificate
Insurer, in its discretion undertake any such action which it may deem necessary
or desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders and the Certificate
Insurer hereunder. In such event, the legal expenses and costs of such action,
and any liability resulting therefrom, shall be expenses, costs and liabilities
of the Trust, and the Seller, the Depositor and the Servicer shall be entitled
to be reimbursed therefor out of the Collection Account.
Section 6.04. Limitation on Resignation of the Servicer; No
Assignment or Delegation of Duties by Servicer.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except (a) by the mutual consent of the Certificate Insurer
(except that if a Certificate Insurer Default has occurred and is continuing,
the decision of the Trustee shall control) and the Trustee or (b) upon
determination that its duties hereunder are no longer permissible under
applicable law. Any such determination pursuant to the preceding sentence
permitting the resignation of the Servicer shall be evidenced by an Independent
Opinion of Counsel to such effect delivered (at the expense of the Servicer) to
the Trustee. No resignation of the Servicer shall become effective until the
Trustee or a successor servicer, appointed pursuant to the provisions of Section
3.26(b) hereof and satisfying the requirements of Sections 6.06 and 7.02 hereof
with respect to the qualifications of a successor Servicer, shall have assumed
the Servicer's responsibilities, duties, liabilities (other than those
liabilities arising prior to the appointment of such successor) and obligations
under this Agreement.
Except as expressly provided herein, the Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, or (except as permitted by Section 3.02 hereof) 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 Servicer hereunder,
without the prior written consent of each of the Certificate Insurer and the
Trustee (except that if a Certificate Insurer Default has occurred and is
continuing, the decision of the Trustee shall control), and, absent such written
consent, any agreement, instrument or act purporting to effect any such
assignment, transfer, delegation or appointment shall be void.
Section 6.05 Rights of the Seller, the Depositor, the
Certificateholders and Others in Respect of the Servicer.
The Servicer shall (and shall require any Subservicer in the related
Subservicing Agreement to) afford the Seller, the Depositor, the Trustee, the
Certificate Insurer and any Regular Certificateholder which has a greater than
10% Percentage Interest in the related Class and any representative or agent of
the foregoing, upon reasonable prior notice, during normal business hours,
access to all records maintained by the Servicer in respect of its rights and
obligations hereunder and access to officers of the Servicer and each
Subservicer responsible for such obligations. Upon request and at such
requesting party's expense, the Servicer shall furnish to the Seller, the
Depositor, any Certificateholder, the Trustee and the Certificate Insurer, the
Servicer's most recent publicly available financial statements and each
Subservicer's most recent financial statements (annual or quarterly statements,
as the case may be) and such other information reasonably relating to their
capacity to perform their obligations under this Agreement as the Servicer or
such Subservicer possesses.
To the extent such information is not otherwise available to the
public, the Seller, the Depositor, the Certificateholders, the Servicer (with
respect to information of any Subservicer), the Trustee and the Certificate
Insurer shall not disseminate any information obtained pursuant to the preceding
two sentences without the written consent of the Servicer or the Subservicer
(only with respect to information of such Subservicer) except as required
pursuant to this Agreement or to the extent that it is necessary to do so (i) in
working with legal counsel, auditors, taxing authorities or other governmental
agencies for reasons consistent with the performance of their respective duties
or (ii) pursuant to any law, rule, regulation, order, judgment, writ, injunction
or decree of any court or governmental authority, or as may be required in any
report submitted to any regulatory body, having jurisdiction over the Seller,
the Depositor, the Servicer, the Trustee, any Certificateholder or the Trust
Fund, as the case may be, and in any case, the Seller, the Depositor, the
Servicer (with respect to information of any Subservicer) or the Trustee, as the
case may be, shall use its best efforts to assure the confidentiality of any
such disseminated non-public information.
Section 6.06. Eligibility Requirements for Servicer.
The Servicer hereunder shall at all times be a corporation or a
state-chartered or national bank acceptable to the Certificate Insurer except
that if a Certificate Insurer Default has occurred and is continuing, such
entity shall be acceptable to the Trustee. The Servicer shall be organized and
doing business under the laws of the United States of America or any state
thereof or the District of Columbia and have, except in the case of the original
Servicer, equity of at least $10,000,000 (or such lower level as may be
acceptable to the Certificate Insurer, or, if a Certificate Insurer Default has
occurred and is continuing, to the Trustee). In case at any time the Servicer
shall cease to be eligible in accordance with the provisions of this Section
6.06, the Servicer shall resign immediately in the manner and with the effect
specified in Section 7.02(a) hereof.
ARTICLE VII.
DEFAULT
Section 7.01. Servicer Defaults; Certain Matters Affecting the Servicer.
(a) "Servicer Default", wherever used herein, means any one of the
following events:
(i) Any failure by the Servicer to (1) make required Servicing
Advances and Delinquency Advances on the related Servicer Remittance Date or (2)
deposit into the Collection Account as described in Section 3.11(i) hereof or
transfer to the Trustee for deposit in the Certificate Account on the related
Servicer Remittance Date any other amount required to be deposited therein under
this Agreement, which failure, in the case of only clause (2) hereof, is not
remedied by the close of business on the Business Day after the date upon which
written notice of such failure shall have been given to the Servicer by the
Trustee or the Certificate Insurer or to the Servicer, the Certificate Insurer
and the Trustee by Holders of Certificates evidencing Voting Rights represented
by all Certificates aggregating not less than 51%;
(ii) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement or in the Mortgage Loan Purchase Agreement,
which failure (1) materially and adversely affects the Certificateholders or the
Certificate Insurer and (2)continues unremedied for a period of 30 days after
the date on which written notice of such failure (which notice shall refer
specifically to this Section),requiring the same to be remedied, shall have been
given to the Servicer by the Trustee, at the direction of the Certificate
Insurer, or by the Certificate Insurer, or, with the consent of the Certificate
Insurer, to the Servicer by the Holders of Certificates evidencing Voting Rights
represented by all Certificates aggregating not less than 51%;
(iii) The entry against the Servicer of a decree or order by a
court or agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, 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, and
the continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days;
(iv) The consent by the Servicer to the appointment of a trustee,
conservator or receiver or liquidator in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to the Servicer or of or relating to substantially
all of its property; or the admission by the Servicer in writing of its
inability to pay its debts generally as they become due, the Servicer's filing
of a petition to take advantage of any applicable bankruptcy, insolvency or
reorganization statute, the Servicer's making of an assignment for the benefit
of its creditors, or the Servicer's voluntary suspension of payment of its
obligations;
(v) The occurrence of a Step Up Trigger;
(vi) Breach of a covenant or default by the Servicer or any
Affiliate, whether as principal, guarantor or surety, in the payment of any
amount of $100,000 or more of any principal or interest on any indebtedness or
any other obligation, subject to the applicable cure period, if any;
(vii) Breach by the Servicer in any material respect of any of
its representations and warranties made herein or in the Mortgage Loan Purchase
Agreement (not including Section 4(b) thereof), or in any certificate delivered
pursuant hereto or thereto, and the failure of the Servicer to cure such breach
in all material respects within 30 days after the notice of such breach shall
have been given to the Servicer by the Issuer, the Trustee, the Certificate
Insurer or the holders of the Certificates evidencing not less than 51% of the
voting rights; or
(viii) The cessation of the ownership interest or a valid,
perfected, first priority security interest in the Mortgage Loans in favor of
the Trustee;
(ix) The filing of any actions, proceedings, or final rulings
against Mortgage Lenders Network USA, Inc. or any successor Servicer which (i)
are not dismissed within 60 days after the initiation thereof, (ii) seek damages
from Mortgage Lenders Network USA, Inc. or any successor Servicer and (iii) when
aggregated are in excess of $500,000; provided, however that the filing of any
actions or proceedings or final rulings against Mortgage Lenders Network USA,
Inc. or any successor Servicer will not constitute an Event of Default hereunder
in the event that the counsel to Mortgage Lenders Network USA, Inc. or any
successor Servicer determines and the counsel to the Note Insurer concurs that
the expected outcome of such actions, proceedings or rulings will not have an
adverse effect upon the Mortgage Lenders Network USA, Inc. or any successor
Servicer;
(x) The occurrence of an event of default under the Insurance
Agreement; and
(xi) The Servicer fails to maintain a minimum Net Worth of
$20,000,000.
If a Servicer Default shall occur, then, and in each and every such
case, so long as such Servicer Default shall not have been remedied, (x) the
Certificate Insurer or (y) if a Certificate Insurer Default has occurred and is
continuing, the Trustee, at the direction of the Majority Certificateholders,
may by notice in writing to the Servicer, the Trustee, the Depositor, the
Seller, each related Certificateholder and the Certificate Insurer, terminate
all of the rights and obligations of the Servicer in its capacity as Servicer
under this Agreement, to the extent permitted by law, and in and to the related
Mortgage Loans and the proceeds thereof.
On and after the receipt by the Servicer of any such written notice,
or on and after the date on which the Servicer's term expires and is not renewed
pursuant to Section 7.07 hereof, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates (other than as a Holder
of any Certificate) or the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee or other successor Servicer appointed pursuant to Section
7.02 hereof and, without limitation, the Trustee or such other successor
Servicer is hereby authorized and empowered, as attorney-in-fact or otherwise,
to execute and deliver, on behalf of and at the expense of the Servicer, 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 related Mortgage Loans and related documents, or otherwise.
The Servicer agrees promptly (and in any event no later than ten
Business Days subsequent to such notice) to provide the successor Servicer with
all documents and records requested by it to enable it to assume the functions
of the Servicer under this Agreement and to cooperate with the successor
Servicer in effecting the termination of the Servicer's responsibilities and
rights under this Agreement, including, without limitation, the transfer within
one Business Day, to the successor Servicer or its designee for administration,
of all cash amounts which shall at the time be or should have been credited by
the Servicer to any Account, or which shall thereafter be received with respect
to the related Mortgage Loans or any related REO Property (provided, however,
that the Servicer shall to be entitled to receive at the time of relinquishing
its servicing obligations, a cash payment equal to all amounts accrued or owing
to it under this Agreement on or prior to the date of such termination, whether
in respect of Delinquency Advances or otherwise and shall continue to be
entitled to the benefit of Section 6.03 hereof, notwithstanding such
termination).
For purposes of this Section 7.01, the Trustee shall not be deemed to
have knowledge of a Servicer Default unless a Responsible Officer of the Trustee
has actual knowledge thereof or unless written notice of any event which is in
fact such a Servicer Default is received at the notice address of the Trustee
provided herein and such notice references the Certificates, the Seller, the
Depositor, the Trust or this Agreement.
For purposes of this Section 7.01, any consent or determination by the
Certificate Insurer shall be replaced by consent or determination of the
Majority Certificateholders if a Certificate Insurer Default has occurred and is
continuing.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Servicer on behalf of Trustee, may be enforced
by it without the possession of any of the Certificates, or the production
thereof at the trial or other proceeding relating thereto, and any such suit,
action or proceeding instituted by the Servicer on behalf of Trustee shall be
brought in its name for the benefit of all the Holders of such Certificates,
subject to the provisions of this Agreement.
Section 7.02. Trustee to Act; Appointment of Successor.
On and after the day the Servicer receives a notice of termination
pursuant to Section 7.01 hereof or on and after the day the Servicer becomes
ineligible to act as Servicer due to an inability to meet the eligibility
requirements of Section 6.07 hereof or on and after the date on which the
Servicer's term expires and is not renewed pursuant to Section 7.07 hereof, and
unless a successor Servicer other than the Trustee shall have been appointed
pursuant to Section 7.02 hereof, the Backup Servicer if one has been appointed
or the Trustee, if no Backup Servicer has been appointed, shall be the successor
in all respects to the Servicer in its capacity as Servicer under this Agreement
(until replaced by the Certificate Insurer) and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto and arising thereafter placed on the Servicer
(except for any representations or warranties of the Servicer and any obligation
to repurchase a Mortgage Loan for any reason hereunder) by the terms and
provisions hereof, including, without limitation, the Servicer's obligations to
make Delinquency Advances pursuant to Section 4.06 hereof (but only to the
extent that it determines that such Delinquency Advance would not be a
Nonrecoverable Delinquency Advance) and payments of Prepayment Interest
Shortfalls pursuant to Section 3.23 hereof (including, if the Servicer was
terminated in connection with a Servicer Default described in Section
7.01(a)(vii) hereof, the Delinquency Advance(s) and/or Prepayment Interest
Shortfalls not made by the Servicer which resulted in such termination);
provided, however, that if the Trustee is prohibited by law or regulation (as
evidenced by an Independent Opinion of Counsel) from obligating itself to make
advances regarding delinquent Mortgage Loans, then the Trustee shall not be
obligated to make Delinquency Advances or payments in respect of Prepayment
Interest Shortfalls; and provided, further, that any failure to perform such
duties or responsibilities caused by the Servicer's failure to provide the
documents and records required by Section 7.01 hereof shall not be considered a
default by the Trustee as successor to the Servicer hereunder, provided,
further, that within a reasonable period of time not to exceed 90 days, without
limitation, the Trustee or successor Servicer is hereby authorized and empowered
to execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
Mortgage Notes and related documents, or otherwise provided, further, that,
without affecting the immediate termination of the rights of the Servicer
hereunder, it is understood and acknowledged by the parties hereto that there
will be a period of transition, not to exceed 90 days (the "Transition Period")
before the servicing transfer is fully effected. The Servicer agrees to
cooperate with the Trustee in effecting the termination of its responsibilities
and rights as Servicer hereunder, including, without limitation, the transfer to
the Trustee or successor Servicer for the administration by it of all cash
amounts that shall at the time be held by the Servicer that have been deposited
by the Servicer in the Collection Account or transferred to the Trustee for
deposit into the Certificate Account or thereafter received by the Servicer with
respect to the Mortgage Loans. During the Transition Period, neither the
Successor Servicer nor the Trustee shall be responsible for the lack of
information and documents that it cannot reasonably obtain on a practicable
basis under the circumstances.
All reasonable costs and expenses (including attorneys' fees)incurred
in connection with transferring the Servicer Mortgage Files to a successor
Servicer, amending this Agreement to reflect the appointment of a successor as
Servicer pursuant to this Section 7.02 or otherwise in connection with the
assumption by a successor Servicer of the duties of the predecessor Servicer
hereunder (such expenses, "Transition Expenses") shall be paid in full by the
predecessor Servicer upon presentation of reasonable documentation of such costs
and expenses and to the extent the predecessor Servicer does not for any reason
fully pay such Transition Expenses, any unreimbursed Transition Expenses shall
be paid in accordance with Section 4.04.
Notwithstanding the above, if the Trustee shall be unable to so act as
successor Servicer or if the Trustee is prohibited by law from making advances
regarding delinquent Mortgage Loans or making payments in respect of Prepayment
Interest Shortfalls, and in such event that the procedures described in Section
3.26 hereof have not commenced within a reasonable period of time, then the
Trustee shall petition a court of competent jurisdiction to appoint, as the
successor to the Servicer under this Agreement in the assumption of all or any
part of the responsibilities, duties or liabilities of the Servicer under this
Agreement, any established mortgage loan servicing institution qualified to
service mortgage loans such as the Mortgage Loans which meets the eligibility
requirements of Section 6.07 hereof.
In connection with such appointment made by such court, the Trustee
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Servicer as such hereunder. The Seller, the Certificate Insurer, the Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effect any such succession. Upon a successor Servicer's
acceptance of its appointment by such court, the Trustee shall notify in writing
the Seller, each Certificateholder, the Certificate Insurer, the Depositor and
each Rating Agency of such appointment.
No appointment of a successor to the Servicer under this Agreement
shall be effective until the assumption by the successor to the Servicer of all
the responsibilities, duties and liabilities hereunder except as otherwise
provided herein.
Any successor to the Servicer, other than a successor appointed by a
court of competent jurisdiction upon the petition of the Trustee, shall be
entitled to receive, as compensation therefor, the Servicing Fee, calculated at
a servicing fee rate to be agreed upon at the time between such successor and
the Seller (it being acknowledged that the Trustee as Successor Servicer shall
be entitled to the Servicing Fee Rate provided for herein), but not in excess of
the Servicing Fee Rate, and all funds relating to the Mortgage Loans which the
Servicer would have been entitled to if the Servicer had continued to act
hereunder.
All reasonable costs and expenses (including attorneys' fees) incurred
in connection with transferring the servicing of the Mortgage Loans to a
successor Servicer, amending this Agreement to reflect the appointment of a
successor as Servicer pursuant to this Section 7.02 or otherwise in connection
with the assumption by a successor Servicer of the duties of the predecessor
Servicer hereunder (such expenses, "Transition Expenses") shall be paid in full
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses and to the extent the predecessor Servicer does not for
any reason fully paid such Transition Expenses, any unreimbursed Transition
Expenses shall be paid in accordance with Section 4.04 of this Agreement.
Section 7.03. Notification to Mortgagors and Certificateholders.
(a) Upon any such termination pursuant to Section 7.02 hereof or the
appointment of a successor to the Servicer, the Trustee shall, at the expense of
the Servicer, give prompt written notice thereof to the Certificate Insurer and
the related Certificateholders at their respective addresses appearing in the
Certificate Register and to the related Mortgagors at their respective addresses
appearing in the Mortgage Loan Schedule.
(b) Within three Business Days after the occurrence of any event which
constitutes or which, with notice or lapse of time or both, would constitute a
Servicer Default, the Trustee shall transmit by mail, at the expense of the
Servicer, to all Holders of Certificates and the Certificate Insurer notice of
any Servicer Default actually known to a Responsible Officer of the Trustee.
Section 7.04. Additional Remedies of Trustee upon Servicer Defaults.
Upon any Servicer Default, the Trustee shall have the right to the
extent consistent with the rights reserved to the Certificate Insurer hereunder,
in its own name and as Trustee, to take all actions now or hereafter existing at
law, in equity or by statute to enforce its rights and remedies and to protect
the interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). No remedy provided for by this Agreement shall be exclusive of any
other remedy, and each and every remedy shall be cumulative and in addition to
any other remedy and no delay or omission to exercise any right or remedy shall
impair any such right or remedy or shall be deemed to be a waiver of any
Servicer Default.
Section 7.05. Waiver of Servicer Defaults.
The Certificate Insurer, for so long as a Certificate Insurer Default
has not occurred and is not continuing, and otherwise Majority
Certificateholders may waive any Servicer Default and its consequences, except
that a default in the making of any required deposit into the Collection Account
or the Certificate Account that would result in a failure by the Trustee to make
any required distribution on the Certificates may be waived only by all of the
Certificateholders. Upon any waiver of a past Servicer Default, such Servicer
Default shall cease to exist, and any Servicer 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 Servicer Default or impair any
right consequent thereto except to the extent expressly so waived. Notice of any
such waiver shall be given by the Trustee to each Rating Agency and to all
Certificateholders.
Section 7.06. Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon termination of
the Servicer hereunder, any liabilities of the Servicer which accrued prior to
such termination shall survive such termination.
Section 7.07. Appointment and Term of Servicer
The Servicer hereby covenants and agrees to act as the Servicer under
this Agreement for an initial term, commencing on the Closing Date and ending on
June 30, 2000, which term may be extended by the Certificate Insurer for
successive terms of three calendar months thereafter, until the termination of
the Trust Fund pursuant to Article X. Each such notice of extension (a "Servicer
Renewal Notice"), if any, shall be delivered by the Certificate Insurer to the
Trustee, the Depositor and the Servicer. The Servicer hereby agrees that, upon
its receipt of any such Servicer Renewal Notice, the Servicer shall become bound
for the duration of the term covered by such Servicer Renewal Notice to continue
as the Servicer subject to and in accordance with the other provisions of this
Agreement. The Servicer agrees that if as of the fifteenth(15th) day prior to
the last day of any term of the Servicer the Servicer shall not have received
any Servicer Renewal Notice from the Certificate Insurer, the Servicer shall
within five (5) days thereafter, give written notice of such non-receipt to the
Certificate Insurer, the Trustee and the Depositor. The failure of the
Certificate Insurer to deliver a Servicer Renewal Notice by the end of a
calendar term shall result in the termination of the Servicer.
Section 7.08. Appointment of Backup Servicer
If the Certificate Insurer directs the Servicer to appoint a Backup
Servicer at anytime on or after July 15, 2000, the Servicer shall enter into a
subservicing agreement in form and substance satisfactory to the Certificate
Insurer, with a Backup Servicer selected by the Certificate Insurer. The
Servicer shall use its best efforts to provide all information necessary for the
Backup Servicer to implement the Backup Servicer Agreement. Upon execution of
such subservicing agreement, the Certificate Insurer shall notify the Trustee in
writing that a Backup Servicer has been appointed and shall submit wiring
instructions to the Trustee for remittance of the Backup Servicing Fee.
ARTICLE VIII.
CONCERNING THE TRUSTEE
Section 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Default and after
the curing of all Servicer Defaults which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. During a Servicer Default, the Trustee shall exercise such of the
rights and powers vested in it by this Agreement, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs. Any
permissive right of the Trustee enumerated in this Agreement shall not be
construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the it which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are in
the form specified in this Agreement.
The Trustee may, in accordance with its duties hereunder, do all
things necessary and proper as may be required in connection with any secondary
mortgage licensing laws and similar requirements, including, but not limited, to
consenting to jurisdiction, and the appointment of agents for service of
process, in jurisdictions in which the Mortgaged Properties are located.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of a Servicer Default, and after the
curing of all such Servicer Defaults which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions contained therein (including, but not limited to, Servicer
Information), upon any certificates or opinions furnished to the Trustee that
are in the forms specified in this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Majority Certificateholders issued to the Trustee pursuant
to Section 8.13 hereof.
The Trustee shall, upon receipt of the request substantially in the
form of Exhibit O attached hereto, prepare, issue and forward to the Servicer
checks for refunds and expenses indicated on such request.
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01 hereof:
(i) The Trustee may request and rely upon and shall be protected
in acting or refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document (including, but not limited to, Servicer Information) reasonably
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) The Trustee shall not be under any obligation to exercise
any of the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder to institute, conduct or defend any
litigation hereunder or in relation hereto at the request, order or direction of
any of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby (provided that an unsecured letter of indemnity in a
form reasonably satisfactory to the Trustee from a Holder which is an insurance
company having long-term unsecured debt that is rated at least investment grade
(or has a comparable claim-paying ability rating) and having a minimum net worth
of $100,000,000 shall satisfy such requirement); nothing contained herein shall,
however, relieve the Trustee of the obligation, upon the occurrence of a
Servicer Default of which the Trustee has actual knowledge (which has not been
cured or waived), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(v) Prior to the occurrence of a Servicer Default hereunder and
after the curing of all Servicer Defaults which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or document, unless
requested in writing to do so by the Certificate Insurer or by the Majority
Certificateholders; provided, however, that if the payment of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee from a Holder which
is an insurance company having long-term unsecured debt which is rated at least
investment grade (or having a comparable claim-paying ability rating) and having
a minimum net worth of $100,000,000 shall satisfy such requirement) against such
expense or liability as a condition to taking any such action. The reasonable
expense of every such examination shall be paid by the Servicer or, if paid by
the Trustee, shall be repaid by the Servicer upon demand;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys; and
(vii) The Trustee shall not be personally liable for any loss
resulting from the investment of funds at the direction of the Servicer or the
Seller held in any Account; provided, however, that the Trustee shall be
personally liable on any investment on which the Trustee or an affiliate
thereof, as applicable, is the obligor and has defaulted.
(b) Following the Closing Date, and except as otherwise provided in
this Agreement, the Trustee shall not knowingly accept any contribution of
assets to the Trust unless it shall have been provided with an Opinion of
Counsel at the expense of the party delivering such assets acceptable to it to
the effect that the inclusion of such assets in either REMIC will not cause such
REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding or subject the Trust to any tax under the REMIC Provisions or other
applicable provisions of federal, state and local law or ordinances.
(c) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
signature on the Certificates) shall be taken as the statements of the Seller,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations or warranties as to the validity or sufficiency of this
Agreement or of the Certificates (other than the signature of the Trustee and
authentication of the Trustee on the Certificates) or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Seller, the Depositor, the Servicer of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Seller, the Depositor or the Servicer in
respect of the Mortgage Loans or for the use or application of any funds
deposited into or withdrawn from the Collection Account by the Servicer.
Section 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity may
become the owner or pledgee of Certificates with the same rights it would have
if it were not Trustee.
Section 8.05. Expenses of Trustee.
The Trustee shall withdraw from the Certificate Account on each
Distribution Date the Trustee Fee and Transition Expenses as described in
Section 4.04 hereof. In addition, the Seller covenants and agrees to pay or
reimburse the Trustee, upon request, for all reasonable expenses, disbursements
and advances incurred or made by the Trustee, and any director, officer,
employee or agent acting for and on behalf of the Trustee, in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ, whether or not such expenses are incurred in connection
with any Opinion of Counsel obtained or permitted to be obtained by the Trustee)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith. The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Seller and held harmless
against any loss, liability or expense incurred in connection with or relating
to this Agreement or the Certificates, or the performance of any of the
Trustee's duties hereunder, other than any loss, liability or expense incurred
by reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder; provided, however, that with respect to any such loss,
liability or expense, the Trustee shall have given to the Seller, the Depositor,
the Certificate Insurer and the Certificateholders written notice thereof
promptly after the Trustee shall have knowledge thereof. Such indemnity shall
survive the termination or discharge of this Agreement and the resignation or
removal of the Trustee.
Section 8.06. Trustee Eligibility Requirements.
The Trustee hereunder shall at all times be a corporation or a
national or state-chartered bank or a national banking association acceptable to
the Certificate Insurer and that is not an affiliate of the Seller or the
Servicer, organized and doing business under the laws of the United States of
America or any state thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $100,000,000 or a member of a bank holding company whose capital and
surplus is at least $100,000,000 and subject to supervision or examination by
federal or state authority. If such corporation or association publishes reports
of conditions at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 8.06 the combined capital and surplus of such corporation, bank or
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published. In case at any time any
Trustee shall cease to be eligible in accordance with the provisions of this
Section 8.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07 hereof. The corporation, bank or association
serving as Trustee may have normal banking and trust relationships with the
Seller and the Servicer and the respective affiliates.
Section 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Seller, the Depositor,
the Certificate Insurer and to all Certificateholders. Upon receiving such
notice of any such resignation or of any removal as provided in this Section,
the Certificate Insurer may select, or if the Certificate Insurer elects not to,
the Servicer shall select a successor Trustee and shall present such party to
the Certificate Insurer and upon its approval such party shall promptly be
appointed successor trustee by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee and to the successor
trustee. A copy of such instrument shall be delivered to the Certificateholders,
the Certificate Insurer and the Seller by the Servicer. If no successor trustee
shall have been so appointed and accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 hereof and shall fail to resign after written
request therefor, or if at any time the Trustee shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Servicer shall solicit and
present to the Certificate Insurer a written instrument removing the Trustee and
appointing a successor trustee and, upon its written approval, such instrument
shall be delivered to the Trustee so removed and to the successor trustee. A
copy of such instrument shall be delivered to the Certificateholders, the
Certificate Insurer and the Seller by the Servicer.
The Majority Certificateholders, with the written consent of the
Certificate Insurer (which shall only be required if no Certificate Insurer
Default has occurred and is continuing), or the Certificate Insurer (if no
Certificate Insurer Default has occurred and is continuing) may at any time
remove the Trustee and appoint a successor by written instrument or instruments,
in triplicate, signed by such Holders or their attorneys-in-fact duly
authorized, one complete set of which instruments shall be delivered to the
Seller, one complete set to the Trustee so removed and one complete set to the
successor so appointed. A copy of such instrument shall be delivered to the
Certificateholders, the Servicer, the Certificate Insurer and the Seller by the
Trustee.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08 hereof.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists and is continuing, the Trustee may not be
removed by the Certificateholders without the prior written consent of the
Certificate Insurer.
Section 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Certificateholders, the
Certificate Insurer, the Servicer or the Trustee, as applicable, and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee, all Mortgage Files and related documents and statements held by it
hereunder (other than any Mortgage Files at the time held by a custodian, which
shall become the agent of any successor trustee hereunder), and the Seller, the
Servicer and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section 8.08 unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06 hereof.
Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the predecessor trustee shall mail notice of the succession
of such trustee hereunder to each Holder of Certificates at their respective
addresses as shown in the Certificate Register and to each Rating Agency. If the
predecessor trustee fails to mail such notice within ten (10) days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be mailed at the expense of the predecessor trustee.
Notwithstanding anything to the contrary contained herein, so long as
no Certificate Insurer Default exists, the appointment of any successor trustee
pursuant to any provision of this Agreement will be subject to the prior written
consent of the Certificate Insurer.
The Trustee shall not be liable for the acts or omissions to act of
any successor Trustee appointed hereunder.
Section 8.09. Merger or Consolidation of Trustee.
Any corporation, bank or association into which the Trustee may be
merged or converted or with which it may be consolidated or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation, bank or association succeeding to
the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation, bank or association shall be eligible under the
provisions of Section 8.06 hereof, without the execution or filing of any paper
or any further act on the part of any of the parties hereto.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Trustee with the consent of the Certificate Insurer shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity, such title
to the Trust Fund, or any part thereof, and, subject to the other provisions of
this Section 8.10, such powers, duties, obligations, rights and trusts as the
Seller and the Trustee may consider necessary or desirable. If the Trustee shall
not have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Certificate Insurer shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 8.06 hereof
and no notice to Holders of Certificates of the appointment of co-trustee(s) or
separate trustee(s) shall be required under Section 8.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that, under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to the Servicer hereunder), the Trustee shall
be incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee at the direction of the
Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11. Trustee Records.
The Trustee shall afford the Seller, the Depositor, the Servicer, the
Certificate Insurer, the Trustee and each Certificateholder, upon reasonable
notice during normal business hours, access to all records maintained by the
Trustee in respect of its duties hereunder and access to officers of the Trustee
responsible for performing such duties, such inspection to take place at ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇. Upon request, the Trustee shall
each furnish the Servicer, the Certificate Insurer, the Trustee and any
requesting Certificateholder with its most recent financial statements. The
Trustee shall cooperate fully with the Seller, the Servicer and such
Certificateholder and shall make available to the Seller, the Servicer, the
Certificate Insurer or Trustee, as applicable, and such Certificateholder for
review and copying such books, documents or records as may be requested with
respect to the Trustee's duties hereunder. The Seller, the Servicer, the
Certificate Insurer and the Certificateholders shall not have any responsibility
or liability for any action or failure to act by the Trustee and are not
obligated to supervise the performance of the Trustee under this Agreement or
otherwise.
Section 8.12. Appointment of Office or Agency.
The Trustee designates its offices at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to Norwest Bank Minnesota, National
Association, Corporate Trust Services MAC ▇▇▇▇▇-▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as the office at which notices and demands
to or upon the Trustee in respect of the Certificates may be served and will
notify the Certificateholders of any change in the location of such office or
agency.
Section 8.13. Exercise of Trustee Powers by Certificateholders.
Subject to the provisions of this Article VIII, the Certificate
Insurer, or the Majority Certificateholders with the consent of the Certificate
Insurer (provided that such consent of the Certificate Insurer shall not be
required if a Certificate Insurer Default has occurred and is continuing), may
direct the time, method and place of conducting any proceeding relating to the
Trust or the Certificates or for any remedy available to the Trustee in its
capacity as Trustee (and not in its individual capacity) with respect to the
Certificates or exercising any trust or power conferred on the Trustee with
respect to the Certificates or the Trust (except that if a Certificate Insurer
Default has occurred and is continuing then the direction of the Majority
Certificateholders shall control and the Certificate Insurer shall have no right
to act); provided, however, that:
(i) such direction shall not be in conflict with any rule of law
or with this Agreement; and
(ii) the Trustee shall have been provided with indemnity
satisfactory to it (provided that an unsecured letter of indemnity in a form
reasonably satisfactory to the Trustee from a Person which is an insurance
company having long-term unsecured debt that is rated at least investment grade
(or having a comparable claim-paying ability rating) and having a minimum net
worth of $100,000,000 shall satisfy such requirement).
ARTICLE IX.
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 9.01. Certain Rights of the Certificate Insurer.
By accepting its Certificate, each Holder of a Class A
Certificate agrees that unless a Certificate Insurer Default exists, the
Certificate Insurer shall have the right to exercise all rights of the Holders
of the Offered Certificates (except as provided in Section 11.01), including but
not limited to the following rights, without any consent of the Holders of
Offered Certificates:
(a) the right to direct foreclosures upon Mortgage Loans upon
failure of the Servicer to do so for any reason, except that in the case of
Section 3.15(b) hereof;
(b) the right to require the Seller to repurchase or substitute
for, or to require the Servicer to purchase, Mortgage Loans pursuant to Section
2.06;
(c) the right to give notices of breach or to terminate the
rights and obligations of the Servicer pursuant to Section 7.01;
(d) the right to direct the actions of the Trustee during the
continuance of a Servicer Default pursuant to Sections 7.01 and 7.02; and
(e) the right to direct the Trustee to investigate certain
matters pursuant to Section 8.02(a)(v).
(f) the right to institute proceedings against the Servicer in
the event of default by the Servicer and refusal of the Trustee to institute
such proceedings.
In addition, each Holder of an Offered Certificate agrees that,
unless a Certificate Insurer Default exists, the right to remove the Trustee
pursuant to Section 8.07 hereof may be exercised by the Majority
Certificateholders only with the prior written consent of the Certificate
Insurer.
Section 9.02. Trustee To Act Solely with Consent of the Certificate
Insurer.
(a) Unless a Certificate Insurer Default exists, the Trustee shall
not:
(i) terminate the rights and obligations of the Servicer as
Servicer pursuant to Section 7.01 or consent to the resignation of the Servicer
pursuant to Section 6.04;
(ii) terminate any Sub-Servicing Agreements pursuant to Section
3.03;
(iii) assume any Sub-Servicing Agreements pursuant to Section
3.06; or
(iv) undertake any litigation pursuant to either Section 7.05 or
8.02(a)(iii);
without the prior written consent of the Certificate Insurer.
(b) Notwithstanding anything herein to the contrary, after the
occurrence of a Servicer Default and until such time as all Servicer Defaults
have been cured, no provision of this Agreement shall require the Trustee to
take any action or omit to take any action at the request of the Certificate
Insurer or any Certificateholder to the extent the Trustee believes in good
faith such action or omission would cause the Trustee to violate any law or
regulation applicable to it or to breach their respective obligations owed by it
to the Certificateholders and to the Certificate Insurer, pursuant to this
Agreement or otherwise.
Section 9.03. Trust Fund and Accounts Held for Benefit of the
Certificate Insurer and the Certificateholders.
The Trustee shall hold the Trust Fund and the Mortgage Files, and
shall maintain the Accounts, for the benefit of the Certificateholders and the
Certificate Insurer and all references in this Agreement (including, without
limitation, in Sections 2.02, 2.04, 3.10 and 4.04) and in the Certificates to
the benefit of Holders of the Certificates shall be deemed to include the
Certificate Insurer. The Trustee shall cooperate in all reasonable respects with
any reasonable request by the Certificate Insurer or the Class A
Certificateholders (when other than the Seller, the Servicer or any affiliate
thereof), for action to preserve or enforce the respective rights and interests
of the Certificate Insurer or the Class A Certificateholders (when other than
the Seller, the Servicer or any affiliate thereof) under this Agreement and the
Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Mortgage Loans and any REO Properties for the benefit of the
Certificateholders and for the benefit of the Certificate Insurer, and all
references in this Agreement (including, without limitation, in Sections 3.01(b)
and 3.10) to the benefit of or actions on behalf of the Certificateholders shall
be deemed to include the Certificate Insurer. Unless a Certificate Insurer
Default exists, the Servicer shall not terminate any Sub-Servicing Agreements
without cause or undertake any litigation pursuant to Section 3.12(c), without
the prior written consent of the Certificate Insurer. Unless a Certificate
Insurer Default exists, neither the Servicer nor the Seller shall undertake any
litigation pursuant to Section 6.03 (other than litigation to enforce their
respective rights hereunder) without the prior written consent of the
Certificate Insurer.
Section 9.04. Effect of Payments by the Certificate Insurer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Offered Certificates which is made
with moneys received pursuant to the terms of the Policy shall not be considered
payment of the Offered Certificates from the Trust Fund and shall not result in
the payment of or the provision for the payment of the principal of or interest
on the Offered Certificates within the meaning of Section 4.04. The Seller, the
Depositor, the Servicer and the Trustee acknowledge, and each Holder by its
acceptance of a Class A Certificate agrees, that without the need for any
further action on the part of the Certificate Insurer, the Seller, the Servicer
or the Trustee, to the extent the Certificate Insurer makes payments, directly
or indirectly, on account of principal of or interest on the Offered
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to the rights of such Holders to receive such principal
and/or interest from the Trust Fund.
The Trustee, the Depositor and the Servicer shall reasonably cooperate
in all respects with any reasonable request by the Certificate Insurer or the
Class A Certificateholders (when other than the Seller, the Servicer or any
affiliate thereof) for action to preserve or enforce the respective rights or
interests of the Certificate Insurer or the Class A Certificateholders under
this Agreement without limiting the rights or affecting the interests of the
Holders as otherwise set forth herein.
Section 9.05. Notices to the Certificate Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to the Certificateholders
if not otherwise required to be sent to the Certificate Insurer, shall also be
sent to the Certificate Insurer.
Section 9.06. Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 9.07. Trustee to Hold the Policy.
The Trustee will hold the Policy in trust as agent for the holders of
the Offered Certificates for the purpose of making claims thereon and
distributing the proceeds thereof. Neither the Policy nor amounts paid on the
Policy will constitute part of the Trust Fund or assets of either REMIC. Each
holder of Offered Certificates, by accepting its Offered Certificates, appoints
the Trustee as attorney-in-fact for the purpose of making claims on the Policy.
ARTICLE X.
TERMINATION
Section 10.01. Termination.
(a) Subject to Section 10.02 hereof, this Agreement shall terminate
upon notice to the Trustee of either: (i) the later of the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or advances of same by the Servicer), or the disposition of all
funds with respect to the last Mortgage Loan and the remittance of all funds due
hereunder and the payment of all amounts due and payable to the Certificate
Insurer and the Trustee or (ii) mutual consent of the Servicer, the Seller, the
Certificate Insurer and each and every Certificateholder in writing; provided,
however, that in no event shall the Trust established by this Agreement
terminate later than twenty-one years after the death of the last surviving
lineal descendant of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇., the late President of Standard
Oil Corporation, alive as of the date hereof.
(b) Subject to Section 10.02 hereof, the Majority Class X
Certificateholders may, at their option (or the Servicer, if such holders do not
exercise such option), terminate this Agreement on any Distribution Date
following the Call Option Date by purchasing, on the Servicer Remittance Date
preceding such Distribution Date, all of the outstanding Mortgage Loans and REO
Properties at a price equal to the sum of (x) the greater of (i) 100% of the
Loan Balance of each such outstanding Mortgage Loan and each such REO Property
as of the last day of the preceding Due Period and (ii) the fair market value
(disregarding accrued interest) of such Mortgage Loans and REO Properties,
determined as the average of three written bids (copies of which shall be
delivered to the Trustee, the Certificate Insurer and the Servicer) made by
nationally recognized dealers, (y) 30 days' interest thereon at a rate equal to
the Mortgage Rate (or such lesser rate as may be in effect due to the
application of the Civil Relief Act) and (z) the aggregate amount of (i) all
unreimbursed Delinquency Advances, (ii) all unreimbursed Servicing Advances
relating only to such Mortgage Loans and REO Properties then held as part of the
Trust Fund and (iii) any accrued and unpaid Servicing Fees (such sum, the
"Termination Price"). Any such purchase which results in unpaid Reimbursement
Amounts shall require the consent of the Certificate Insurer.
(c) In connection with any such purchase pursuant to paragraph (b)
above, the Servicer shall deposit into the Certificate Account all amounts then
on deposit in the Collection Account (less amounts permitted to be withdrawn by
the Servicer pursuant to Section 3.11 hereof), which deposit shall be deemed to
have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by the deposit of the
Termination Price into the Certificate Account on the applicable Servicer
Remittance Date, which amount shall be applied to the distributions to be made
on the Distribution Date immediately following such Servicer Remittance Date.
Upon such deposit of the Termination Price, the Trustee shall pay the Servicer
the amount described in clause (z) of the definition of "Termination Price" from
the amounts on deposit in the Certificate Amount.
(d) In connection with any such purchase pursuant to paragraph (b)
above, the party or parties effecting such purchase shall (i) at its or their
own expense, provide to the Trustee an Opinion of Counsel experienced in federal
income tax matters, in form and substance satisfactory to the Trustee, to the
effect that such purchase constitutes a "Qualified Liquidation" of the related
REMIC established hereunder, as such term is defined in the REMIC Provisions,
and (ii) give the Trustee, the Certificate Insurer and the Servicer (if the
purchaser is not the Servicer) at least 60 days' prior written notice of its or
their intent to exercise such option. The party or parties effecting the
purchase and the Servicer shall at the time discuss future servicing
arrangements for the Mortgage Loans.
(e) Notice of any termination, specifying the Distribution Date upon
which the Trust will terminate shall, after the Trustee's receipt of any such
notice, be given promptly by the Trustee by letter to the Certificateholders by
first class mail or overnight delivery during the month of such final
distribution two Business Days after the Determination Date in such month,
specifying (i) the Distribution Date upon which final payment of the
Certificates will be made and (ii) the amount of any such final payment.
(f) Each Holder is required, and hereby agrees, to return to the
Trustee any Certificate with respect to which the Trustee has made the final
distribution due thereon. Any such Certificate as to which the Trustee has made
the final distribution thereon shall be deemed canceled and shall no longer be
outstanding for any purpose of this Agreement, whether or not such Certificate
is ever returned to the Trustee.
(g) In the event that any amount due to any Regular Certificateholder
remains unclaimed, the Trustee shall, at its expense, use its best efforts to
contact each such Regular Certificateholder by mail or telephone and if such
efforts fail shall cause to be published once, in the eastern edition of The
Wall Street Journal, notice that such money remains unclaimed. Such funds shall
remain uninvested and shall not accrue any interest. If, within two years after
such publication, such amount remains unclaimed, the party or parties effecting
the purchase pursuant to either clause (b) or (c) above shall be entitled to all
unclaimed funds and other assets which remain subject hereto and the Trustee,
upon transfer of such funds, shall be discharged of any responsibility for such
funds, and the Certificateholders shall look to such party for payment.
(h) Following any purchase by the party or parties effecting the
purchase pursuant to clause (b) above, the Trustee shall promptly release to
such party or parties the Mortgage Files for the remaining Mortgage Loans, and
the Trustee shall execute all assignments, endorsements and other instruments
necessary to effect such transfer as are furnished by such party or parties.
(i) The Trustee shall return the Policy to the Certificate Insurer no
later than five Business Days following the termination of this Agreement.
Section 10.02. Additional Termination Requirements.
(a) In the event that the purchase of the Mortgage Loans as provided
in Section 10.01 hereof occurs, the Trust shall be terminated in accordance with
the following additional requirements, unless the party or parties effecting
such purchase obtains at its or their own expense and delivers or deliver to the
Trustee, and the Certificate Insurer an Opinion of Counsel, addressed to the
Seller, the Servicer, the Trustee and the Certificate Insurer, to the effect
that the failure of the REMIC to comply with the requirements of this Section
10.02 will not (x) result in the imposition of taxes on "prohibited
transactions" of the REMIC as defined in Section 860F of the Code or (y) cause
the REMIC to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(i) Within 90 days prior to the time of the making of the final
payment on the Certificates, the Trustee, on behalf the REMIC, shall adopt a
plan of complete liquidation of the REMIC, meeting the requirements of a
qualified liquidation under Section 860F of the Code and any regulations
thereunder and shall specify the first day of such period in a statement
attached to such REMIC's final Tax Returns pursuant to Treasury Regulations ss.
1.860F1;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the time of making of the final payment on the
Certificates, the Servicer, with the cooperation of the Trustee, shall conduct a
sale of the assets of the Trust Fund to the purchasing party or parties for
cash; and
(iii) At the time of the making of the final payment on the
Certificate, the Trustee shall distribute or credit, or cause to be distributed
or credited, to the purchasing party or parties all cash on hand in any Account
not required to be paid to the Servicer, the Regular Certificateholders, or any
other Person, and the Trust shall terminate at that time.
(b) By their acceptance of Class R Certificates, the related Holders
thereof hereby agree to authorize the Trustee on behalf of the REMIC to adopt a
plan of complete liquidation of the REMIC, which authorization shall be binding
upon all successor Class R Certificateholders.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment.
This Agreement may be amended from time to time by the Seller, the
Depositor, the Servicer and the Trustee with the consent of the Certificate
Insurer and without the consent of the Certificateholders; (i) to cure any
ambiguity, (ii) to correct or supplement any provisions herein which may be
defective or inconsistent with any other provisions herein or (iii) to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement;
provided, however, that any such action listed in clause (i) through (iii) above
shall not, as evidenced by an Independent Opinion of Counsel delivered to the
Servicer, the Certificate Insurer and the Trustee, adversely affect in any
respect the interests of any Certificateholder.
In addition, this Agreement may be amended from time to time by the
Seller, the Depositor, the Servicer and the Trustee with the consent of the
Certificate Insurer with the consent of the Majority Certificateholders for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Holders of Certificates; provided, however, that no such amendment or waiver
shall (x) reduce in any manner the amount of, or delay the timing of, payments
required to be distributed on any Certificate without the consent of the Holder
of such Certificate, (y) adversely affect in any material respect the interests
of the Holders of any Class of Certificates in a manner other than as described
in clause (x) above, without the consent of the Holders of Certificates of such
Class evidencing at least a 66% Percentage Interest in such Class, or (z) reduce
the percentage of Voting Rights required by clause (y) above without the consent
of the Holders of all Certificates of such Class then outstanding.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Independent Opinion of Counsel to the effect that such
amendment will not result in the imposition of a tax on any REMIC created
hereunder pursuant to the REMIC Provisions or cause any REMIC to fail to qualify
as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is the Seller or the Servicer (but in no event at the expense of the
Trustee), otherwise at the expense of the Trust, a copy of such amendment and
the Opinion of Counsel referred to in the immediately preceding paragraph to the
Servicer, each Certificateholder, the Certificate Insurer and each Rating
Agency.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment;
instead it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
The Trustee may, but shall not be obligated to, enter into any
amendment pursuant to this 11.01 Section that affects its rights, duties and
immunities under this Agreement or otherwise.
Section 11.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the expense of the Trust, to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.
Section 11.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i) operate
to terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust, or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as expressly provided for herein, no Certificateholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as hereinbefore provided, and unless also the Holders
of Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity (provided that an unsecured letter of indemnity in a form
reasonably satisfactory to the Trustee from a Holder which is an insurance
company having long-term unsecured debt which is rated at least investment grade
(or having a comparable claim-paying ability rating) and having a minimum net
worth of $100,000,000 shall satisfy such requirement) as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee for 15 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding. It is understood and intended, and expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue of any provision of this Agreement to affect, disturb or prejudice the
rights of the Holders of any other of such Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this Section 11.03 each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 11.04. Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws. With respect to any
claim arising out of this Agreement each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of or
relating hereto brought in any such courts, irrevocably waives any claim that
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum and further irrevocably waives the right to object,
with respect to such claim, suit, action or proceeding brought in any such
court, that such court does not have jurisdiction over such party, provided that
service of process has been made by any lawful means.
Section 11.05. Notices.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given (except as otherwise provided in Section
11.12 hereof) by facsimile transmission or other electronic transmission or if
personally delivered at or mailed by first class mail, postage prepaid, or by
express delivery service, to (a) in the case of the Seller and the Servicer,
Mortgage Lenders Network USA, Middlesex Corporate Center, 11th Floor, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (telecopy number 860-344-5707), or such
other address or telecopy number as may hereafter be furnished to the Depositor,
the Certificate Insurer and the Trustee in writing by the Seller, (b) in the
case of the Depositor, Prudential Securities Secured Financing Corporation, ▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇, or
such other address or telecopy number as may be furnished to the Seller, the
Certificate Insurer, the Servicer and the Trustee in writing by the Depositor,
(d) in the case of the Trustee, Norwest Bank Minnesota, National Association,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to Norwest Bank
Minnesota, National Association, Corporate Trust Services MAC ▇▇▇▇▇-▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other address
or telecopy number as may be furnished to the Seller, the Certificate Issuer,
the Servicer and the Depositor in writing by the Trustee, and (e) in the case of
the Certificate Insurer, Financial Security Assurance, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Surveillance Department, Re: Mortgage
Lenders Network Asset Backed Pass-through Certificates, Series 2000-1, (212)
826-0100, telecopy number (▇▇▇) ▇▇▇-▇▇▇▇ (in each case in which notice or other
communication to the Certificate Insurer refers to a Servicer Default or a claim
on the Policy or with respect to which failure on the part of the Certificate
Insurer to respond shall be deemed to constitute consent or acceptance, then a
copy of such notice or other communication shall 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"), or such other address
or telecopy number as may hereafter be furnished to the Trustee, the Seller, the
Depositor and the Servicer in writing by the Certificate Insurer. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register. Notice of any Servicer Default shall be given by telecopy
and by certified mail. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have duly been given when mailed,
whether or not the Certificateholder receives such notice. A copy of any notice
required to be telecopied hereunder shall also be mailed to the appropriate
party in the manner set forth above.
Section 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall for any reason whatsoever be 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 or of the Certificates or the rights of the Holders thereof.
Section 11.07. Article and Section References.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
Section 11.08. Notice to the Rating Agencies.
(a) Each of the Trustee and the Servicer shall be obligated to use its
best reasonable efforts promptly to provide notice to the Rating Agencies with
respect to each of the following of which a Responsible Officer of the Trustee
or Servicer, as the case may be, has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Default that has not been
cured or waived;
(iii) the resignation or termination of the Servicer or the
Trustee;
(iv) the final payment to Holders of the Certificates of any
Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as successor Servicer pursuant to
Section 7.02 hereof, any event that would result in the inability of the Trustee
to make Delinquency Advances.
(b) In addition, (i) the Trustee shall make available to each Rating
Agency copies of the following:
(A) each annual report to Certificateholders described in Section
4.05 hereof; and
(B) each Statement to Certificateholders described in Section
4.05 hereof; and
(ii) the Servicer shall promptly furnish to each Rating Agency
copies of the following:
(A) each annual statement as to compliance described in Section
3.19 hereof;
(B) each annual independent public accountants' servicing report
described in Section 3.20 hereof;
(C) each Collection Account Statement described in Section 3.18
hereof; and
(D) each notice delivered pursuant to Section 7.01(a) hereof
which relates to the fact that the Servicer has not made a
Delinquency Advance.
Any such notice pursuant to this Section 11.08 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to Standard &
Poor's Ratings Services, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Mortgage Surveillance Group; and ▇▇▇▇▇'▇ Investors Service, Inc.,
Pass-Through Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Structured Finance Group.
Section 11.09. Further Assurances.
Notwithstanding any other provision of this Agreement, neither the
Regular Certificateholders, nor the Trustee shall have any obligation to consent
to any amendment or modification of this Agreement unless they have been
provided reasonable security or indemnity against their out-of-pocket expenses
(including reasonable attorneys' fees) to be incurred in connection therewith.
Section 11.10. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or
implied, shall give to any Person, other than the Certificateholders, the
Certificate Insurer and the parties hereto and their successors hereunder, any
benefit or any legal or equitable right, remedy or claim under this Agreement.
Section 11.11. Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and such action shall become effective when
such instrument or instruments are delivered to the Trustee, the Seller, the
Servicer, and the Certificate Insurer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "act" of the Certificateholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Agreement and conclusive in
favor of the Trustee and the Trust, if made in the manner provided in this
Section 11.11.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Certificate.
Section 11.12. Tax Matters Person.
So long as the Seller owns a 100% Percentage Interest in the Class R
Certificate, the Seller shall act as the Tax Matters Person for the REMIC for
all purposes of the Code. The Tax Matters Person shall perform, or cause to be
performed, such duties, and shall take, or cause to be taken, such actions as
are required to be performed or taken by a "tax matters person" under the Code.
The Seller, as Tax Matters Person, hereby appoints the Trustee to act as agent
of the Tax Matters Person. If the Seller hereafter transfers ownership of a
Percentage Interest in the Class R Certificates to a third party, the Seller may
appoint such third party to be the Tax Matters Person for the REMIC.
IN WITNESS WHEREOF, the Seller, the Depositor, the Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION,
as Depositor
By:_______________________________
Name:
Title:
MORTGAGE LENDERS NETWORK USA, INC.,
as Servicer
By:_______________________________
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By:_______________________________
Name:
Title:
MORTGAGE LENDERS NETWORK USA, INC.,
as Seller
By:_______________________________
Name:
Title: