EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Dated as of February 28, 1997
by and among
Prudential Securities Secured Financing Corporation
(Depositor)
and
Life Savings Bank, Federal Savings Bank
(Seller and Servicer)
and
Norwest Bank Minnesota, National Association
(Trustee and Back-up Servicer)
Life Financial Services Trust 1997-1A and 1997-1B
Mortgage Pass-Through Certificates,
Series 1997-1A
Class A-1 and Class R
and
Series 1997-1B
Class A-2
TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS
Section 1.1 Certain Defined Terms........................................1
Section 1.2 Provisions of General Application...........................26
ARTICLE II.
SALE AND CONVEYANCE OF THE TRUST FUND27
Section 2.1. Establishment of the Trusts................................27
Section 2.2 Purchase and Sale of Initial Mortgage Loans................27
Section 2.3. Purchase and Sale of Subsequent Mortgage Loans.............28
Section 2.4 Possession of mortgage files; access to mortgage
files......................................................30
Section 2.5 Delivery of Mortgage Loan Documents........................30
Section 2.6 Acceptance by Trustee of each Trust Fund; Certain
Substitutions; Certification by Trustee...................32
Section 2.7 Execution of Certificates..................................34
Section 2.8 Application of Principal and Interest......................34
Section 2.9 Grant of Security Interest.................................34
Section 2.10 Further Action Evidencing Assignments......................35
Section 2.11 Designations under REMIC Provisions; Designation
of Startup Date............................................36
ARTICLE III.
REPRESENTATIONS AND WARRANTIES36
Section 3.1 Representations and Warranties..............................36
Section 3.2 Representations, Warranties and Covenants of the
Depositor...................................................37
Section 3.3 Purchase and Substitution...................................38
ARTICLE IV
THE CERTIFICATES
Section 4.1 The Certificates............................................40
Section 4.2 Registration of Transfer and Exchange of
Certificates................................................40
Section 4.3 Mutilated, Destroyed, Lost or Stolen Certificates...........46
Section 4.4 Persons Deemed Owners.......................................46
ARTICLE V.
THE SERVICER
Section 5.1 The Servicer...............................................46
Section 5.2 Collection of Certain Mortgage Loan Payments;
Collection Account.........................................48
Section 5.3 Permitted Withdrawals from the Collection Account..........49
Section 5.4 Hazard Insurance Policies; Property Protection
Expenses...................................................50
Section 5.5 Assumption and Modification Agreements.....................51
Section 5.6 Realization Upon Defaulted Mortgage Loans..................52
Section 5.7 Trustee to Cooperate.......................................53
Section 5.8 Servicing Compensation; Payment of Certain
Expenses by Servicer.......................................54
Section 5.9 Annual Statement as to Compliance..........................54
Section 5.10 Annual Independent Public Accountants' Servicing
Report.....................................................54
Section 5.11 Access to Certain Documentation............................54
Section 5.12 Maintenance of Fidelity Bond...............................55
Section 5.13 Reports to the Trustee; Collection Account
Statements.................................................55
Section 5.14 Reports to be Provided by the Servicer.....................56
Section 5.15 Adjustment of Servicing Compensation in Respect of
Prepaid Mortgage Loans.....................................56
Section 5.16 Periodic Advances; Special Advance.........................56
Section 5.17 Indemnification; Third Party Claims........................57
Section 5.18 Maintenance of Corporate Existence and Licenses;
Merger or Consolidation of the Servicer...................57
Section 5.19 Assignment of Agreement by Servicer; Servicer Not
to Resign..................................................58
Section 5.20 Periodic Filings with the Securities and Exchange
Commission; Additional Information........................58
ARTICLE VI
DISTRIBUTIONS AND PAYMENTS
Section 6.1 Establishment of Accounts; Withdrawals from
Accounts; Deposits to the Certificate
Account...................................................58
Section 6.2 Permitted Withdrawals From the Certificate
Account...................................................60
Section 6.3 Collection of Money.......................................61
Section 6.4 The Reserve Account Trust and the Certificate
Insurance Policies........................................61
Section 6.5 Distributions.............................................64
Section 6.6 Investment of Accounts....................................66
Section 6.7 Reports by the Trustee....................................66
Section 6.8 Additional Reports by Trustee.............................69
Section 6.9 Compensating Interest.....................................69
Section 6.10 Effect of Payments by the Certificate Insurer;
Subrogation...............................................69
ARTICLE VII
DEFAULT
Section 7.1 Events of Default...........................................70
Section 7.2 Trustee to Act; Appointment of Successor....................72
Section 7.3 Waiver of Defaults..........................................73
Section 7.4 Trustee To Act Solely with Consent of the
Certificate Insurer.........................................74
Section 7.5 Mortgage Loans, Trust Fund and Accounts Held for
Benefit of the Certificate Insurer..........................74
ARTICLE VIII
TERMINATION
Section 8.1 Termination.................................................74
Section 8.2 Accounting Upon Termination of Servicer.....................76
ARTICLE IX
THE TRUSTEE
Section 9.1 Duties of Trustee.........................................76
Section 9.2 Certain Matters Affecting the Trustee.....................78
Section 9.3 Trustee Not Liable for Certificates or Mortgage
Loans.....................................................80
Section 9.4 Trustee May Own Certificates..............................80
Section 9.5 Trustee's Fees and Expenses; Indemnity....................80
Section 9.6 Eligibility Requirements for Trustee......................80
Section 9.7 Resignation and Removal of the Trustee....................81
Section 9.8 Successor Trustee.........................................82
Section 9.9 Merger or Consolidation of Trustee........................82
Section 9.10 Appointment of Co-Trustee or Separate Trustee.............82
Section 9.11 Tax Returns...............................................83
Section 9.12 Retirement of Certificates................................83
Section 9.13 Trustee May Enforce Claims Without Possession of
Certificates..............................................84
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1 Limitation on Liability of the Depositor and the
Servicer..................................................84
Section 10.2 Acts of Certificateholders................................84
Section 10.3 Amendment.................................................85
Section 10.4 Recordation of Agreement..................................86
Section 10.5 Duration of Agreement.....................................86
Section 10.6. Notices...................................................86
Section 10.7 Severability of Provisions................................87
Section 10.8 No Partnership............................................87
Section 10.9 Counterparts..............................................87
Section 10.10 Successors and Assigns....................................87
Section 10.11 Headings..................................................87
Section 10.12 The Certificate Insurer Default...........................87
Section 10.13 Third Party Beneficiary...................................87
Section 10.14 GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF
JURY TRIAL................................................87
Section 10.15 Intent of the Parties.....................................88
Section 10.16 Appointment of Tax Matters Person.........................88
ARTICLE XI
THE BACK-UP SERVICER
Section 11.1 Merger or Consolidation of, or Assumption of the
Obligations of, Back-Up Servicer...........................89
Section 11.2 Back-Up Servicer Resignation...............................89
Section 11.3 Oversight of Servicing.....................................89
Section 11.4 Back-Up Servicer Compensation..............................91
Section 11.5 Duties and Responsibilities................................91
EXHIBIT A-1 CERTIFICATE INSURANCE POLICY FOR TRUST 1A
EXHIBIT A-2 CERTIFICATE INSURANCE POLICY FOR TRUST 1B
EXHIBIT B-1 CLASS A-1 CERTIFICATE
EXHIBIT B-2 CLASS A-2 CERTIFICATE
EXHIBIT B-3 CLASS R CERTIFICATE
EXHIBIT C MORTGAGE FILE
EXHIBIT D-1 MORTGAGE LOAN SCHEDULE - TRUST 1A
EXHIBIT D-2 MORTGAGE LOAN SCHEDULE - TRUST 1B
EXHIBIT E TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT OF FILES
EXHIBIT F INITIAL CERTIFICATION OF TRUSTEE
EXHIBIT G FINAL CERTIFICATION OF TRUSTEE
EXHIBIT H REQUEST FOR RELEASE OF DOCUMENTS
EXHIBIT I TRANSFER AFFIDAVIT AND AGREEMENT
EXHIBIT J TRANSFEROR'S CERTIFICATE
EXHIBIT K ERISA CERTIFICATE
EXHIBIT L [RESERVED]
EXHIBIT M CERTIFICATE RE: PREPAID LOANS
EXHIBIT N REPRESENTATION LETTER CONCERNING "DISQUALIFIED
ORGANIZATIONS"
EXHIBIT O FORMAT FOR TAPE INPUT, SERVICER PERIOD REPORTING
POOLING AND SERVICING AGREEMENT, relating to "Life Financial Services
Trust 1997-1A" and "Life Financial Services Trust 1997-1B", dated as of February
28, 1997, by and among PRUDENTIAL SECURITIES SECURED FINANCING CORPORATION, a
Delaware corporation, in its capacity as Depositor of the Trust (the
"Depositor"), LIFE SAVINGS BANK, FEDERAL SAVINGS BANK, in its capacity as seller
(the "Seller") and as servicer (the "Servicer"), and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association, in its capacity as trustee
(the "Trustee") and back-up servicer (the "Back-up Servicer").
WHEREAS, the Depositor wishes to establish two trusts, each of which
provides for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the related trust estate;
WHEREAS, the Servicer has agreed to service the Mortgage Loans, which
constitute the principal assets of each trust estate;
WHEREAS, the Trustee is willing to serve in the capacity of Trustee
hereunder for each Trust; and
WHEREAS, MBIA Insurance Corporation (the "Certificate Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Seller, the Servicer, the
Trustee and the Back-up Servicer hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 CERTAIN DEFINED TERMS.
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings.
ACCEPTED SERVICING PRACTICES: The Servicer's normal servicing
practices, which in general will conform to the mortgage servicing practices of
prudent mortgage lending institutions which service for their own account
mortgage loans of the same type as the Mortgage Loans in the jurisdictions in
which the related Mortgaged Properties are located.
ACCOUNT: Any of the Collection Account, the Certificate Account, the
Capitalized Interest Account, the Pre-Funding Account, the Insurance Account or
the Reserve Account for either Trust.
ACCRUAL PERIOD: With respect to the Class A-1 Certificates and any
Distribution Date, the period commencing on the 15th day of the month
immediately preceding the month in which such Distribution Date occurs or, in
the case of the first Distribution Date, the Closing Date, and ending on the
14th day of the month in which such Distribution Date occurs and with respect to
the Class A-2 Certificates and any Distribution Date, the calendar month
immediately preceding the month in which such Distribution Date occurs or, in
the case of the first Distribution Date, the period commencing on the Closing
Date and ending on the last day of the calendar month immediately preceding the
month n which the first Distribution Date occurs.
ADDITION NOTICE: A written notice from the Seller to the Trustee, the
Rating Agencies and the Certificate Insurer that the Seller desires to make a
Subsequent Transfer to a Trust.
ADJUSTED PASS-THROUGH RATE: With respect to a Trust and any
Distribution Date, the percentage equal to the sum of (i) the related Class A
Pass-Through Rate, (ii) the rate per annum at which the Trustee's Fee is
determined and (iii) the Premium Percentage for such Trust.
ADMINISTRATIVE COSTS: With respect to a Trust and any Distribution
Date, the sum of the Trustee Fee, the Premium Amount and the Servicing Fee for
such Distribution Date for such Trust.
ADVERSE REMIC EVENT: An event described in Section 5.1.
AFFILIATE: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
AGREEMENT: This Pooling and Servicing Agreement, including the
Exhibits hereto, and all amendments hereof and supplements hereto.
APPRAISED VALUE: As to any Mortgaged Property and time referred to
herein, when applicable, the appraised value of the Mortgaged Property based
upon the appraisal made by or on behalf of the Seller or the Servicer at the
time referred to therein or, in the case of a Mortgage Loan that is a purchase
money mortgage loan, the sales price of the Mortgaged Property, if such sales
price is less than such appraised value.
ARM: A Mortgage Loan listed on the initial Mortgage Loan Schedule for
Trust 1A and identified as an "ARM," or listed on a subsequent Mortgage Loan
Schedule for Trust 1A and identified as an "ARM" and that has a Mortgage
Interest Rate that adjusts on each Interest Adjustment Date by reference to the
Index, subject to the applicable Periodic Rate Cap and the applicable Lifetime
Floor and Lifetime Cap.
ASSIGNMENT OF MORTGAGE: With respect to each Mortgage Loan, an
assignment of the Mortgage, notice of transfer or equivalent instrument
sufficient under the laws of the jurisdiction wherein the related Mortgaged
Property is located to reflect of record the sale of the Mortgage to the Trustee
for the benefit of the Certificateholders and the Certificate Insurer.
AUTHORIZED DENOMINATIONS: Each of the Class A Certificates is issuable
only in the minimum Percentage Interest corresponding to a minimum denomination
of $1,000 or integral multiples of $1,000 in excess thereof; provided, however,
that one Certificate is issuable in a denomination equal to any such multiple
plus an additional amount such that the aggregate denomination of all Class A
Certificates shall be equal to the applicable Original Certificate Principal
Balance.
AVAILABLE AMOUNT: With respect to a Trust and any Distribution Date,
an amount equal to (i) the Servicer Distribution Amount for the related Trust
for such Distribution Date plus any other amount the Servicer, the Seller, the
Depositor or the Trustee is required to deposit in the Certificate Account for
such Trust on or prior to such Distribution Date (other than from the Reserve
Accounts or Insured Payments) minus (ii) the Trustee Fee and the Premium Amount
for such Trust.
BACK-UP SERVICER: The Trustee.
BUSINESS DAY: Any day other than (a) a Saturday or Sunday, or (b) a
day on which the Certificate Insurer or banking institutions located in the
States of California, Minnesota or New York are authorized or obligated by law
or executive order to be closed.
CAPITALIZED INTEREST ACCOUNT: For each Trust, the related Capitalized
Interest Account established in accordance with Section 6.1(a) hereof and
maintained by the Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to a Trust and the
Distribution Dates occurring in April 1997 and May 1997, (A) the product of (i)
one-twelfth of the related Adjusted Pass-Through Rate as calculated as of such
Distribution Date and (ii) the related Pre-Funded Amount as of the first day of
the related Due Period, MINUS (B) 30 days' interest, at the related Mortgage
Interest Rate, on the Subsequent Mortgage Loans transferred to the Trust during
the related Due Period which had a Due Date after the related Subsequent Cut-Off
Date during the related Due Period, MINUS (C) the amount of any related
Pre-Funding Earnings earned from the last Distribution Date (or the Closing Date
with respect the April 1997 Distribution Date) and deposited in the related
Certificate Account pursuant to Section 6.1(e).
CERCLA: The Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
CERTIFICATE: Any Class A-1, Class A-2 or Class R Certificate executed
by the Trustee on behalf of the Trust Fund and authenticated by the Trustee.
CERTIFICATE ACCOUNT: For each Trust, the related Certificate Account
established in accordance with Section 6.1(a) hereof and maintained by the
Trustee.
CERTIFICATEHOLDER or HOLDER: Except as provided in Article X, each
Person in whose name a Certificate is registered in the Certificate Register,
except that, solely for the purposes of giving any consent (except any consent
required to be obtained pursuant to Section 10.2), waiver, request or demand
pursuant to this Agreement, any Certificate registered in the name of the
Servicer or the Seller, or any Affiliate of any of them, shall be deemed not to
be outstanding and the undivided Percentage Interest evidenced thereby shall not
be taken into account in determining whether the requisite percentage of
Certificates necessary to effect any such consent, waiver, request or demand has
been obtained. For purposes of any consent, waiver, request or demand of
Certificateholders pursuant to this Agreement, upon the Trustee's request, the
Servicer and the Seller shall provide to the Trustee a notice identifying any of
their respective Affiliates that is a Certificateholder, as of the date(s)
specified by the Trustee in such request. Any Certificates on which payments are
made under the Certificate Insurance Policy shall be deemed to be outstanding
and held by the Certificate Insurer to the extent of such payment.
CERTIFICATEHOLDERS' INTEREST CARRYOVER: For any Distribution Date for
Trust 1A for which the Class A-1 Pass-Through Rate is limited by the Weighted
Average Rate Cap, the excess, if any, of interest that would have been due on
such Certificates for such Distribution Date if interest had been calculated
without giving effect to the Weighted Average Rate Cap over interest due on such
Distribution Date calculated at the Weighted Average Rate Cap plus any
Certificateholders' Interest Carryover remaining unpaid for any prior
Distribution Date plus interest thereon at the Class A-1 Pass- Through Rate
calculated without giving effect to the Weighted Average Rate Cap.
CERTIFICATE INSURANCE POLICY: The Certificate Guaranty Insurance
Policy No. 23495, in the case of Trust 1A, and Policy No. 23496, in the case of
Trust 1B, dated the Closing Date, issued by the Certificate Insurer for the
benefit of the related Class A Certificateholders, a copy of each which is
attached hereto as Exhibits A-1 and A-2.
CERTIFICATE INSURER: MBIA Insurance Corporation, a stock insurance
company organized and created under the laws of the State of New York, and any
successors thereto.
CERTIFICATE INSURER DEFAULT: The failure, and continuance of such
failure, by the Certificate Insurer to make a required payment when due under
the Certificate Insurance Policy.
CERTIFICATE PRINCIPAL BALANCE: As to any particular Class A
Certificate and date of determination, the product of the Percentage Interest
evidenced thereby and the related aggregate Class A Certificate Principal
Balance as of such date.
CERTIFICATE REGISTER: For each Trust, as described in Section 4.2(a).
CIVIL RELIEF ACT: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
CIVIL RELIEF ACT INTEREST SHORTFALL: With respect to any Distribution
Date, for any Mortgage Loan as to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the application of the Civil Relief Act, the amount, if any, by which
(a) interest collectible on such Mortgage Loan during the most recently ended
calendar month is less than (b) the sum of one month's interest on the Principal
Balance of such Mortgage Loan, calculated at a rate equal to the Mortgage
Interest Rate.
CLASS A CERTIFICATE: A Class A-1 Certificate or Class A-2 Certificate,
as the case may be.
CLASS A CERTIFICATEHOLDER: The Holder of a Class A Certificate.
CLASS A CERTIFICATE PRINCIPAL BALANCE: As of any time of determination
for a Trust, the related Original Certificate Principal Balance less any amounts
distributed with respect to principal thereon on all prior Distribution Dates.
CLASS A CURRENT INTEREST: With respect to the Class A Certificates of
a Trust for any Distribution Date, the product of (x) one-twelfth of the related
Class A Pass-Through Rate applicable to such Distribution Date and (y) the
related Class A Certificate Principal Balance as of such Distribution Date (and
prior to making any distributions on such Distribution Date).
CLASS A DISTRIBUTION AMOUNT: With respect to the Class A Certificates
of a Trust for any Distribution Date, the sum of (a) the related Class A
Interest Distribution Amount for such Distribution Date and (b) the related
Class A Principal Distribution Amount for such Distribution Date.
CLASS A FINAL SCHEDULED MATURITY DATE: For each Trust, the June 2028
Distribution Date.
CLASS A FORMULA DISTRIBUTION AMOUNT: With respect to any Distribution
Date for a Trust, the sum of the related Class A Interest Distribution Amount
and the related Class A Principal Distribution Amount calculated pursuant to (b)
of the definition thereof.
CLASS A INTEREST DISTRIBUTION AMOUNT: With respect to the Class A
Certificates of a Trust for any Distribution Date an amount equal to (a) the
related Class A Current Interest, MINUS (b) the related Mortgage Loan Interest
Shortfall.
CLASS A PASS-THROUGH RATE: The Class A-1 Pass-Through Rate or the
Class A-2 Pass-Through Rate, as the case may be.
CLASS A PRINCIPAL DISTRIBUTION AMOUNT: With respect to the
Certificates of a Trust for any Distribution Date, the lesser of:
(a) the excess of (i) the sum, as of such Distribution Date, of (A)
the related Available Amount plus (B) amounts on deposit in and available
to be withdrawn from the related Reserve Account, plus (C) any Insured
Payment to such Trust over (ii) the related Class A Interest Distribution
Amount; and
(b) the sum, without duplication, of:
(i) with respect to each related Mortgage Loan, (A) all scheduled
installments of principal actually received, and the principal portion
of all Periodic Advances actually made, during the related Due Period
and (B) all prepayments, curtailments and other unscheduled receipts
of principal other than Liquidation Proceeds,
(ii) the Principal Balance of each related Mortgage Loan that
either was repurchased by the Seller or by the Depositor or purchased
by the Servicer with respect to the related Distribution Date, to the
extent such Principal Balance is actually received by the Trustee,
(iii) any Substitution Adjustments delivered by the Servicer or
the Seller with respect to the related Servicer Distribution Date in
connection with a substitution of a Mortgage Loan relating to such
Trust, to the extent such Substitution Adjustments are actually
received by the Trustee,
(iv) with respect to each related Mortgage Loan that became a
Liquidated Mortgage Loan during the prior calendar month, the
Principal Balance of such Mortgage Loan immediately prior to the time
when such Mortgage Loan became a Liquidated Mortgage Loan;
(v) any moneys released from the related Pre-Funding Account as a
prepayment of the related Class A Certificates on or prior to the
Distribution Date which immediately follows the end of the related
Pre- Funding Period; and
(vi) the proceeds received by the Trustee of any termination of
the related Trust Fund (to the extent such proceeds relate to
principal).
CLASS A-1 CERTIFICATE: Any Certificate designated as a "Class A-1
Certificate" on the face thereof, in the form of Exhibit B-1 hereto, and
authenticated by the Trustee in accordance with the procedures set forth herein.
The Class A-1 Certificates shall be issued in an initial aggregate Certificate
Principal Balance equal to the Original Class A-1 Certificate Principal Balance.
CLASS A-1 CERTIFICATEHOLDER: The Holder of a Class A-1 Certificate.
CLASS A-1 CREDIT ENHANCEMENT DISTRIBUTION AMOUNT: The Credit
Enhancement Distribution Amount for Trust 1A.
CLASS A-1 PASS-THROUGH RATE: With respect to the first Distribution
Date, 5.866% per annum and with respect to each Distribution Date thereafter the
lesser of (i) LIBOR for the related Interest Determination Date plus the Margin
and (ii) the Weighted Average Rate Cap.
CLASS A-2 CERTIFICATE: Any Certificate designated as a "Class A-2
Certificate" on the face thereof, in the form of Exhibit B-2 hereof, and
authenticated by the Trustee in accordance with the procedures set forth herein.
The Class A-2 Certificate shall be issued in an initial aggregate Certificate
Principal Balance equal to the Original Class A-2 Certificate Principal Balance.
CLASS A-2 CERTIFICATEHOLDER: The Holder of a Class A-2 Certificate.
CLASS A-2 CREDIT ENHANCEMENT DISTRIBUTION AMOUNT: The Credit
Enhancement Distribution Amount for Trust 1B.
CLASS A-2 PASS-THROUGH RATE: With respect to any Distribution Date,
the per annum rate equal to 7.485% plus, with respect to any Distribution Date
occurring after the Clean-up Call Date, 0.50% per annum.
CLASS R CERTIFICATE: With respect to Trust 1A, any Certificate
denominated as a Class R Certificate and subordinate to the Class A-1
Certificates in right of payment to the extent set forth herein, which
Certificate shall be in the form of Exhibit B-3 hereto.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLEAN-UP CALL DATE: The date on which the aggregate Principal Balance
of the Mortgage Loans in each Trust is less than 5% of the sum of (i) the
related Original Pool Principal Balance and (ii) the related Original Pre-Funded
Amount.
CLOSING DATE: March 26, 1997.
CODE: The Internal Revenue Code of 1986, as amended.
COLLECTION ACCOUNT: For each Trust, the Eligible Account established
and maintained pursuant to Section 5.2(b).
COMMISSION: The Securities and Exchange Commission.
COMPENSATING INTEREST: For each Trust, as defined in Section 6.9
hereof.
CREDIT ENHANCEMENT DISTRIBUTION AMOUNT: With respect to a Trust and
any Distribution Date, the excess of the related Class A Formula Distribution
Amount over the related Available Amount for such Distribution Date.
CUMULATIVE LIQUIDATED LOAN LOSS: As of any date of determination for a
Trust, the sum of all Liquidated Loan Losses with respect to the related
Mortgage Loans since the Closing Date.
CURTAILMENT: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of the
amount of the Monthly Payment due for such Due Period and which is not intended
to satisfy the Mortgage Loan in full, nor is intended to cure a delinquency.
CUT-OFF DATE: With respect to the Initial Mortgage Loans, the Initial
Cut-Off Date, and with respect to the Subsequent Mortgage Loans, the Subsequent
Cut-Off Date.
CUT-OFF DATE AGGREGATE PRINCIPAL BALANCE: For each Trust, the
aggregate Principal Balance of the related Mortgage Loans as of the Cut-Off
Date.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a reduction
by a court of competent jurisdiction of the Monthly Payment due on such Mortgage
Loan in a proceeding under the Bankruptcy Code, except such a reduction that
constitutes a Deficient Valuation or a permanent forgiveness of principal.
DEFICIENCY AMOUNT: As of any Distribution Date for a Trust, the
excess, if any, of the related Credit Enhancement Distribution Amount over any
remaining amounts on deposit in and available to be withdrawn from the Trust 1A
Reserve Account and the Trust 1B Reserve Account.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding principal balance of the Mortgage Loan, which
valuation results from a proceeding initiated under the United States Bankruptcy
Code.
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by or to be replaced
by a Qualified Substitute Mortgage Loan.
DELINQUENCY CALCULATION AMOUNT: For any Distribution Date for a Trust,
the sum of (i) 25% of the aggregate Principal Balance of all related Mortgage
Loans that are 30-59 days Delinquent, (ii) 50% of the aggregate Principal
Balance of all related Mortgage Loans that are 60-89 days Delinquent and (iii)
100% of the aggregate Principal Balance of all related Mortgage Loans that are
90 or more days Delinquent (including foreclosures and REO Properties).
DELINQUENCY RATIO: With respect to a Trust and any Distribution Date,
the percentage equivalent of a fraction (a) the numerator of which equals the
aggregate Principal Balances of all related Mortgage Loans that are 60 or more
days Delinquent, in foreclosure or converted to REO Property as of the last day
of such Due Period and (b) the denominator of which is the aggregate Principal
Balance of the related Mortgage Loans as of the last day of such Due Period.
DELINQUENT: A Mortgage Loan is "delinquent" if any payment due thereon
is not made by the close of business on the day such payment is scheduled to be
due. A Mortgage Loan is "30 days delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days delinquent," "90
days delinquent" and so on.
DEPOSITOR: Prudential Securities Secured Financing Corporation, a
Delaware corporation, and any successor thereto.
DEPOSITORY: The Depository Trust Company, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and any successor Depository hereafter named.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial
institution for which the Depository holds Class A Certificates from time to
time as a securities depository.
DISTRIBUTION DATE: The 15th day of any month or if such 15th day is
not a Business Day, the first Business Day immediately following, commencing on
April 15, 1997.
DUE DATE: With respect to each Mortgage Loan and any Distribution
Date, the day of the calendar month preceding the calendar month in which such
Distribution Date occurs on which the Monthly Payment for such Mortgage Loan was
due.
DUE PERIOD: With respect to each Distribution Date, the calendar month
preceding such Distribution Date.
ELIGIBLE ACCOUNT: Either (A) a segregated account or accounts
maintained with an institution (which may include the Trustee, provided such
institution otherwise meets these requirements) whose deposits are insured by
the FDIC, the long-term unsecured and uncollateralized debt obligations of which
institution shall be rated AA or better by S&P and Aa2 or better by Moody's and
in the highest short term rating category by S&P and Moody's, and which is (i) a
federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution (including the
Trustee) duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, or (v) approved in
writing by the Certificate Insurer and the Rating Agencies or (B) a trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution or trust company acceptable to the Certificate
Insurer (which may include the Trustee, provided that the Trustee otherwise
meets these requirements), having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity. Neither Life Savings Bank,
Federal Savings Bank, nor any of its Affiliates shall hold any Eligible Account
hereunder. Notwithstanding the foregoing, the Collection Account may be
maintained with Union Bank of California, so long as the long-term unsecured and
uncollateralized debt obligations of Union Bank of California or any parent of
Union Bank of California are rated at least A or better by S&P and Moody's, and
the short-term unsecured and uncollateralized debt obligations are rated A-1 by
S&P and P-1 by Moody's, and such account with Union Bank of California shall be
deemed an Eligible Account for all purposes under this Agreement.
ERISA: As defined in Section 4.2(j) hereof.
ESTIMATED VALUE: As to any Mortgaged Property and time referred to
herein, when applicable, and in the absence of an Appraised Value, the estimated
value.
EVENT OF DEFAULT: As described in Section 7.1.
FDIC: The Federal Deposit Insurance Corporation and any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, and any successor
thereto.
FIXED RATE LOAN: (i) Each fixed rate, closed end, loan identified as
such on the Mortgage Loan Schedule for Trust 1B on the Closing Date, (ii) any
additional such fixed rate, closed end, loans identified as such on the Mortgage
Loan Schedule for Trust 1B after the Closing Date, as such schedule is amended
and supplemented from time to time to reflect the transfer of the Subsequent
Mortgage Loans which are Fixed Rate Loans, the deletion of the Deleted Mortgage
Loans which are Fixed Rate Loans and the substitution of Qualified Substitute
Mortgage Loans which are Fixed Rate Loans for Deleted Mortgage Loans (iii) each
Mortgage Note evidencing any loan referred to in (i) or (ii) above, including
all amounts now or hereafter due under such Mortgage Notes whether relating to
such loans or other loans which may be made from time to time and (iv) the
related Mortgage.
FNMA: The Federal National Mortgage Association, and any successor
thereto.
FORECLOSURE PROFITS: As to any Servicer Distribution Date for a Trust,
the excess, if any, of (i) Net Liquidation Proceeds in respect of each related
Mortgage Loan that became a Liquidated Mortgage Loan during the month
immediately preceding the month of such Servicer Distribution Date over (ii) the
sum of the unpaid principal balance of each such Liquidated Mortgage Loan plus
accrued and unpaid interest at the applicable Mortgage Interest Rate on the
unpaid principal balance thereof from the Due Date to which interest was last
paid by the Mortgagor (or, in the case of a Liquidated Mortgage Loan that had
been an REO Mortgage Loan, from the Due Date to which interest was last deemed
to have been paid pursuant to Section 5.6 to the first day of the month
following the month in which such Mortgage Loan became a Liquidated Mortgage
Loan).
GROSS MARGIN: As to each ARM, the fixed percentage set forth in the
related Mortgage Note and indicated in the Mortgage Loan Schedule as the "Gross
Margin," which percentage is added to the applicable Index on each Interest
Adjustment Date to determine (subject to rounding, any applicable statutory
maximum interest rate, the Lifetime Floor, the Lifetime Cap and the Periodic
Rate Cap) the Mortgage Interest Rate on such ARM until the next Interest
Adjustment Date.
INDEX: Either LIBOR Index or the Treasury Index, as the case may be.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
INITIAL CUT-OFF DATE: The close of business on February 28, 1997 (or
with respect to any Initial Mortgage Loan originated after February 28, 1997,
the date of origination of such Initial Mortgage Loan).
INITIAL MORTGAGE LOANS: For each Trust, the Mortgage Loans delivered
to the Trustee by the Depositor on the Closing Date.
INSURANCE ACCOUNT: For each Trust, the Insurance Account established
in accordance with Section 6.4(g) hereof and maintained by the Trustee.
INSURANCE AGREEMENT: The Insurance Agreement dated as of February 28,
1997 among the Certificate Insurer, the Depositor, the Servicer, the Seller, the
Trustee and the Back-up Servicer as such agreement may be amended or
supplemented in accordance with the provisions thereof.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan to the extent such proceeds are not
applied to the restoration of the related Mortgaged Property or released to the
related Mortgagor in accordance with Accepted Servicing Practices. "Insurance
Proceeds" do not include "Insured Payments."
INSURED PAYMENT: For a Trust (i) as of any Distribution Date, any
Deficiency Amount and (ii) any Preference Amount.
INTEREST ADJUSTMENT DATE: With respect to an ARM, the date on which
the Mortgage Interest Rate is or may be adjusted with respect to such ARM.
INTEREST COLLECTIONS: All amounts (including, without limitation,
Monthly Payments (or Periodic Advances in respect thereof) and Liquidation
Proceeds) collected on any Mortgage Loan allocable to interest pursuant to the
terms of the related Mortgage Note, or if no provision for allocation is made
therein, pursuant to the terms hereof.
INTEREST DETERMINATION DATE: With respect to any Accrual Period
applicable to the Class A-1 Certificates, the second London Business Day
preceding the first day of such Accrual Period.
LATE PAYMENT RATE: Has the meaning ascribed thereto in the Insurance
Agreement.
LIBOR: With respect to any Accrual Period applicable to the Class A-1
Certificates, the rate determined by the Trustee on the related Interest
Determination Date on the basis of the offered rates for one-month U.S. dollar
deposits, as such rates appear on Telerate Page 3750, as of 11:00 a.m. (London
time) on such Interest Determination Date. On each Interest Determination Date,
LIBOR for the related Accrual Period applicable to the Class A-1 Certificates
will be established by the Trustee. If such rate does not appear on Telerate
Page 3750, the rate for that day will be determined on the basis of the rates at
which deposits in United States dollars are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on that day to prime banks in the London
interbank market for one-month U.S. dollar deposits:
(i) If on such Interest Determination Date two or more Reference Banks
provide such offered quotations, 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 0.0625%).
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, LIBOR for the related Accrual Period
shall be the arithmetic mean of the rates quoted by major banks in New York
City, selected by the Trustee at approximately 11:00 a.m. (New York City
time) on that day for loans to leading European banks for one-month U.S.
dollar loans (commencing on the Interest Determination Date).
LIBOR INDEX: The London Interbank Offered Rate for six-month U.S.
dollar deposits either as specified in the related Mortgage Note or as announced
by the Federal National Mortgage Association and available as of the date 45
days before each Interest Adjustment Date.
LIFETIME CAP: As to any ARM, the maximum Mortgage Interest Rate set
forth in the related Mortgage Note and indicated in the Mortgage Loan Schedule
for Trust 1A.
LIFETIME FLOOR: As to any ARM, the minimum Mortgage Interest Rate set
forth in the related Mortgage Note and indicated in the Mortgage Loan Schedule
for Trust 1A.
LIQUIDATED LOAN LOSS: With respect to a Trust and any Distribution
Date, the aggregate of the amount of losses with respect to each related
Mortgage Loan which became a Liquidated Mortgage Loan prior to the Due Date
preceding such Distribution Date, equal to the excess, if any, of (i) the unpaid
principal balance of each such Liquidated Mortgage Loan, plus accrued interest
thereon in accordance with the amortization schedule at the time applicable
thereto at the applicable Mortgage Interest Rate from the Due Date as to which
interest was last paid with respect thereto through the last day of the month in
which such Mortgage Loan became a Liquidated Mortgage Loan, over (ii) Net
Liquidation Proceeds with respect to such Liquidated Mortgage Loan.
LIQUIDATED MORTGAGE LOAN: A Mortgage Loan shall be a "Liquidated
Mortgage Loan" upon the first to occur of (i) the Servicer determines that such
Mortgage Loan has become 180 days delinquent or (ii) the date the Servicer
determines that all amounts which it expects to recover with respect to such
Mortgage Loan have been recovered.
LIQUIDATION EXPENSES: Out-of-pocket expenses incurred by the Servicer
in connection with the liquidation of any defaulted Mortgage Loan or property
acquired in respect thereof (including, without limitation, legal fees and
expenses or referee fees, and, if applicable, brokerage commissions and
conveyance taxes), any unreimbursed amount expended by the Servicer pursuant to
Sections 5.4 and 5.6 respecting the related Mortgage Loan and any unreimbursed
expenditures for real property taxes or for property restoration or preservation
of the related Mortgaged Property. Liquidation Expenses shall not include any
previously incurred expenses in respect of an REO Mortgage Loan which have been
netted against related REO Proceeds. In no event may Liquidation Expenses with
respect to a Liquidated Mortgage Loan exceed the related Liquidation Proceeds.
LIQUIDATION PROCEEDS: The amount (other than Insurance Proceeds)
received by the Servicer in connection with (i) the taking of all or a part of
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.
LOAN REPURCHASE PRICE: As defined in Section 2.6(b).
LOAN-TO-VALUE RATIO OR LTV OR COMBINED LOAN-TO-VALUE RATIO OR CLTV: As
to any Mortgage Loan at any time, the fraction, expressed as a percentage, the
numerator of which is the sum of (i) the Principal Balance thereof at such time
and (ii) the unpaid principal balance of the related first mortgage loan, if
any, as of such time, and the denominator of which is the Appraised Value (or
Estimated Value if there is no Appraised Value) of the related Mortgaged
Property as of the date of the appraisal (or estimate) used by or on behalf of
the Seller to underwrite such Mortgage Loan.
LONDON BUSINESS DAY: Any day in which banks in the City of London are
open and conducting transactions in U.S. dollars.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A
Certificates of a Trust evidencing Percentage Interests in the Trust in excess
of 50.1% in the aggregate.
MARGIN: 0.21%, but for each Distribution Date after the Clean-up Call
Date, 0.42%.
MATERIAL DISCREPANCY: As defined in Section 11.3(c).
MONTHLY EXCESS CASH FLOW: For any Distribution Date for a Trust, the
excess, if any, of (i) all interest collected on the related Mortgage Loans or
for which Periodic Advances were made by the Servicer during the related Due
Period over (ii) the sum of the related Class A Interest Distribution Amount and
the related Administrative Costs for such Distribution Date.
MONTHLY PAYMENT: As to any Mortgage Loan (including any REO Mortgage
Loan) and any Due Date, the payment of principal and interest due thereon as
specified for such Due Date in the related amortization schedule at the time
applicable thereto (after adjustment for any Curtailments and Deficient
Valuations occurring prior to such Due Date but before any adjustment to such
amortization schedule by reason of any bankruptcy, other than Deficient
Valuations or similar proceeding or any moratorium or similar waiver or grace
period).
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc., a corporation organized and
existing under Delaware law, or any successor thereto and if such corporation no
longer for any reason performs the services of a securities rating agency,
"Moody's" shall be deemed to refer to any other nationally recognized rating
agency designated by the Certificate Insurer.
MORTGAGE: The mortgage, deed of trust or other instrument creating a
first or second lien on the Mortgaged Property.
MORTGAGE FILE: With respect to each Mortgage Loan, a file as described
in Exhibit C and, as to each Mortgage Loan, including the documents described in
Section 2.5 hereof.
MORTGAGE INTEREST RATE: As to any Mortgage Loan, the per annum rate at
which interest accrues on the unpaid principal balance thereof, as adjusted from
time to time in accordance with the provisions of the related Mortgage Note,
which rate is (a) for each Fixed Rate Loan the Mortgage Interest Rate for such
Fixed Rate Loan indicated on the Mortgage Loan Schedule, (b) for each ARM and
prior to the first Interest Adjustment Date for each such ARM occurring after
the Cut-Off Date, the current Mortgage Interest Rate for such Mortgage Loan
indicated on the Mortgage Loan Schedule and (c) for each ARM and from and after
such first Interest Adjustment Date, the sum of the applicable Index for the
most recent Interest Adjustment Date and the Gross Margin, rounded as set forth
in such Mortgage Note, subject to the Lifetime Cap and the Lifetime Floor and
any applicable statutory maximum interest rate as set forth in the related
Mortgage Note, that may be applicable to such Mortgage Loan at any time during
the life of such Mortgage Loan.
MORTGAGE LOAN: For each Trust, the Initial Mortgage Loans and the
Subsequent Mortgage Loans, together with any Qualified Substitute Mortgage Loans
substituted therefor in accordance with this Agreement, as from time to time are
held as a part of the related Trust Fund, the Initial Mortgage Loans originally
so held being identified in the related initial Mortgage Loan Schedule. The term
Mortgage Loan shall include each ARM and Fixed Rate Loan. When used in respect
of any Distribution Date for a Trust, the term Mortgage Loans shall mean all
related Mortgage Loans (including those in respect of which the Trustee has
acquired the related Mortgaged Property) which have not been repaid in full
prior to the related Due Period, did not become Liquidated Mortgage Loans prior
to such related Due Period or were not repurchased or replaced by the Seller
prior to such related Due Period; provided, however, that this sentence shall
not prohibit the related Trust Fund from being entitled to any recoveries or
other proceeds on a related Mortgage Loan to which it otherwise would be
entitled after such Mortgage Loan becomes a Liquidated Mortgage Loan.
MORTGAGE LOAN INTEREST SHORTFALL: With respect to any Distribution
Date for a Trust, as to any related Mortgage Loan, the sum of (a) any Prepayment
Interest Shortfall for which no payment of Compensating Interest is paid in
respect of such Mortgage Loan for such Distribution Date and (b) any Civil
Relief Act Interest Shortfall in respect of such Mortgage Loan for such
Distribution Date.
MORTGAGE LOAN SCHEDULE: For each Trust, the initial schedule of
Initial Mortgage Loans as of the Initial Cut-Off Date as attached hereto as
Exhibit D, which will be deemed to be modified automatically upon any
replacement, sale, substitution, liquidation, transfer or addition of any
Mortgage Loan, including the addition of a Subsequent Mortgage Loan, pursuant to
the terms hereof. The initial Mortgage Loan Schedule for a Trust sets forth as
to each related Initial Mortgage Loan, and any subsequent Mortgage Loan Schedule
for such Trust provided in connection with the related Subsequent Mortgage Loans
will set forth as to each Subsequent Mortgage Loan: (i) its identifying number
and the name of the related Mortgagor; (ii) the billing address for the related
Mortgaged Property including the state and zip code; (iii) its date of
origination; (iv) the original number of months to stated maturity; (v) the
original stated maturity; (vi) the original Principal Balance; (vii) its Cut-Off
Date Balance; (viii) the Mortgage Interest Rate; (ix) the scheduled monthly
payment of principal and interest; (x) whether such Mortgage Loan is an ARM or
Fixed Rate Loan; and (xi) with respect to an ARM, the Gross Margin, the Lifetime
Cap, the Lifetime Floor, the Periodic Rate Cap and the first Interest Adjustment
Date after the Cut-Off Date.
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 or properties securing a
Mortgage Loan, consisting of a fee simple estate in one or more parcels of land.
MORTGAGOR: The obligor on a Mortgage Note.
NET FORECLOSURE PROFITS: As to any Servicer Distribution Date for a
Trust, the excess, if any, of (i) the related aggregate Foreclosure Profits with
respect to such Servicer Distribution Date over (ii) related Liquidated Loan
Losses with respect to such Servicer Distribution Date.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses and net of any unreimbursed
Periodic Advances made by the Servicer with respect to such Liquidated Mortgage
Loan. For all purposes of this Agreement, Net Liquidation Proceeds shall be
allocated first to accrued and unpaid interest on the related Mortgage Loan and
then to the unpaid principal balance thereof.
NET MORTGAGE INTEREST RATE: With respect to each Mortgage Loan at any
time of determination, a rate equal to (i) the Mortgage Interest Rate on such
Mortgage Loan minus (ii) the sum of the rates used to determine the related
Administrative Costs. Any regular monthly computation of interest at such rate
shall be based upon annual interest at such rate on the applicable amount
divided by twelve.
NET REO PROCEEDS: As to any REO Property, REO Proceeds net of any
related expenses of the Servicer related to such REO Property.
NONRECOVERABLE ADVANCES: With respect to any Mortgage Loan, (a) any
Periodic Advance previously made and not reimbursed from late collections
pursuant to Section 5.3(e), or (b) a Periodic Advance proposed to be made in
respect of a Mortgage Loan or REO Property either of which, in the good faith
business judgment of the Servicer, as evidenced by an Officer's Certificate
delivered to the Certificate Insurer and the Trustee no later than the Business
Day following such determination, would not ultimately be recoverable pursuant
to Sections 5.3 and 5.4.
OFFICER'S CERTIFICATE: A certificate signed by the Chairman of the
Board, the President or a Vice President and the Treasurer, the Secretary or one
of the Assistant Treasurers or Assistant Secretaries of the Seller and/or the
Servicer, or the Depositor, as required by this Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Seller, the Servicer, the Trustee, a
Certificateholder or a Certificateholder's prospective transferee or the
Certificate Insurer (including except as otherwise provided herein, in-house
counsel) reasonably acceptable to each addressee of such opinion and experienced
in matters relating to the subject of such opinion; except that any opinion of
counsel relating to the qualification of the Trust as a grantor trust must be an
opinion of counsel who (i) is in fact independent of the Seller, the Servicer
and the Trustee, (ii) does not have any direct financial interest or any
material indirect financial interest in the Seller or the Servicer or the
Trustee or in an Affiliate thereof, (iii) is not connected with the Seller or
the Servicer or the Trustee as an officer, employee, director or person
performing similar functions and (iv) is reasonably acceptable to the
Certificate Insurer. The Certificate Insurer shall be an addressee on each
Opinion of Counsel relating to, or otherwise affecting, the Class A
Certificates.
ORIGINAL CERTIFICATE PRINCIPAL BALANCE: The Original Class A-1
Certificate Principal Balance or the Original Class A-2 Certificate Principal
Balance, as the case may be.
ORIGINAL CLASS A-1 CERTIFICATE PRINCIPAL BALANCE: $38,500,000.
ORIGINAL CLASS A-2 CERTIFICATE PRINCIPAL BALANCE: $61,500,000.
ORIGINAL POOL PRINCIPAL BALANCE: Original Trust 1A Pool Principal
Balance or Original Trust 1B Pool Principal Balance, as the case may be.
ORIGINAL TRUST 1A POOL PRINCIPAL BALANCE: The Pool Principal Balance
of Trust 1A as of the Initial Cut-Off Date, which amount is equal to
$33,609,478.29.
ORIGINAL TRUST 1B POOL PRINCIPAL BALANCE: The Pool Principal Balance
of Trust 1B as of the Initial Cut-Off Date, which amount is equal to
$46,493,327.29.
ORIGINAL PRE-FUNDED AMOUNT: Original Trust 1A Pre-Funded Amount or
Original Trust 1B Pre-Funded Amount, as the case may be.
ORIGINAL TRUST 1A PRE-FUNDED AMOUNT: $4,890,521.71.
ORIGINAL TRUST 1B PRE-FUNDED AMOUNT: $15,006,672.71
OWNERSHIP INTEREST: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as to which
(a) the related Mortgagor represented an intent to occupy as such Mortgagor's
primary, secondary or vacation residence at the origination of the Mortgage
Loan, and (b) the Seller has no actual knowledge that such Residential Dwelling
is not so occupied.
PERCENTAGE INTEREST: With respect to a Class A Certificate of a Trust,
the portion evidenced by such Certificate, expressed as a percentage rounded to
four decimal places, equal to a fraction the numerator of which is the
denomination represented by such Certificate and the denominator of which is the
related Original Certificate Principal Balance.
PERIODIC ADVANCE: For each Trust, the aggregate of the advances
required to be made by the Servicer on any Servicer Distribution Date pursuant
to Section 5.16 hereof, the amount of any such advances being equal to the sum
of:
(a) Monthly Payments on each related Mortgage Loan due by the related
Due Date but not received by the Servicer as of the close of business on the
Business Day immediately preceding such Servicer Distribution Date, net of the
related Servicing Fee; and
(b) with respect to each related REO Property which was acquired
during or prior to the related Due Period and as to which an REO Disposition did
not occur during the related Due Period, an amount equal to the excess, if any,
of (i) interest on the Principal Balance of such REO Mortgage Loan at the
related Mortgage Interest Rate, net of the related Servicing Fee, for the most
recently ended Due Period over (ii) the net income from the related REO Property
transferred to the related Certificate Account for such Distribution Date;
PROVIDED, HOWEVER, that in each such case such advance has not been determined
by the Servicer to be a Nonrecoverable Advance.
PERIODIC RATE CAP: The provision in the Mortgage Note for each ARM
which limits increases or decreases in the Mortgage Interest Rate on each
Interest Adjustment Date to the rate set forth in the applicable Mortgage Note.
PERMITTED INVESTMENTS: As used herein, Permitted Investments shall
include only the following:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the United States and any
obligation of, or guaranties by, FHLMC or FNMA (other than senior debt
obligations and mortgage pass- through certificates guaranteed by FHLMC or FNMA)
shall be a Permitted Investment; PROVIDED, that at the time of such investment,
such investment is acceptable to the Certificate Insurer, but excluding any of
such securities whose terms do not provide for payment of a fixed dollar amount
upon maturity or call for redemption;
(b) federal funds and certificates of deposit, time and demand
deposits and banker's acceptances issued by any bank or trust company
incorporated under the laws of the United States or any state thereof and
subject to supervision and examination by federal or state banking authorities
having an original term to maturity of not more than 365 days, provided that at
the time of such investment or contractual commitment providing for such
investment 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 P-1 by Moody's;
(c) commercial paper (having original maturities of not more than 180
days) rated A- 1+ by S&P and P-1 by Moody's;
(d) investments in money market funds rated "AAAm" or "AAAm-G" by S&P
and "Aaa" by Moody's that invest only in other Permitted Investments; and
(e) investments approved by S&P, Moody's and the Certificate Insurer
in writing delivered to the Trustee.
provided, that each such Permitted Investment shall (i) in the case of Trust 1A,
be a "permitted investment" within the meaning of Section 860G(a)(5) of the Code
and (ii) evidence either the right to receive (x) only interest with respect to
the obligations underlying such instrument or (y) both principal and interest
payments derived from obligations underlying such instrument and the interest
and principal payments with respect to such instrument provided a yield to
maturity at par greater than 120% of the yield to maturity at par of the
underlying obligations; and provided, further, that 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. Any Permitted Investment must mature no later than the Business Day
prior to the next Distribution Date.
PERMITTED TRANSFEREE: Any Person other than (a) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (b) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (c) an organization
(except certain farmers' cooperatives described in Section 521 of the Code)
which is exempt from tax imposed by Chapter I of the Code (including the tax
imposed by Section 511 of the Code on unrelated business taxable income) on any
excess inclusions (as defined in Section 860E(c)(1) of the Code) with respect to
any Class R Certificate, (d) rural electric and telephone cooperatives described
in Section 1381(a)(2)(C) of the Code and (e) any other Person so designated by
the Trustee based upon an Opinion of Counsel to the Trustee and the Certificate
Insurer that the transfer of an Ownership Interest in a Class R Certificate to
such Person may cause either (i) Trust 1A to fail to qualify as a REMIC at any
time that the Class A-1 Certificates are outstanding or (ii) Trust 1A or the
related Trust Fund or any Person having an Ownership Interest in any Class of
Certificates of Trust 1A, other than such Person, to incur a liability for any
federal tax imposed under the Code that would not otherwise be imposed but for
the Transfer of an Ownership Interest in a Class R Certificate to such Person.
The terms "United States," "State" and "International Organization" shall have
the meanings set forth in Section 7701 of the Code or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of FHLMC, a majority of
its board of directors is not selected by such governmental unit.
PERSON: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, national banking association,
unincorporated organization or government or any agency or political subdivision
thereof.
POOL PRINCIPAL BALANCE: For a Trust, the related aggregate Principal
Balances as of any date of determination.
PREFERENCE AMOUNT: Any amount previously distributed to the Holder of
a Class A Certificate that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final, nonappealable order of a court having competent jurisdiction.
PREFERENCE CLAIM: As defined in Section 6.4(d).
PRE-FUNDING ACCOUNT: For each Trust, the Pre-Funding Account
established in accordance with Section 6.1(a) hereof and maintained by the
Trustee.
PRE-FUNDING AMOUNT: With respect to a Trust and any date, the amount
on deposit in the related Pre-Funding Account.
PRE-FUNDING EARNINGS: The actual investment earnings realized on
amounts deposited in the related Pre-Funding Account.
PRE-FUNDING PERIOD: For a Trust, the period commencing on the Closing
Date and ending on the earliest of (i) the date on which the amount on deposit
in the related Pre-Funding Account is less than $100,000, (ii) the date on which
an Event of Default occurs or (iii) May 15, 1997.
PREMIUM AMOUNT: For each Trust, the product of the Premium Percentage
and the related Class A Certificate Principal Balance immediately prior to the
related Distribution Date.
PREMIUM PERCENTAGE: For each Trust, has the meaning set forth in the
Insurance Agreement.
PREPAYMENT ASSUMPTION: A constant prepayment rate of 25%, in the case
of the Class A-1 Certificates, and 17%, in the case of the Class A-2
Certificates, used solely for determining the accrual of original issue discount
and market discount on the related Class A Certificates for federal income tax
purposes.
PREPAYMENT INTEREST SHORTFALL: With respect to a Trust and any
Distribution Date, for each related Mortgage Loan that was the subject during
the related Due Period of a Principal Prepayment, an amount equal to the excess,
if any, of (a) 30 days' interest on the Principal Balance of such Mortgage Loan
at a per annum rate equal to the Mortgage Interest 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 rate at which the Servicing Fee is calculated over (b)
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 BALANCE: As to any Mortgage Loan and any date of
determination, the outstanding principal balance of such Mortgage Loan as of
such date of determination after giving effect to prepayments received prior to
the end of the related Due Period, Deficient Valuations incurred prior to the
related Due Date and the payment of principal due on such Due Date and
irrespective of any delinquency in payment by the related Mortgagor. The
Principal Balance of a Mortgage Loan which becomes a Liquidated Mortgage Loan on
or prior to such Due Date shall be zero; provided, however, that for purposes of
calculating the Loan Repurchase Price of a Mortgage Loan, the Principal Balance
of a Mortgage Loan shall be calculated without regard to this sentence.
PRINCIPAL COLLECTIONS: All amounts collected with respect to a
Mortgage Loan, including, without limitation, Monthly Payments (or Periodic
Advances made in respect thereof), any Loan Repurchase Price and Substitution
Adjustments allocable to principal pursuant to the terms of the related Mortgage
Note, or, if no provision for allocation is made therein, in accordance with the
terms hereof.
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 in any month or months subsequent to
the month of prepayment.
PROHIBITED TRANSACTION: A "prohibited transaction" under the REMIC
Provisions.
PROSPECTUS SUPPLEMENT: The Prospectus Supplement dated March 24, 1997
relating to the Class A Certificates filed with the Commission in connection
with the Registration Statement heretofore filed with the Commission pursuant to
Rule 424(b)(2) or 424(b)(5).
PURCHASE AGREEMENT: The Mortgage Loan Purchase Agreement, dated as of
the date hereof, between the Seller and the Depositor relating to the sale of
the Mortgage Loans to the Depositor.
QUALIFIED APPRAISER: An appraiser, duly appointed by the Seller, who
had no interest, direct or indirect, in the Mortgaged Property or in any loan
made on the security thereof, and whose compensation is not affected by the
approval or disapproval of the Mortgage Loan, and such appraiser and the
appraisal made by such appraiser both satisfy the requirements of Title XI of
the Federal Institutions Reform, Recovery and Enforcement Act of 1989 and the
regulations promulgated thereunder, all as in effect on the date the Mortgage
Loan was originated.
QUALIFIED MORTGAGE: The meaning set forth from time to time in the
definition of "Qualified Mortgage" at Section 860G(a)(3) of the Code (or any
successor statute thereto).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to Section 2.6 or 3.3 hereof,
which (i) HAS or have an interest rate at least equal to that applicable to the
Deleted Mortgage Loan, (ii) relates or relate to a detached one-family residence
or to the same type of Residential Dwelling as the Deleted Mortgage Loan and in
each case has or have the same or a better lien priority as the Deleted Mortgage
Loan and has the same occupancy status or is an Owner Occupied Mortgaged
Property, (iii) matures or mature no later than (and not more than one year
earlier than) the Deleted Mortgage Loan, (iv) has or have a Loan-to-Value Ratio
or Loan-to-Value Ratios at the time of such substitution no higher than the
Loan-to-Value Ratio of the Deleted Mortgage Loan, (v) has or have a principal
balance or principal balances (after application of all payments received on or
prior to the date of substitution) not substantially less and not more than the
Principal Balance of the Deleted Mortgage Loan as of such date, (vi) has or have
the same interest rate index and a margin over such index and maximum interest
rate at least equal to those applicable to the Deleted Mortgage Loan if an ARM,
(vii) satisfies the criteria set forth from time to time in the definition of
"qualified replacement mortgage" in Section 860G(a)(4) of the Code (or any
successor statute thereto) and (viii) complies or comply as of the date of
substitution with each representation and warranty set forth in Sections 3.01
and 3.02 of the Purchase Agreement. A Qualified Substitute Mortgage Loan, with
respect to Trust 1A, must be an ARM and with respect to Trust 1B, must be a
Fixed Rate Loan.
RATING AGENCY: S&P or ▇▇▇▇▇'▇.
RECORD DATE: The last Business Day of the month immediately preceding
a month in which a Distribution Date occurs.
REFERENCE BANKS: Bank of Tokyo-Mitsubishi, Ltd., Bankers Trust
Company, Barclays Bank, PLC and National Westminster Bank, PLC; PROVIDED that if
any of the foregoing banks are not suitable to serve as a Reference Bank, then
any leading banks selected by the Trustee which are engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) whose quotations appear on the
Reuters Screen LIBO Page on the relevant Interest Determination Date and (iii)
which have been designated as such by the Trustee.
REIMBURSEMENT AMOUNT: As of any Distribution Date for a Trust, the sum
of (x) the amount of all related Insured Payments and other payments made by the
Certificate Insurer pursuant to the related Certificate Insurance Policy which
have not been previously repaid (y) any other amounts owing to the Certificate
Insurer pursuant to the Insurance Agreement, and (z) interest accrued on such
amounts calculated at the Late Payment Rate. The Certificate Insurer shall
notify the Trustee and the Depositor of the amount of any Reimbursement Amount.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC CHANGE OF LAW: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to the REMIC and the REMIC Provisions issued after the
Closing Date.
REMIC PROVISIONS: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter I of the Code, and related provisions, and
temporary and final regulations promulgated thereunder and published rulings,
notices and announcements, as the foregoing may be in effect from time to time.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged
Property acquired by the Servicer in foreclosure or by deed in lieu of
foreclosure.
REO MORTGAGE LOAN: Any Mortgage Loan which is not a Liquidated
Mortgage Loan and as to which the indebtedness evidenced by the related Mortgage
Note is discharged and the related Mortgaged Property is held as part of the
Trust Fund.
REO PROCEEDS: Proceeds received in respect of any REO Property
(including, without limitation, proceeds from the rental of the related
Mortgaged Property).
REO PROPERTY: A Mortgaged Property acquired by the Servicer in the
name of the Trustee on behalf of the related Certificateholders and the
Certificate Insurer through foreclosure or deed- in-lieu of foreclosure.
REPORTS: As defined in Section 11.3(a).
REPRESENTATION LETTER: Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A Certificates of a
Trust registered in the related Certificate Register under the nominee name of
the Depository.
REQUEST FOR RELEASE: A request for release in substantially the form
attached as Exhibit H hereto.
REQUIRED RESERVE ACCOUNT LEVEL: For each Trust, as of any Distribution
Date occurring during the period commencing on the Closing Date and ending on
the later of the date on which the Certificateholders have received one-half of
the related Original Certificate Principal Balance and the 36th Distribution
Date following the Closing Date, the greater of:
(i) 5.5% for Trust 1A and 10.1% for Trust 1B of the related Original
Certificate Principal Balance and
(ii) Twice the excess, if any, of (x) the aggregate Principal Balances
of all related Mortgage Loans that are 91 or more days Delinquent
(including foreclosures, bankruptcies and REO Properties) over (y) three
times the related Monthly Excess Cashflow for Trust 1A or five times the
related Monthly Excess Cashflow for Trust 1B, as applicable, for such
Distribution Date.
As of any Distribution Date occurring thereafter, the greater of:
(i) The lesser of (x) 5.5% for Trust 1A and 10.1% for Trust 1B of the
related Original Certificate Principal Balance and (y) 11.0% for Trust 1A
and 20.2% for Trust 1B of the related current Class A Certificate Principal
Balance;
(ii) Twice the excess, if any, of (x) the aggregate Principal Balances
of all related Mortgage Loans that are 91 or more days delinquent
(including REO Properties) over (y) three times the related Monthly Excess
Cashflow for Trust 1A and five times the related Monthly Excess Cashflow
for Trust 1B, as applicable, for such Distribution Date, and
(iii) 0.50% of the related Original Certificate Principal Balance.
Notwithstanding any of the above, the Required Reserve Account Level
for Trust 1B shall increase to 12.65% of the related Original Certificate
Principal Balance in the event that on any date of determination (1) the three
month rolling average of 60+ day delinquencies is equal to 4.00% or greater or
(2) the related Three Month Annualized Default Rate is equal to or greater than
3.5% or (3) related Cumulative Liquidated Loan Losses meet or exceed the
following:
MONTH OF CUMULATIVE LIQUIDATED
DETERMINATION LOAN LOSSES
0 - 12 1.5%
13 - 24 3.0%
25 - 36 4.5%
37 - 48 6.0%
49 - 60+ 7.5%
The Required Reserve Account Level for Trust 1B may step down pursuant
to the first paragraph of the definition of "Required Reserve Account Level" if
for six consecutive months the three month rolling average of 60+ day
delinquencies remains below 4.00% and the related Three Month Average Annualized
Default Rate is less than 3.5% and related Cumulative Liquidated Loan Losses
remain below the levels set forth above for the relevant month of determination.
At the time of any related Subsequent Transfer, in accordance with
Section 2.03, the Certificate Insurer may, by written notice to the Servicer,
the Trustee, the Depositor and the Rating Agencies, require a deposit by the
Seller into the related Reserve Account, in light of the characteristics of the
Subsequent Mortgage Loans actually delivered to the Trust on the related
Subsequent Transfer Date. In addition, during or within five days following the
end of the related Pre-Funding Period, the Certificate Insurer may, by written
notice to the Servicer, the Trustee, the Depositor and the Rating Agencies,
increase the Required Reserve Account Level in light of the characteristics of
the Subsequent Mortgage Loans actually delivered to the Trust. In making such
determinations, the Certificate Insurer shall apply the same standards and
methodology as were applied with respect to the related Initial Mortgage Loans.
In addition, the Certificate Insurer may reduce the requirements relating to the
Required Reserve Account Level without the consent of any Certificateholders.
The Trustee shall send a copy of any such amendment to each Rating Agency. No
Opinion of Counsel pursuant to Section 10.3 shall be required in connection with
any such amendment.
RESERVE ACCOUNT: For each Trust, the Reserve Account established and
pledged to the related Trust in accordance with Section 6.4 hereof and
maintained by the Reserve Account Trustee. A Reserve Account shall not be part
of the related Trust Fund.
RESERVE ACCOUNT BALANCE: With respect to a Trust and any date of
determination, the aggregate amount then on deposit in the related Reserve
Account.
RESERVE ACCOUNT TRUST: Reserve Account Trust 1A or Reserve Account
Trust 1B, as the case may be.
RESERVE ACCOUNT TRUST 1A: The LFS 1997-1A Reserve Account Trust
established pursuant to Section 6.4 hereof and maintained by the Reserve Account
Trustee.
RESERVE ACCOUNT TRUST 1B: The LFS 1997-1B Reserve Account Trust
established pursuant to Section 6.4 hereof and maintained by the Reserve Account
Trustee.
RESERVE ACCOUNT TRUSTEE: Norwest Bank Minnesota, National Association,
in its capacity as Trustee of each Reserve Account Trust.
RESIDENTIAL DWELLING: A one- to four-family dwelling, a unit in a
planned unit development, a unit in a condominium development, a townhouse or a
manufactured housing unit which is non-mobile.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any
officer assigned to the Corporate Trust Division (or any successor thereto),
including any Vice President, Senior Trust Officer, Trust Officer, Assistant
Trust Officer, any Assistant Secretary, any trust officer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and to whom, with respect to a particular
matter, such matter is referred because of such officer's knowledge of and
familiarity with the particular subject. When used with respect to the Seller or
the Servicer, the President or any Vice President, Assistant Vice President, or
any Secretary or Assistant Secretary.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or any successor thereto and if such corporation no longer for
any reason performs the services of a securities rating agency, "S&P" shall be
deemed to refer to any other nationally recognized statistical rating
organization designated by the Certificate Insurer.
SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan on any
Due Date, the unpaid principal balance of such Mortgage Loan as of such Due
Date, as specified in the amortization schedule at the time relating thereto
(before any adjustment to such amortization schedule by reason of any bankruptcy
or similar proceeding (other than a Deficient Valuation) or any moratorium or
similar waiver or grace period), after giving effect to any Principal
Prepayments and the principal portion of Net Liquidation Proceeds received
during or prior to the immediately preceding Due Period, and the Monthly Payment
due on such Due Date irrespective of any delinquency in payment. The Scheduled
Principal Balance of any Mortgage Loan that becomes a Liquidated Mortgage Loan
shall be zero.
SELLER: Life Savings Bank, Federal Savings Bank
SERVICER: Life Savings Bank, Federal Savings Bank, or any successor
appointed as herein provided.
SERVICER DISTRIBUTION AMOUNT: With respect to a Trust and any Servicer
Distribution Date, an amount equal to the sum of (i) all unscheduled collections
of principal and interest on the related Mortgage Loans (including Principal
Prepayments, Net REO Proceeds and Net Liquidation Proceeds, if any) collected by
the Servicer during the related Due Period and all related scheduled Monthly
Payments due on the Due Date and received by the Servicer on or prior to the
Business Day preceding such Servicer Distribution Date, (ii) all Periodic
Advances made by the Servicer with respect to payments due to be received on the
related Mortgage Loans on the related Due Date and (iii) any other amounts
required to be placed in the related Collection Account by the Servicer pursuant
to this Pooling and Servicing Agreement but excluding the following:
(a) amounts received on particular related Mortgage Loans as late
payments of principal or interest, or as Net Liquidation Proceeds, with respect
to which the Servicer has previously made an unreimbursed Periodic Advance to
the extent of such Periodic Advance;
(b) amounts received on a particular related Mortgage Loan with
respect to which the Servicer has previously made an unreimbursed Servicing
Advance to the extent of such Servicing Advance;
(c) those portions of each payment of interest on a particular related
Mortgage Loan which represent the Servicing Fee (subject to the subordination of
the Servicing Fee for the first six months following the Closing Date as
described in Section 5.8);
(d) that portion of related Liquidation Proceeds and related REO
Proceeds that represents any unpaid Servicing Fee;
(e) all net income from Permitted Investments that is held in the
related Collection Account for the account of the Servicer;
(f) all amounts in respect of related Mortgage Loans representing late
fees, assumption fees, prepayment fees and similar fees;
(g) related Net Foreclosure Profits; and
(h) certain other amounts which are reimbursable to the Servicer from
the related Collection Account, as provided in this Pooling and Servicing
Agreement.
SERVICER DISTRIBUTION DATE: With respect to a Trust and any
Distribution Date, the 10th day of the month in which such Distribution Date
occurs, or if such 10th day is not a Business Day, the Business Day immediately
preceding such 10th day.
SERVICING ADVANCES: All reasonable and customary "out-of-pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations relating to the enforcement of a Trust's rights under a related
Mortgage Loan, including, but not limited to, the cost of (a) the preservation,
restoration and protection of the Mortgaged Property, (b) any enforcement or
judicial proceedings, including foreclosures and (c) the management and
liquidation of the REO Property, including reasonable fees paid to any
independent contractor in connection therewith, all of which reasonable and
customary out-of-pocket costs and expenses are reimbursable to the Servicer to
the extent provided in Section 5.3.
SERVICING COMPENSATION: For each Trust, the Servicing Fee and other
amounts to which the Servicer is entitled pursuant to Section 5.8.
SERVICING FEE: As to each Mortgage Loan, the annual fee payable to the
Servicer, which is calculated as an amount equal to the product of (i) (a) for
Trust 1A, 0.65% per annum for the period commencing on the Issue Date and ending
on the Distribution Date in March 1998, and (b) 1.0% per annum thereafter; (ii)
for Trust 1B, 1.0% per annum, and (b) the Scheduled Principal Balance thereof.
Such fee shall be calculated and payable monthly only from the amounts received
in respect of interest on such Mortgage Loan and shall be computed on the basis
of the same principal amount and for the period respecting which any related
interest payment on a Mortgage Loan is computed. The Servicing Fee includes any
servicing fees owed or payable to any subservicer.
SERVICING OFFICER: Any officer of the Servicer 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 and the Certificate Insurer by the Servicer, as such list may from
time to time be amended.
SPECIAL ADVANCE: As defined in Section 5.16 hereof.
STARTUP DATE: The day designated as such pursuant to Section 2.11
hereof.
SUBSEQUENT CUT-OFF DATE: As to the Subsequent Mortgage Loans, the date
specified in the Addition Notice delivered in connection therewith.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans hereafter transferred
and assigned to a Trust pursuant to Section 2.3.
SUBSEQUENT TRANSFER: The transfer and assignment by the Seller to the
Depositor and by the Depositor to a Trust of the Subsequent Mortgage Loans
pursuant to the terms hereof.
SUBSEQUENT TRANSFER DATE: The Business Day on which a Subsequent
Transfer occurs.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.6 or 3.3, the amount (if any) by which the aggregate
principal balances (after application of principal payments received on or
before the date of substitution of any Qualified Substitute Mortgage Loans as of
the date of substitution, are less than the aggregate of the Principal Balances
of the related Deleted Mortgage Loans together with 30 days' interest thereon at
the Mortgage Interest Rate.
TAX MATTERS PERSON: The Person or Persons appointed pursuant to
Section 10.16 from time to time to act as the "tax matters person" (within the
meaning of the REMIC Provisions) of Trust 1A.
TAX RETURN: (i) In the case of Trust 1A, the federal income tax return
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 REMIC Taxable Income or Net Loss Allocation, or any
successor forms, to be filed on behalf of Trust 1A due to its classification 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 provision of federal, state
or local tax laws, (ii) in the case of Trust 1B, any informational return and
(iii) all other information reports or returns that may be required to be filed
under any applicable federal, state or local tax laws.
TELERATE PAGE 3750: The display page currently so designated on the
Dow ▇▇▇▇▇ Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
TERMINATION PRICE: As defined in Section 8.1(b).
THREE MONTH AVERAGE ANNUALIZED DEFAULT RATE: For a Trust and any
Distribution Date, the average of the ratios for the immediately preceding three
months of the quotient of (1) 12 times the outstanding Principal Balance of all
related Mortgage Loans that became Liquidated Mortgage Loans during the related
Due Period, over (2) the related outstanding Pool Principal Balance as of the
end of the related Due Period.
TOTAL EXPECTED LOSSES: For a Trust and any Distribution Date, the sum
of the related Cumulative Liquidated Loan Losses and the related Delinquency
Calculation Amount.
TRANSFER: Any direct or indirect transfer, sale, pledge, hypothecation
or other form of assignment of any Ownership Interest in a Certificate.
TRANSFEREE: Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
TRANSFEROR: Any Person who is disposing by Transfer any Ownership
Interest in a Certificate.
TREASURY INDEX: The One-Year Constant Maturity Treasury Index as
published by the Federal Reserve Board in the most recent edition of Federal
Reserve Board Statistical Release No. H.15 (519) that is available 45 days
before the related Interest Adjustment Date.
TRUST: Trust 1A or Trust 1B, as the case may be.
TRUST 1A: Life Financial Services Trust 1A, a trust created hereunder.
TRUST 1A REMIC: The assets constituting Trust 1A with respect to which
a REMIC election is made pursuant to Section 5.1, which assets shall consist of
(i) each ARM, (ii) the related Collection Account, (iii) the related Certificate
Account, (iv) the related Certificate Insurance Policy and (v) all proceeds of
the foregoing.
TRUST 1A RESERVE ACCOUNT: The LFS 1997-1A Reserve Account established
in accordance with Section 6.4 hereof.
TRUST 1B: Life Financial Services Trust 1B, a trust created hereunder.
TRUST 1B RESERVE ACCOUNT: The LFS 1997-1B Reserve Account established
in accordance with Section 6.4 hereof.
TRUST FUND: For each Trust, the segregated pool of assets subject
hereto, constituting the trust created hereby and to be administered hereunder,
consisting of: (i) such Mortgage Loans as from time to time are transferred to
such Trust pursuant to this Agreement, together with the Mortgage Files relating
thereto, and together with all collections thereon and proceeds thereof
including interest accrued after the applicable Cut-Off Date and principal
received after the applicable Cut-Off Date; (ii) any related REO Property,
together with all collections thereon and proceeds thereof; (iii) the Trustee's
rights with respect to such Mortgage Loans under all insurance policies required
to be maintained pursuant to this Agreement and any proceeds thereof; (iv) any
other security for such Mortgage Loan; (v) the related Certificate Insurance
Policy; (vi) the rights and remedies of the Trustee against any Person making
any representation or warranty to the Trustee hereunder with respect to or in
connection with such Mortgage Loans, to the extent provided herein; (vii) all
rights (but not obligations) of the Depositor under the Purchase Agreement with
respect to or in connection with such Mortgage Loans; and (viii) each related
Account (other than the related Capitalized Interest Account, the related
Pre-Funding Account and the related Reserve Account) and 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. Amounts
deposited in the related Capitalized Interest Account and the related
Pre-Funding Account shall be held by the Trustee, in trust for the benefit of
the related Certificateholders and the Certificate Insurer, but shall not
constitute part of such Trust Fund. The related Reserve Account shall be held in
trust by the Reserve Account Trustee for the benefit of the related
Certificateholders, the Certificate Insurer, the Trustee and the Seller but
shall not be deemed part of such Trust Fund.
TRUSTEE: Norwest Bank Minnesota, National Association, a national
banking association (in its capacity as Trustee of each Trust Fund and as
Reserve Account Trustee, unless the context would otherwise limit to the Trustee
of each Trust Fund), or its successor in interest, or any successor trustee
appointed as herein provided.
TRUSTEE FEE: As to a Trust and any Distribution Date, the fee payable
to the Trustee in respect of its services as Trustee that accrues at a monthly
rate equal to (i) one-twelfth of .03% of the related Class A Certificate
Principal Balance as of the related Determination Date for the period of time
during which the Trustee is performing the obligations of the Back-Up Servicer
pursuant to subsections (a) through (e) of Section 11.3 hereof, and (ii)
one-twelfth of .02% of the related Class A Certificate Principal Balance as of
the related Determination Date for the period of time during which the Trustee
is no longer performing the obligations of the Back-Up Servicer pursuant to
subsections (a) through (e) of Section 11.3 hereof.
TRUSTEE'S MORTGAGE FILE: For each Trust, the documents delivered to
the Trustee or its designated agent pursuant to Section 2.5(a).
TRUSTEE REMITTANCE REPORT: As defined in Section 6.7.
UNDERWRITER: Prudential Securities Incorporated.
UNDERWRITING GUIDELINES: The underwriting guidelines of the Seller and
of the Servicer, a copy of which has been delivered to the Depositor and the
Certificate Insurer.
UNITED STATES PERSON: A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States, or
a trust other than a trust described in Section 7701(a)(31) of the Code.
WEIGHTED AVERAGE RATE CAP: With respect to the ARMs and the Class A-1
Certificates, on any Distribution Date, that maximum interest rate computed to
equal one-twelfth the weighted average of the Mortgage Interest Rates for the
ARMs, net of (i) the related Premium Percentage and the rates at which the
related Servicing Fee and the related Trustee's Fee are calculated and, (ii)
commencing with the Distribution Date in October, 1997, 0.50%.
Section 1.2 PROVISIONS OF GENERAL APPLICATION.
(a) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP.
(b) The terms defined in this Article include the plural as well as
the singular.
(c) The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole. All references to Articles
and Sections shall be deemed to refer to Articles and Sections of this Agreement
(d) Reference to statutes are to be construed as including all
statutory provisions consolidating, amending or replacing the statute to which
reference is made and all regulations promulgated pursuant to such statutes
(e) All calculations of interest (other than with respect to the
Mortgage Loans) provided for herein shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All calculations of interest with respect to
any Mortgage Loan provided for herein shall be made in accordance with the terms
of the related Note and Mortgage or, if such documents do not specify the basis
upon which interest accrues thereon, on the basis of a 360-day year consisting
of twelve 30-day months, to the extent permitted by applicable law.
(f) Any Mortgage Loan payment is deemed to be received on the date
such payment is actually received by the Servicer, provided, however, that for
purposes of calculating distributions on the Certificates prepayments with
respect to any Mortgage Loan are deemed to be received on the date they are
applied in accordance with customary servicing practices consistent with the
terms of the related Note and Mortgage to reduce the outstanding principal
balance of such Mortgage Loan on which interest accrues.
ARTICLE II.
ESTABLISHMENT OF THE TRUST
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.1 ESTABLISHMENT OF THE TRUSTS.
The Depositor does hereby establish, pursuant to the further
provisions of this Agreement and the laws of the State of New York, two express
trusts to be known, for convenience, as "Life Financial Services Trust 1997-1A"
and "Life Financial Services Trust 1997-1B" and does hereby appoint Norwest Bank
Minnesota, National Association, as Trustee of each Trust in accordance with the
provisions of this Agreement.
Section 2.2 PURCHASE AND SALE OF INITIAL MORTGAGE LOANS.
The Depositor does hereby sell, transfer, assign, set over and convey
to the Trustee without recourse but subject to the terms and provisions of this
Agreement, all of the right, title and interest of the Depositor in and to the
related Initial Mortgage Loans, and all other assets included or to be included
in each Trust Fund for the benefit of the related Certificateholders and the
Certificate Insurer. In connection with such transfer and assignment, and
pursuant to Section 2.07 of the Purchase Agreement, the Depositor does hereby
also irrevocably transfer, assign, set over and otherwise convey to the Trustee
all of its rights under (but not obligations under) the Purchase Agreement
including, without limitation, its right to exercise the remedies created by
Sections 2.06 and 3.04 of the Purchase Agreement for defective documentation and
for breaches of representations and warranties, agreements and covenants of the
Seller contained in Sections 3.01 and 3.02 of the Purchase Agreement.
Section 2.3 PURCHASE AND SALE OF SUBSEQUENT MORTGAGE LOANS.
(a) Subject to the satisfaction of the conditions set forth in
paragraph (b) below, in consideration of the Trustee's delivery on the related
Subsequent Transfer Dates to or upon the order of the Depositor of all or a
portion of the balance of funds in the related Pre-Funding Account, the
Depositor shall on any Subsequent Transfer Date sell, transfer, assign, set over
and convey to the Trustee without recourse but subject to terms and provisions
of this Agreement, all of the right, title and interest of the Depositor in and
to the Subsequent Mortgage Loans, and all other assets included or to be
included in the specified Trust Fund for the benefit of the related
Certificateholders and the Certificate Insurer. In connection with such transfer
and assignment, and pursuant to Section 2.07 of the Purchase Agreement, the
Depositor does hereby also irrevocably transfer, assign, set over and otherwise
convey to the Trustee all of its rights under (but not obligations under) the
Purchase Agreement including, without limitation, its right to exercise the
remedies created by Sections 2.06 and 3.04 of the Purchase Agreement for
defective documentation and for breaches of representations and warranties,
agreements and covenants of the Seller contained in Sections 3.01 and 3.02 of
the Purchase Agreement.
The amount released from the related Pre-Funding Account with respect
to a transfer of related Subsequent Mortgage Loans shall be one-hundred percent
(100%) of the aggregate principal balances as of the related Subsequent Cut-Off
Date of the Subsequent Mortgage Loans so transferred.
(b) The Subsequent Mortgage Loans and the other property and rights
related thereto described in paragraph (a) above shall be transferred by the
Depositor to the specified Trust only upon the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee, the Rating Agencies
and the Certificate Insurer with an Addition Notice not later than five
business days prior to the Subsequent Transfer Date, which shall include a
Mortgage Loan Schedule for the specified Trust, listing the Subsequent
Mortgage Loans, and shall have provided any other information reasonably
requested by any of the foregoing with respect to the Subsequent Mortgage
Loans;
(ii) the Seller shall have deposited in the related Collection Account
all collections of (x) principal in respect of the Subsequent Mortgage
Loans received on or after the related Subsequent Cut-Off Date and (y)
interest due on the Subsequent Mortgage Loans after the related Subsequent
Cut- Off Date;
(iii) as of each Subsequent Transfer Date, the Seller was not
insolvent nor will be made insolvent by such transfer nor is the Seller
aware of any pending insolvency;
(iv) such addition will not result in a material adverse tax
consequence to the specified Trust or the related Certificateholders;
(v) the related Pre-Funding Period shall not have terminated;
(vi) the Seller shall have delivered to the Trustee an Officer's
Certificate confirming (x) the satisfaction of each condition precedent
specified in paragraph (b)(i), (ii), (iii), (v) and (viii), (y) that the
Subsequent Mortgage Loans comply with the provisions of Section 2.3(c) and
(z) each Subsequent Mortgage Loan complies with the terms of the Purchase
Agreement, including each of the representations and warranties made with
respect thereto;
(vii) there shall have been delivered to the Certificate Insurer, the
Rating Agencies and the Trustee, Opinions of Counsel with respect to the
transfer of the Subsequent Mortgage Loans substantially in the form of the
Opinions of Counsel delivered to the Certificate Insurer and the Trustee on
the Closing Date (bankruptcy, corporate and tax opinions);
(viii) the Seller shall not have selected such Subsequent Mortgage
Loans in a manner that it believes is adverse to the interests of the
related Certificateholders and the Certificate Insurer;
(ix) the Depositor shall have delivered to the Trustee an executed
assignment of the Subsequent Mortgage Loans substantially in the form of
Exhibit D to the Purchase Agreement;
(x) the Trustee shall have transferred from the related Pre-Funding
Account to the related Reserve Account the amount required pursuant to
6.1(g); and
(xi) the Certificate Insurer shall deliver to the Seller, the Trustee
and the Rating Agencies a written notice confirming the Certificate
Insurer's consent and approval to the addition of all Subsequent Mortgage
Loans purchased by each Trust on any Subsequent Transfer Date, which notice
shall specify any required variation in the Required Reserve Account Level
for each Trust and any required deposit by the Seller into the related
Reserve Account, over and above the reserve account deposit required by
Section 6.1(g).
(c) The obligation of the specified Trust to purchase the Subsequent
Mortgage Loans on a Subsequent Transfer Date is subject to the following
requirements, the satisfaction of which shall be the responsibility of the
Seller: (i) such Subsequent Mortgage Loan may not be 30 or more days
contractually delinquent as of the related Subsequent Cut-Off Date; (ii) the
original term to maturity of such Subsequent Mortgage Loan may not exceed 360
months; (iii) such Subsequent Mortgage Loan shall have a Mortgage Interest Rate
of at least 8.45% in the case of Trust 1B and a Gross Margin, in the case of
Trust 1A of at least 2.0%; (iv) the purchase of the Subsequent Mortgage Loans is
consented to by the Certificate Insurer and will not cause the Rating Agencies
to lower the ratings assigned to the related Class A Certificates; (v) the
Principal Balance of any such Subsequent Mortgage Loan that is a first lien may
not exceed $650,000, in the case of Trust 1A, and $525,000, in the case of Trust
1B, and none of such Subsequent Mortgage Loans in Trust 1A may be a second lien;
(vi) no more than 96.0%, in the case of Trust 1B, of such Subsequent Mortgage
Loans may be second liens; (vii) no such Subsequent Mortgage Loan shall have an
LTV of more than 90%, in the case of Trust 1A, and a CLTV of more than 125%, in
the case of Trust 1B; (viii) no Trust 1A Subsequent Mortgage Loan may be a
balloon loan, and no more than 8.0% of such Subsequent Mortgage Loans,
substantially all of which shall be first lien Mortgage Loans, may be balloon
loans, in the case of Trust 1B; (ix) following the purchase of the Subsequent
Mortgage Loans by the related Trust, the Mortgage Loans in Trust 1A will have a
weighted average Gross Margin of at least 5.5%, and the Mortgage Loans in Trust
1B will have a weighted average Mortgage Interest Rate of at least 13.0% and (x)
following the purchase of such Subsequent Mortgage Loans by Trust 1B, the
Mortgage Loans will have a weighted average CLTV of not more than 108.0%, in the
case of Trust 1B. Any such requirement may be waived or modified in any respect
with the written consent of the Certificate Insurer.
(d) Prior to the transfer and assignment of the Subsequent Mortgage
Loans, the Depositor shall satisfy the document delivery requirements set forth
in Section 2.5.
Section 2.4 POSSESSION OF MORTGAGE FILES; ACCESS TO MORTGAGE FILES.
(a) For each Trust, upon the issuance of the related Certificates, the
ownership of each related Mortgage Note, the related Mortgage and the contents
of the related Mortgage File related to each related Initial Mortgage Loan is,
and upon delivery to the Trust of each Subsequent Mortgage Loan, the ownership
of each Mortgage Note, the Mortgage and the contents of the related Mortgage
File relating to such Subsequent Mortgage Loan will be, vested in the Trustee
for the benefit of the related Certificateholders and the Certificate Insurer.
(b) Pursuant to Section 2.05 of the Purchase Agreement, the Depositor
has delivered or caused to be delivered the Trustee's Mortgage File related to
each Initial Mortgage Loan to the Trustee and will deliver or cause to be
delivered the Trustee's Mortgage File related to each Subsequent Mortgage Loan
to the Trustee.
(c) The Trustee will be the custodian or may enter into a custodial
agreement pursuant to which the Trustee will appoint a custodian (a "Custodian")
to hold the Mortgage Files in trust for the benefit of all present and future
Certificateholders and the Certificate Insurer; provided, however, that the
custodian so appointed shall in no event be the Depositor or the Servicer or any
Person known to a Responsible Officer of the Trustee to be an Affiliate of any
of them and shall be approved by the Certificate Insurer.
(d) The Custodian shall afford the Depositor, the Certificate Insurer
and the Servicer reasonable access to all records and documentation regarding
the Mortgage Loans relating to this Agreement, such access being afforded at
customary charges, upon reasonable request and during normal business hours at
the offices of the Custodian.
Section 2.5 DELIVERY OF MORTGAGE LOAN DOCUMENTS.
(a) In connection with the transfer and assignment of the Mortgage
Loans, the Depositor has delivered or shall cause to be delivered (with respect
to the Initial Mortgage Loans) or shall cause to be delivered (with respect to
the Subsequent Mortgage Loans) to the Trustee for a specified Trust the
following documents or instruments with respect to each Mortgage Loan so
transferred or assigned:
(i) the original Mortgage Note, endorsed without recourse in blank by
the Seller, including all intervening endorsements showing a complete chain
of endorsement;
(ii) the related original Mortgage with evidence of recording
indicated thereon or a copy thereof certified by the applicable recording
office;
(iii) the recorded mortgage assignment(s), or copies thereof certified
by the applicable recording office, if any, showing a complete chain of
assignment from the originator of the related Mortgage Loan to the Seller
(which assignment may, at the Seller's option, be combined with the
assignment referred to in subpart (iv) hereof);
(iv) a mortgage assignment in recordable form (which, if acceptable
for recording in the relevant jurisdiction, may be included in a blanket
assignment or assignments) of the related Mortgage from the Seller to the
Trustee;
(v) originals of all assumption, modification and substitution
agreements in those instances where the terms or provisions of the related
Mortgage or Mortgage Note have been modified or such Mortgage or Mortgage
Note has been assumed; and
(vi) evidence of title insurance (which may consist of (A) a copy of
the title insurance or PERT policy, or (B) a binder thereof or copy of such
binder) together with a certificate from the Seller that the original
Mortgage has been delivered to the title insurance company that issued such
binder for recordation.
In instances where the original recorded Mortgage and a completed
assignment thereof in recordable form cannot be delivered by the Seller to the
Trustee prior to or concurrently with the execution and delivery of this
Agreement due to a delay in connection with recording, the Seller may:
(x) In lieu of delivering such original recorded Mortgage, deliver to
the Trustee a copy thereof provided that the Seller certifies that the original
Mortgage has been delivered to a title insurance company for recordation after
receipt of its policy of title insurance or binder therefor (and the Seller
shall deliver such original recorded Mortgage to the Trustee within 5 Business
Days after the Seller's receipt thereof); and
(y) In lieu of delivering the completed assignment in recordable form,
deliver to the Trustee the assignment in recordable form, otherwise complete
except for recording information.
The Trustee shall promptly upon receipt thereof, with respect to each
Mortgage Note described in (i) above and each assignment described in (iv)
above, endorse such Mortgage Note and assignment as follows: "Norwest Bank
Minnesota, National Association, as Trustee under the Pooling and Servicing
Agreement dated as of February 28, 1997, Life Financial Services Trust 1997-1A"
or "Life Financial Services Trust 1997-1B," as applicable.
As promptly as practicable, but in any event within thirty (30) days
from the Closing Date, (or with respect to the Subsequent Mortgage Loans, within
thirty (30) days from the applicable Subsequent Transfer Date) the Seller shall
cause to be recorded, at the Seller's expense, in the appropriate public office
for real property records, the assignments of the Mortgages to the Trustee.
All original documents relating to the Mortgage Loans which are not
delivered to the Trustee, as permitted by Section 2.05(a) of the Purchase
Agreement and this Section 2.5(a), are and shall be held by the Servicer in
trust for the benefit of the Trustee on behalf of the related Certificateholders
and the Certificate Insurer.
(b) Within 30 days following delivery of the Mortgage Files to the
Trustee, the Trustee will review each Mortgage File to ascertain that all
required documents set forth in Section 2.5(a) have been executed and received,
and that such documents relate to the Mortgage Loans identified on the related
Mortgage Loan Schedule, and in so doing the Trustee may rely on the purported
due execution and genuineness of any signature thereon. If within such 30-day
period (or, with respect to any Qualified Replacement Mortgage, within 30 days
after the assignment thereof) the Trustee or the Certificate Insurer finds any
document constituting a part of a Mortgage File not to have been executed or
received or to be unrelated to the Mortgage Loans identified in the related
Mortgage Loan Schedule, the Trustee or the Certificate Insurer, as applicable,
shall promptly notify the Trustee, the Seller, the Servicer and the Certificate
Insurer in writing with the details thereof. The Seller shall have a period of
60 days after such notice within which to correct or cure any such defect. Each
original recorded assignment of a Mortgage shall be delivered to the Trustee
within 10 days following the date on which it is returned to the Seller by the
office with which such assignment was filed for recording and within 10 days
following receipt by the Trustee of the recorded assignment or the assignment in
recordable form, as the case may be, the Trustee shall review such assignment to
confirm the information specified above in the first sentence of this Section
2.5(b) with respect to the documents constituting the Mortgage File. Upon
receipt by the Trustee of the recorded assignment or the assignment in
recordable form, as the case may be, such recorded assignment or assignment in
recordable form shall become part of the Mortgage File. The Trustee shall notify
the Seller of any defect the Trustee identifies in such assignment based on such
review. The Seller shall have a period of 60 days following such notice to
correct or cure such defect. In the event that the Seller fails to record an
assignment of a Mortgage as herein provided the Trustee shall, at the Seller's
expense, use reasonable efforts to prepare and, if required hereunder, file such
assignments for recordation in the appropriate real property or other records
and the Seller hereby appoints the Trustee as its attorney-in-fact with full
power and authority acting in its stead for the purpose of such preparation,
execution and filing.
Section 2.6 ACCEPTANCE BY TRUSTEE OF EACH TRUST FUND; CERTAIN
SUBSTITUTIONS; CERTIFICATION BY TRUSTEE.
The Trustee agrees to execute and deliver to the Depositor, the
Certificate Insurer, the Servicer and the Seller on or prior to the Closing Date
with respect to the Initial Mortgage Loans, and on each Subsequent Transfer Date
with respect to the related Subsequent Mortgage Loans, an acknowledgment of
receipt of each Certificate Insurance Policy (provided it has been delivered to
the Trustee as contemplated herein) and, with respect to each Initial Mortgage
Loan and Subsequent Mortgage Loan, the original Mortgage Note (with any
exceptions noted), in the form attached as Exhibit E hereto and declares that it
will hold such documents and any amendments, replacements or supplements
thereto, as well as any other assets included in the definition of Trust Fund
and delivered to the Trustee, as Trustee in trust upon and subject to the
conditions set forth herein for the benefit of the Certificateholders of the
specified Trust and the Certificate Insurer. The Trustee agrees, for the benefit
of the Certificateholders of the specified Trust and the Certificate Insurer, to
review (or cause to be reviewed) each Trustee's Mortgage File relating to the
Initial Mortgage Loans for each Trust within 30 days after the Closing Date (and
with respect to the Subsequent Mortgage Loans for each Trust, within 30 days of
the related Subsequent Transfer Date) and to deliver to the Seller, the
Servicer, the Depositor and the Certificate Insurer a certification in the form
attached hereto as Exhibit F to the effect that, as to each Mortgage Loan listed
in the related Mortgage Loan Schedule (other than any Mortgage Loan paid in full
or any Mortgage Loan specifically identified in such certification as not
covered by such certification and except as otherwise noted in such
certification), (i) all documents required to be delivered to it pursuant to
Section 2.5 are in its possession, (ii) each such document has been reviewed by
it and has not been mutilated, damaged, torn or otherwise physically altered
(handwritten additions, changes or corrections shall not constitute physical
alteration if initialed by the Mortgagor), appears regular on its face and
relates to such Mortgage Loan, and (iii) based on its examination and only as to
the foregoing documents, the information set forth on the Mortgage Loan Schedule
as to the information set forth in (i), (ii), (v) and (vi) of the definition of
"Mortgage Loan Schedule" set forth herein accurately reflects the information
set forth in the related Mortgage File delivered on such date. The Trustee shall
be under no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face.
By June 30, 1997, the Trustee shall deliver (or cause to be delivered)
to the Servicer, the Seller, the Depositor and the Certificate Insurer a final
certification in the form attached hereto as Exhibit G to the effect that, as to
each Mortgage Loan listed in each Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in such
certification as not covered by such certification and except as otherwise noted
in such certification), (i) all documents required to be delivered to it
pursuant to Section 2.5 are in its possession, (ii) each such document has been
reviewed by it and has not been mutilated, damaged, torn or otherwise physically
altered (handwritten additions, changes or corrections shall not constitute
physical alteration if initialed by the Mortgagor), appears regular on its face
and relates to such Mortgage Loan, and (iii) based on its examination and only
as to the foregoing documents, the information set forth in (i), (ii), (v) and
(vi) of the definition of "Mortgage Loan Schedule" set forth herein accurately
reflects the information set forth in the Trustee's Mortgage File delivered on
such date. The Trustee shall be under no duty or obligation to inspect, review
or examine any such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable, or appropriate for the represented
purpose or that they are other than what they purport to be on their face.
(b) If the Trustee or the Certificate Insurer during the process of
reviewing the Trustee's Mortgage Files finds any document constituting a part of
a Trustee's Mortgage File which is not executed, has not been received, is
unrelated to the Mortgage Loan identified in the related Mortgage Loan Schedule,
or does not conform to the requirements of Section 2.5 or the description
thereof as set forth in the related Mortgage Loan Schedule, the Trustee or the
Certificate Insurer, as applicable, shall promptly so notify the Servicer, the
Seller, the Certificate Insurer and the Trustee. In performing any such review,
the Trustee may conclusively rely on the Seller as to the purported genuineness
of any such document and any signature thereon. It is understood that the scope
of the Trustee's review of the Mortgage Files is limited solely to confirming
that the documents listed in Section 2.5 have been executed and received and
relate to the Mortgage Files identified in the related Mortgage Loan Schedule.
Pursuant to the Purchase Agreement, the Seller has agreed to use reasonable
efforts to cause to be remedied any material defect in a document constituting
part of a Mortgage File of which it is so notified by the Trustee or the
Certificate Insurer. If, however, within 60 days after the Trustee's notice to
it respecting such defect the Seller has not caused to be remedied the defect
and the defect materially and adversely affects the value of the related
Mortgage Loan or the interest of the Certificateholders of the related Trust in
the related Mortgage Loan or the interests of the Certificate Insurer, the
Seller will be obligated, pursuant to the Purchase Agreement, to either (i)
substitute in lieu of such Mortgage Loan a Qualified Substitute Mortgage Loan in
the manner and subject to the conditions set forth in Section 3.3 or (ii)
purchase such Mortgage Loan at a purchase price equal to the Principal Balance
of such Mortgage Loan as of the date of purchase, plus the greater of (x) all
accrued and unpaid interest on such Principal Balance and (y) 30 days' interest
thereon, computed at the related Mortgage Interest Rate, net of the Servicing
Fee if the Seller is the Servicer, plus the amount of any unreimbursed Servicing
Advances made by the Servicer with respect to such Mortgage Loan, which purchase
price shall be deposited in the related Collection Account on the next
succeeding Servicer Distribution Date, after deducting therefrom any amounts
received in respect of such repurchased Mortgage Loan or Loans and being held in
the related Collection Account for future distribution to the extent such
amounts have not yet been applied to principal or interest on such Mortgage Loan
(the "Loan Repurchase Price"). For purposes of calculating the related Available
Amount, any Loan Repurchase Price or Substitution Adjustment that is paid shall
be deemed deposited in the related Certificate Account in the Due Period
preceding such Servicer Distribution Date.
(c) Upon receipt by the Trustee of a certification of a Servicing
Officer of such substitution or purchase and, in the case of a substitution,
upon receipt of the related Trustee's Mortgage File, and the deposit of the
amounts described above in the related Collection Account (which certification
shall be in the form of Exhibit H hereto), the Trustee shall release to the
Servicer for release to the Seller the related Trustee's Mortgage File and shall
execute, without recourse, and deliver such instruments of transfer furnished by
the Seller as may be necessary to transfer such Mortgage Loan to the Seller. The
Trustee shall notify the Certificate Insurer if the Seller fails to repurchase
or substitute for a Mortgage Loan in accordance with the foregoing.
Section 2.7 EXECUTION OF CERTIFICATES.
The Trustee acknowledges with respect to each Trust the assignment to
it of the related Initial Mortgage Loans and the delivery of the Trustee's
Mortgage Files relating thereto to it and, concurrently with such delivery, has
executed, authenticated and delivered to or upon the order of the Depositor, in
exchange for the related Initial Mortgage Loans, the Trustee's Mortgage Files
and the other assets included in the definition of Trust Fund, Certificates duly
authenticated by the Trustee in Authorized Denominations evidencing the entire
ownership of the related Trust Fund.
Section 2.8 APPLICATION OF PRINCIPAL AND INTEREST.
In the event that Net Liquidation Proceeds on a Liquidated Mortgage
Loan are less than the Principal Balance of the related Mortgage Loan plus
accrued interest thereon, or any Mortgagor makes a partial payment of any
Monthly Payment due on a Mortgage Loan, such Net Liquidation Proceeds or partial
payment shall be applied to payment of the related Mortgage Note as provided
therein, and if not so provided, first to interest accrued at the Mortgage
Interest Rate and then to principal.
Section 2.9 GRANT OF SECURITY INTEREST.
(a) It is intended that the conveyance of the Mortgage Loans and other
property of the related Trust Fund by the Depositor to the Trustee for each
specified Trust as provided in this Section 2.9 and Sections 2.2 and 2.3 be, and
be construed as, a sale of the related Mortgage Loans and such other property by
the Depositor to the Trustee for the benefit of the related Certificateholders
and the Certificate Insurer. It is, further, not intended that such conveyance
be deemed a pledge of the related Mortgage Loans or such other property by the
Depositor to the Trustee for the specified Trust to secure a debt or other
obligation of the Depositor. However, in the event that such Mortgage Loans or
any of such other property are held to be property of the Depositor, or if for
any reason this Agreement is held or deemed to create a security interest in the
Mortgage Loans or any of such other property, then it is intended that: (i) this
Agreement shall also be deemed to be a security agreement within the meaning of
the Uniform Commercial Code; (ii) the conveyance provided for in this Section
shall be deemed to be a grant by the Depositor to the Trustee for the specified
Trust of a security interest in all of the Depositor's right, title and interest
in and to such Mortgage Loans and such other property and all amounts payable to
the holders of such Mortgage Loans in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts from time to time held or invested in the related Certificate
Account, whether in the form of cash, instruments, securities or other property;
(iii) the possession by the Trustee or its agent of the related Mortgage Notes
and such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to the Uniform
Commercial Code; and (iv) notifications to persons holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest 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 such Mortgage Loans or any of such other
property, 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.
(b) Without diminution of the requirements of Sections 2.4(c) and this
Section 2.9, all original documents relating to such Mortgage Loans that are not
delivered to the Trustee are and shall be held by the Servicer in trust for the
benefit of the Trustee on behalf of the related Certificateholders and the
Certificate Insurer. In the event that any such original document is required
pursuant to the terms of this Section 2.9 to be a part of a Mortgage File, such
document shall be delivered promptly to the Trustee pursuant to the Purchase
Agreement. In acting as custodian of any such original document, the Servicer
agrees further that it does not and will not have or assert any beneficial
ownership interest in the Mortgage Loans or the Mortgage Files. Promptly upon
the Depositor's and a Trust's acquisition thereof and the Servicer's receipt
thereof, the Servicer on behalf of such Trust shall ▇▇▇▇ conspicuously each
original document not delivered to the Trustee, and the Seller's master data
processing records evidencing each Mortgage Loan with a legend, acceptable to
the Trustee, evidencing that such Trust has purchased the Mortgage Loans and all
right and title thereto and interest therein pursuant to the Purchase Agreement
and this Agreement.
(c) The Depositor and the Servicer shall take no action inconsistent
with the Trust's ownership of each Trust Fund and each shall indicate or shall
cause to be indicated in its records and records held on its behalf that
ownership of each Mortgage Loan and the assets in the Trust Fund are held by the
Trustee on behalf of the related Trust. In addition, the Depositor and the
Servicer shall respond to any inquiries from third parties with respect to
ownership of a Mortgage Loan or any other asset in a Trust Fund by stating that
it is not the owner of such asset and that ownership of such Mortgage Loan or
other Trust Fund asset is held by the Trustee on behalf of the related Trust.
Section 2.10 FURTHER ACTION EVIDENCING ASSIGNMENTS.
(a) The Servicer agrees that, from time to time, at its expense, it
shall cause the Seller (and the Depositor on behalf of itself also agrees that
it shall), promptly to execute and deliver all further instruments and
documents, and take all further action, that may be necessary or appropriate, or
that the Servicer, the Trustee or the Certificate Insurer may reasonably
request, in order to perfect, protect or more fully evidence the transfer of
ownership of each Trust Fund or to enable the Trustee or the Certificate Insurer
to exercise or enforce any of its rights hereunder. Without limiting the
generality of the foregoing, the Servicer and the Depositor will, upon the
request of the Servicer, the Trustee or the Certificate Insurer execute and file
(or cause to be executed and filed) such real estate filings, financing or
continuation statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or appropriate.
(b) The Depositor hereby grants to the Servicer and the Trustee powers
of attorney to execute all documents on its behalf under this Agreement and the
Purchase Agreement as may be necessary or desirable to effectuate the foregoing.
Section 2.11 DESIGNATIONS UNDER REMIC PROVISIONS; DESIGNATION OF
STARTUP DATE.
(a) The Class A-1 Certificates are hereby designated as the "regular
interests," and the Class R Certificates are designated the single class of
"residual interests" in Trust 1A and the related Trust Fund for the purposes of
the REMIC Provisions. Trust 1A shall be designated as the "Life Financial
Services Trust 1A REMIC."
(b) The Closing Date will be the "startup day" of Trust 1A within the
meaning of Section 860G(a)(9) of the Code.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES.
The Seller (including the Seller in its capacity as Servicer) hereby
represents and warrants to the Trustee, the Depositor, the Certificate Insurer
and the Certificateholders as of the Closing Date and during the term of this
Agreement that:
(a) The Seller is a federal savings bank duly organized, validly
existing and in good standing under the laws of the United States of America and
has the power to own its assets and to transact the business in which it is
currently engaged. The Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the character
of the business transacted by it or properties owned or leased by it or the
performance of its obligations hereunder requires such qualification and in
which the failure so to qualify could reasonably be expected to have a material
adverse effect on the business, properties, assets, or condition (financial or
other) of the Seller or the performance of its obligations hereunder;
(b) The Seller has the power and authority to make, execute, deliver
and perform this Agreement and all of the transactions contemplated under this
Agreement, and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement. When executed and
delivered, assuming due authorization, execution and delivery hereof by the
Depositor and the Trustee, this Agreement will constitute the legal, valid and
binding obligation of the Seller, enforceable in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and those
of creditors of a federal savings bank, and by the availability of equitable
remedies;
(c) The Seller is not required to obtain the consent of any other
party or any consent, license, approval or authorization from, or registration
or declaration with, any governmental authority, bureau or agency which consent
already has not been obtained in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except such as have
been obtained prior to the Closing Date;
(d) The execution, delivery and performance of this Agreement by the
Seller will not violate any provision of any existing law or regulation or any
order or decree of any court or the Articles of Incorporation or Bylaws of the
Seller, or constitute a breach of any mortgage, indenture, contract or other
agreement to which the Seller is a party or by which it may be bound;
(e) There is no action, suit, proceeding or investigation pending or
threatened against the Seller which, either in any one instance or in the
aggregate, is, in the Seller's judgment, likely to result in any material
adverse change in the business, operations, financial condition, properties, or
assets of the Seller, or in any material impairment of the right or ability of
the Seller to carry on its business substantially as now conducted, or in any
material liability on the part of any of them, or which would draw into question
the validity of this Agreement, the Certificates, or the Mortgage Loans or of
any action taken or to be taken in connection with the obligations of the Seller
contemplated herein or therein, or which would be likely to impair materially
the ability of the Seller to perform its obligations hereunder;
(f) Neither this Agreement nor any statement, report, or other
document furnished or to be furnished pursuant to this Agreement or in
connection with the transactions contemplated hereby, including without
limitation the sale or placement of the Certificates, contains or will contain
any untrue statement of fact provided by or on behalf of the Seller or omits or
will omit to state a fact necessary to make the statements provided by or on
behalf of the Seller contained herein or therein not misleading:
(g) The Seller does not believes, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Agreement;
(h) The transfer, assignment, and conveyance of the Mortgage Loans by
the Seller pursuant to this Agreement is not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable jurisdiction;
(i) The Seller is solvent and will not as a result of this Agreement
and the undertakings of the Seller hereunder be rendered insolvent; and
(j) The Seller is not an "investment company" or a company "controlled
by an investment company," within the meaning of the Investment Company Act of
1940, as amended.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.1 shall survive the delivery of the
respective Mortgage Files to the Trustee or to a custodian, as the case may be,
and inure to the benefit of the Trustee and the Certificate Insurer.
Section 3.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the Trustee
and the Certificate Insurer that as of the date of this Agreement or as of such
date specifically provided herein:
(a) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(b) The Depositor has the corporate power and authority to convey the
Mortgage Loans and to execute, deliver and perform, and to enter into and
consummate transactions contemplated by, this Agreement;
(c) This Agreement has been duly and validly authorized, executed and
delivered by the Depositor, all requisite corporate action having been taken,
and, assuming the due authorization, execution and delivery hereof by the
Servicer and the Trustee, constitutes or will constitute the legal, valid and
binding agreement of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, 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) No consent, approval, authorization or order of or registration or
filing with, or notice to, any governmental authority or court is required for
the execution, delivery and performance of or compliance by the Depositor with
this Agreement or the consummation by the Depositor of any of the transactions
contemplated hereby, except as have been made on or prior to the Closing Date;
(e) None of the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or thereby, or the
fulfillment of or compliance with the terms and conditions of this Agreement,
(i) conflicts or will conflict with or results or will result in a breach of, or
constitutes or will constitute a default or results or will result in an
acceleration under (A) the charter or bylaws of the Depositor, or (B) of any
term, condition or provision of any material indenture, deed of trust, contract
or other agreement or instrument to which the Depositor or any of its
subsidiaries is a party or by which it or any of its subsidiaries is bound; (ii)
results or will result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Depositor of any court or governmental
authority having jurisdiction over the Depositor or its subsidiaries; or (iii)
results in the creation or imposition of any lien, charge or encumbrance which
would have a material adverse effect upon the Mortgage Loans or any documents or
instruments evidencing or securing the Mortgage Loans;
(f) There are no actions, suits or proceedings before or against or
investigations of, the Depositor pending, or to the knowledge of the Depositor,
threatened, before any court, administrative agency or other tribunal, and no
notice of any such action, which, in the Depositor's reasonable judgment, might
materially and adversely affect the performance by the Depositor of its
obligations under this Agreement, or the validity or enforceability of this
Agreement; and
(g) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency that may materially and adversely affect its
performance hereunder.
It is understood and agreed that the representations, warranties and
covenants set forth in this Section 3.2 shall survive delivery of the respective
Mortgage Files to the Trustee or to a custodian, as the case may be, and shall
inure to the benefit of the Trustee and the Certificate Insurer.
Section 3.3 PURCHASE AND SUBSTITUTION.
(a) It is understood and agreed that the representations and
warranties set forth in Sections 3.01 and 3.02 of the Purchase Agreement shall
survive delivery of the Certificates to the Certificateholders. Pursuant to the
Purchase Agreement, with respect to any representation or warranty contained in
Sections 3.01 or 3.02 of the Purchase Agreement (other than Section 3.02(ar)
(concerning environmental matters)) that is made to the best of the Seller's
knowledge, if it is discovered by the Servicer, any subservicer, the Trustee,
the Certificate Insurer or any Certificateholder that the substance of such
representation and warranty was inaccurate as of the Closing Date and such
inaccuracy materially and adversely affects the value of the related Mortgage
Loan, then notwithstanding the Seller's lack of knowledge with respect to the
inaccuracy at the time the representation or warranty was made, such inaccuracy
shall be deemed a breach of the applicable representation or warranty. Upon
discovery by any of the Seller, the Servicer, any subservicer, the Trustee or
the Certificate Insurer of a breach of any of the representations and warranties
contained in Sections 3.01 or 3.02 of the Purchase Agreement, as of the Closing
Date (or with respect to the Subsequent Mortgage Loans, the applicable
Subsequent Transfer Date), with the result that the value of any Mortgage Loan
is reduced or the interests of the Certificateholders in the related Mortgage
Loan or the interests of the Certificate Insurer were materially and adversely
affected (notwithstanding that any such representation and warranty was made to
the Seller's best knowledge and the Seller lacked knowledge of such breach), the
party discovering such breach shall give prompt written notice to the others.
Within 60 days of the earlier of its discovery or its receipt of notice of any
breach of a representation or warranty, pursuant to the Purchase Agreement, the
Seller shall (a) promptly cure such breach in all material respects, or (b)
purchase such Mortgage Loan on the next succeeding Servicer Distribution Date,
in the manner and at the price specified in Section 2.6(b), or (c) remove such
Mortgage Loan from the Trust Fund (in which case it shall become a Deleted
Mortgage Loan) and substitute one or more Qualified Substitute Mortgage Loans;
provided, that, such substitution is effected not later than the date which is
two years after the Closing Date or at such later date, if the Trustee and the
Certificate Insurer receive an Opinion of Counsel that such substitution would
not cause the related Trust Fund to fail to qualify as a "grantor trust" at any
time any Certificates are outstanding, in the case of Trust 1B, or that such
substitution would not be a Prohibited Transaction, in the case of Trust 1A. In
addition, pursuant to the Purchase Agreement, the Seller shall be obligated to
indemnify the Trustee, the Trust, the Certificateholders and the Certificate
Insurer for any claims or damages arising out of a breach by the Seller of
representations or warranties regarding the Mortgage Loans. Pursuant to the
Purchase Agreement any such substitution shall be accompanied by payment by the
Seller of the Substitution Adjustment, if any, to be deposited in the related
Collection Account. Notwithstanding anything else in this Agreement or the
Purchase Agreement, the Seller shall not repurchase or substitute a Mortgage
Loan and the Trustee shall not release any Mortgage Loan until the Seller shall
have deposited in the related Collection Account the Substitution Adjustment or
Loan Repurchase Price required to be deposited by the Seller with respect to
such Mortgage Loans.
(b) As to any Deleted Mortgage Loan for which the Seller substitutes a
Qualified Substitute Mortgage Loan or Loans, the Servicer shall cause the Seller
to effect such substitution by delivering to the Trustee a certification in the
form attached hereto as Exhibit H, executed by a Servicing Officer and the
documents described in Sections 2.5(a)(i)-(vi) for such Qualified Substitute
Mortgage Loan or Loans.
(c) The Servicer shall deposit in the related Collection Account all
payments received in connection with such Qualified Substitute Mortgage Loan or
Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loans on or before the date of
substitution will be retained by the Seller. The related Trust Fund will own all
payments received on the Deleted Mortgage Loan on or before the date of
substitution, and the Seller shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan (unless offset
against the Loan Repurchase Price pursuant to Section 2.6(b). The Servicer shall
give written notice to the Trustee and the Certificate Insurer that such
substitution has taken place and shall amend the related Mortgage Loan Schedule
to reflect the removal of such Deleted Mortgage Loan from the terms of this
Agreement and the substitution of the Qualified Substitute Mortgage Loan. Upon
such substitution, such Qualified Substitute Mortgage Loan or Loans shall be
subject to the terms of this Agreement in all respects.
(d) It is understood and agreed that the obligations of the Seller set
forth in Sections 2.06 and 3.04 of the Purchase Agreement to, and the Servicer's
obligation to cause the Seller to, cure, purchase or substitute for a defective
Mortgage Loan, or to indemnify as described in clause (a) above, constitute the
sole remedies of the Trustee, the Certificate Insurer and the Certificateholders
respecting a breach of the representations and warranties of the Seller set
forth in Sections 3.01 and 3.02 of the Purchase Agreement. The Trustee shall
give prompt written notice to the Certificate Insurer and the Rating Agencies of
any repurchase or substitution made pursuant to this Section 3.3 or Section
2.6(b).
ARTICLE IV.
THE CERTIFICATES
Section 4.1 THE CERTIFICATES.
The Certificates shall be substantially in the forms annexed hereto as
Exhibit B-1, in the case of the Class A-1 Certificate, Exhibit B-2, in the case
of the Class A-2 Certificate and Exhibit B-3, in the case of the Class R
Certificate. All Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized officer and authenticated by the
manual or facsimile signature of an authorized officer. Certificates bearing the
signatures of individuals who were at the time of the execution thereof the
authorized officers of the Trustee shall bind the Trustee, notwithstanding that
such individuals or any of them have ceased to hold such offices prior to the
delivery of such Certificates or did not hold such offices at the date of such
Certificates. All Certificates issued hereunder shall be dated the date of their
authentication.
Section 4.2 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
(a) The Trustee, as registrar, shall cause to be kept for each Trust a
register (the "Certificate Register") in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall provide for the registration
of related Certificates and the registration of transfer of related
Certificates. The Trustee is hereby appointed registrar for the purpose of
registering and transferring of Certificates as herein provided. The Certificate
Insurer shall be entitled to inspect and copy the Certificate Register and the
records of the Trustee relating to the Certificates during normal business hours
upon reasonable notice.
(b) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the related Trust and entitled to the same benefits under this Agreement as
the Certificates surrendered upon such registration of transfer or exchange.
(c) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made to a Holder for any registration
of transfer or exchange of Certificates, but the Trustee may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the related Trust.
(e) It is intended that the Class A Certificates of each Trust be
registered so as to participate in a global book-entry system with the
Depository, as set forth herein. The Class A Certificates of each Trust shall,
except as otherwise provided in the next paragraph, be initially issued in the
form of a single fully registered Class A Certificate with a denomination equal
to the related Original Class A Principal Balance. Upon initial issuance, the
ownership of each such Class A Certificate shall be registered in the related
Certificate Register in the name of Cede & Co., or any successor thereto, as
nominee for the Depository. The Depositor and the Trustee are hereby authorized
to execute and deliver the Representation Letter with the Depository. With
respect to Class A Certificates registered in the related Certificate Register
in the name of Cede & Co., as nominee of the Depository, the Depositor, the
Seller, the Servicer, the Trustee and the Certificate Insurer shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Seller, the Servicer, the Trustee and the Certificate Insurer
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to any Ownership Interest, (ii) the delivery to any Direct or
Indirect Participant or any other Person, other than a Certificateholder, of any
notice with respect to the Class A Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a
Certificateholder, of any amount with respect to any distribution of principal
or interest on the Class A Certificates. No Person other than a
Certificateholder shall receive a certificate evidencing such Class A
Certificate. Upon delivery by the Depository to the Trustee of written notice to
the effect that the Depository has determined to substitute a new nominee in
place of Cede & Co., and subject to the provisions hereof with respect to the
payment of interest by the mailing of checks or drafts to the Certificateholders
appearing as Certificateholders at the close of business on a Record Date, the
name "Cede & Co." in this Agreement shall refer to such new nominee of the
Depository.
(f) In the event that (i) the Depository or the Servicer advises the
Trustee and the Certificate Insurer in writing that the Depository is no longer
willing or able to discharge properly its responsibilities as nominee and
depository with respect to the Class A Certificates and the Servicer or the
Depository is unable to locate a qualified successor or (ii) the Trustee at its
sole option, after notice to the Certificate Insurer, elects to terminate the
book-entry system through the Depository, the Class A Certificates shall no
longer be restricted to being registered in the Certificate Register in the name
of Cede & Co. (or a successor nominee) as nominee of the Depository. At that
time, the Servicer may determine that the Class A Certificates shall be
registered in the name of and deposited with a successor depository operating a
global book-entry system, as may be acceptable to the Servicer, or such
depository's agent or designee but, if the Servicer does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names Certificateholders transferring Class A
Certificates shall designate, in accordance with the provisions hereof;
provided, however, that any such reregistration shall be at the expense of the
Servicer.
(g) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates as the case may be and all notices with respect to
such Class A Certificates as the case may be shall be made and given,
respectively, in the manner provided in the Representation Letter.
(h) Subject to the restrictions set forth in this Agreement, upon
surrender for registration of transfer of any Certificate at the office or
agency of the Trustee located in New York, New York, the Trustee shall execute,
authenticate and deliver in the name of the designated transferee or
transferees, a new Certificate of the same Class and Percentage Interest and
dated the date of authentication by the Trustee. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates of
Authorized Denominations of a like aggregate Percentage Interest in the same
Trust, upon surrender of the Certificates to be exchanged at such office.
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. No service charge 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. All Certificates
surrendered for transfer and exchange shall be canceled and destroyed by the
Trustee in accordance with the Trustee's standard procedures.
(i) No transfer of a Class A Certificate shall be made to the Seller
or, to the actual knowledge of a Responsible Officer of the Trustee, to any of
the Seller's Affiliates, successors or assigns.
(j) No sale or other transfer of record or beneficial ownership of any
Class A Certificate of Trust 1A shall be made to any Person which is an employee
benefit plan or other retirement arrangement that is subject to Title I of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and/or to
Section 4975 of the Code, or an entity whose underlying assets include plan
assets by reason of such plan or account investing in such entity (including
insurance company separate or general accounts and collective investment funds)
prior to the end of the Pre-Funding Period. By acceptance of a Class A
Certificate of Trust 1A, each Person acquiring a Class A Certificate of Trust 1A
prior to the termination of such Pre-Funding Period shall be deemed to have
represented that it is not subject to the foregoing limitations. No sale or
other transfer of record or beneficial ownership of any Class A Certificate of
Trust 1B shall be made to any Person which is an employee benefit plan or other
retirement arrangement that is subject to ERISA, and/or to Section 4975 of the
Code, or an entity whose underlying assets include plan assets by reason of such
plan or account investing in such entity (including insurance company separate
or general accounts and collective investment funds). By acceptance of a Class A
Certificate of Trust 1B, each Person acquiring a Class A Certificate of Trust 1B
shall be deemed to have represented that it is not subject to the foregoing
limitations.
(k) No transfer, sale, pledge or other disposition of any Class R
Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the Securities Act of 1933, as amended
and effective registration or qualification under applicable state securities
laws or "Blue Sky" laws, or is made in a transaction that does not require such
registration or qualification. None of the Servicer, the Depositor, the Seller
or the Trustee is obligated under this Agreement to register the Class R
Certificates under the Securities Act of 1933, as amended or any other
securities law or to take any action not otherwise required under this Agreement
to permit the transfer of the Class R Certificates without such registration or
qualification. Any such Certificateholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Depositor, the
Seller, the Servicer and the Certificate Insurer against any liability that may
result if the transfer is not exempt or is not made in accordance with such
applicable federal and state laws. Promptly after receipt by an indemnified
party under this paragraph of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this paragraph, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than under this paragraph. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to appoint counsel reasonably satisfactory to such indemnified party to
represent the indemnified party in such action; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are in conflict with or contrary to the interests of the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to appoint counsel to defend such action
and approval by the indemnified party of such counsel, the indemnifying party
will not be liable to such indemnified party under this paragraph for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso of the next preceding sentence
(it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel for any indemnified party),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party. Under no circumstances shall the indemnified party enter
into a settlement agreement with respect to any lawsuit, claim or other
proceeding without the prior written consent of the indemnifying party.
(l) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Servicer or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under subclause (viii) below and to
execute all instruments of transfer and to do all other things necessary in
connection with any such sale, and the rights of each Person acquiring any
Ownership Interest in a Class R Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in a Class
R Certificate shall be a Permitted Transferee and a United States Person
and shall promptly notify the Trustee of any change or impending change in
its status as either a United States Person or a Permitted Transferee.
(ii) In connection with any proposed Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require delivery to
it, and shall not register the Transfer of any Class R Certificate until
its receipt of, an affidavit and agreement (a "Transfer Affidavit and
Agreement") attached hereto as Exhibit I from the proposed Transferee,
representing and warranting, among other things, that such Transferee is a
Permitted Transferee, that it is not acquiring its Ownership Interest in
the Class R Certificate that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in a
Class R Certificate, it will endeavor to remain a Permitted Transferee, and
that it has reviewed the provisions of this Section 4.2(l) and agrees to be
bound by them.
(iii) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (ii) above, if the Trustee
has actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Class R Certificate
to such proposed Transferee shall be effected.
(iv) Each Person holding or acquiring any Ownership Interest in a
Class R Certificate shall agree (x) to require a Transfer Affidavit and
Agreement from any other Person to whom such Person attempts to transfer
its Ownership Interest in a Class R Certificate and (y) not to transfer its
Ownership Interest unless it provides a certificate (attached hereto as
Exhibit J) to the Trustee stating that, among other things, it has no
actual knowledge that such other Person is not a Permitted Transferee.
(v) Each Person holding or acquiring an Ownership Interest in a Class
R Certificate, by purchasing an Ownership Interest in such Certificate,
agrees to give the Trustee written notice that it is a "pass-through
interest holder" within the meaning of temporary Treasury Regulation
Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an Ownership
Interest in a Class R Certificate, if it is, or is holding an Ownership
Interest in a Class R Certificate on behalf of, a "pass-through interest
holder."
(vi) The Trustee will register the Transfer of any Class R Certificate
only if it shall have received the Transfer Affidavit and Agreement. In
addition, no Transfer of a Class R Certificate shall be made unless the
Trustee shall have received a representation letter, the form of which is
attached hereto as Exhibit N from the Transferee of such Certificate to the
effect that such Transferee is a United States Person and is not a
"disqualified organization" (as defined in Section 860E(e)(5) of the Code).
(vii) Any attempted or purported transfer of any Ownership Interest in
a Class R Certificate in violation of the provisions of this Section 4.2
shall be absolutely null and void and shall vest no rights in the purported
transferee. If any purported transferee shall become a Holder of a Class R
Certificate in violation of the provisions of this Section 4.2, then the
last preceding Permitted Transferee shall be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of such
Class R Certificate. The Trustee shall notify the Servicer upon receipt of
written notice or discovery by a Responsible Officer that the registration
of transfer of a Class R Certificate was not in fact permitted by this
Section 4.2. Knowledge shall not be imputed to the Trustee with respect to
an impermissible transfer in the absence of such a written notice or
discovery by a Responsible Officer. The Trustee shall be under no liability
to any Person for any registration of transfer of a Class R Certificate
that is in fact not permitted by this Section 4.2 or for making any
payments due on such Certificate to the Holder thereof or taking any other
action with respect to such Holder under the provisions of this Agreement
so long as the transfer was registered after receipt of the related
Transfer Affidavit and Agreement and Transferor's Certificate. The Trustee
shall be entitled, but not obligated to recover from any Holder of a Class
R Certificate that was in fact not a Permitted Transferee at the time it
became a Holder or, at such subsequent time as it became other than a
Permitted Transferee, all payments made on such Class R Certificate at and
after either such time. Any such payments so recovered by the Trustee shall
be paid and delivered by the Trustee to the last preceding Holder of such
Certificate.
(viii) If any purported transferee shall become a Holder of a Class R
Certificate in violation of the restrictions in this Section 4.2, then the
Servicer or its designee shall have the right, without notice to the Holder
or any prior Holder of such Class R Certificate, to sell such Class R
Certificate to a purchaser selected by the Servicer or its designee on such
reasonable terms as the Servicer or its designee may choose. Such purchaser
may be the Servicer itself or any Affiliate of the Servicer. The proceeds
of such sale, net of commissions, expenses and taxes due, if any, will be
remitted by the Servicer to the last preceding purported transferee of such
Class R Certificate, except that in the event that the Servicer determines
that the Holder or any prior Holder of such Class R Certificate may be
liable for any amount due under this Section 4.2 or any other provision of
this Agreement, the Servicer may withhold a corresponding amount from such
remittance as security for such claim. The terms and conditions of any sale
under this subclause (viii) shall be determined in the sole discretion of
the Servicer or its designee, and it shall not be liable to any Person
having an Ownership Interest in a Class R Certificate as a result of its
exercise of such discretion.
(ix) The provisions of Section 4.2(l) may be modified, added to or
eliminated, provided that there shall have been delivered to the Trustee
and the Certificate Insurer an Opinion of Counsel to the effect that such
modification of, addition to or elimination of such provisions will not
cause Trust 1A to cease to qualify as a REMIC and will not cause (x) Trust
1A to be subject to an entity-level tax caused by the Transfer of any
Ownership Interest in a Class R Certificate to a Person that is not a
Permitted Transferee or (y) a Person other than the prospective transferee
to be subject to a REMIC-related tax caused by the Transfer of an Ownership
Interest in a Class R Certificate to a Percentage that is not a Permitted
Transferee.
(x) No transfer of a Class R Certificate or any interest therein shall
be made to any employee benefit plan or other retirement arrangement,
including individual retirement accounts and annuities, ▇▇▇▇▇ plans and
collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or the Code
(each, a "Plan"), unless the prospective transferee of such Class R
Certificate provides the Servicer and the Trustee with a certification of
facts and, at the prospective transferee's expense, an Opinion of Counsel
which establish to the satisfaction of the Servicer and the Trustee that
such transfer will not result in a violation of Section 406 of ERISA or
Section 4975 of the Code or cause the Servicer or the Trustee to be deemed
a fiduciary of such Plan or result in the imposition of an excise tax under
Section 4975 of the Code. In the absence of their having received the
certification of facts or Opinion of Counsel contemplated by the preceding
sentence, the Trustee and the Servicer shall require the prospective
transferee of any Class R Certificate to certify (in the form of Exhibit K
hereto) that (A) it is neither (i) a Plan nor (ii) a Person who is directly
or indirectly purchasing a Class R Certificate on behalf of, as named
fiduciary of, as trustee of, or with assets, of a Plan and (B) all funds
used by such transferee to purchase such Certificates will be funds held by
it in its general account which it reasonably believes do not constitute
"plan assets" of any Plan.
Section 4.3 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (a) 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 (b) there is delivered to the Servicer, the Certificate
Insurer and the Trustee such security or indemnity as may reasonably be required
by each of them to save each of them harmless, then, in the absence of notice to
the Servicer and 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 like tenor and Percentage Interest in the same Trust, but
bearing a number not contemporaneously outstanding. Upon the issuance of any new
Certificate under this Section 4.3, the Servicer and 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 their fees and expenses connected
therewith. Any duplicate Certificate issued pursuant to this Section 4.3 shall
constitute complete and indefeasible evidence of ownership in the related Trust
Fund, as if originally issued, whether or not the mutilated, destroyed, lost or
stolen Certificate shall be found at any time.
Section 4.4 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of
transfer and subject to the provisions of Section 4.2 and Article X, the
Servicer, the Depositor, the Seller, the Certificate Insurer and the Trustee may
treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving remittances pursuant to Section
6.5 and for all other purposes whatsoever, and the Servicer, the Depositor, the
Seller, the Certificate Insurer and the Trustee shall not be affected by notice
to the contrary.
ARTICLE V.
THE SERVICER
Section 5.1 THE SERVICER.
The Servicer shall service and administer the Mortgage Loans in
accordance with the Accepted Servicing Practices and shall have full power and
authority to do any and all things not inconsistent therewith in connection with
such servicing and administration which it may deem necessary or desirable
subject to the limitations set forth in this Agreement. The Trustee shall
furnish the Servicer with any powers of attorney and other documents necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered
by the Trustee, to execute and deliver, on behalf of itself, the
Certificateholders and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, and to effect such modifications, waivers,
indulgences and other like matters as are in its judgment necessary or
desirable, with respect to the Mortgage Loans and the Mortgaged Properties and
the servicing and administration thereof. The Servicer shall notify the Trustee
of any such waiver, release, discharge, modification, indulgence or other such
matter by delivering to the Trustee an Officer's Certificate certifying that
such agreement is in compliance with this Section 5.1 together with the original
copy of any written agreement or other document executed in connection
therewith, all of which written agreements or documents shall, for all purposes,
be considered a part of the related Mortgage File to the same extent as all
other documents and instruments constituting a part thereof. Notwithstanding
anything in this Agreement to the contrary, the Servicer shall not permit any
modification with respect to any Mortgage Loan that would change the Mortgage
Interest Rate, reduce or increase the principal balance, change the lien
priority, or change the final maturity date on or of such Mortgage Loan unless
(i) the Mortgagor is in default with respect to the Mortgage Loan or such
default is, in the judgment of the Servicer, imminent and such modification
would not be considered a Prohibited Transaction and (ii) the Certificate
Insurer consents to such modifications in writing; provided, however, that the
Servicer shall be permitted to extend the final maturity date on a Mortgage Loan
by 180 days or less without the consent of the Certificate Insurer so long as
the final maturity date is not extended beyond the Class A Final Scheduled
Maturity Date.
The relationship of the Servicer (and of any successor to the Servicer
as servicer under this Agreement) to the Trustee under this Agreement is
intended by the parties to be that of an independent contractor and not that of
a joint venturer, partner or agent.
The Servicer shall not alter its servicing and collection procedures
relating to the Mortgage Loans in any material respect without the prior written
consent of the Certificate Insurer.
The Servicer shall make any Mortgage Interest Rate adjustments on each
Interest Adjustment Date in compliance with applicable regulatory adjustable
mortgage loan requirements and the Mortgage Notes. The Servicer shall establish
procedures to monitor the Interest Adjustment Dates in order to assure that it
uses a published interest rate in determining an interest rate change, and it
will comply with those procedures. In the event a published interest rate is no
longer available, the Servicer shall choose a new comparable published interest
rate in accordance with the provisions hereof, of the applicable Mortgage Note
and of Accepted Servicing Practices, and shall provide the Mortgagor, the
Trustee and the Certificate Insurer with notice of the new published interest
rate sufficient under law and the Mortgage Note. The Servicer shall execute and
deliver all appropriate notices required by the applicable adjustable mortgage
loan laws and regulations and the Mortgage Loan documents regarding such
Mortgage Interest Rate adjustments.
If the Servicer fails to make a timely Mortgage Interest Rate
adjustment in accordance with the terms of the related Mortgage Notes, the
Servicer shall use its own funds to satisfy any shortage in the Mortgagor's
remittance so long as such shortage shall continue; any such amount paid by the
Servicer shall be reimbursable to it from any subsequent amounts collected on
account of the related Mortgage Loan with respect to such adjustments.
It is intended that the Trust 1A REMIC shall constitute, and that the
affairs of Trust 1A shall be conducted so as to qualify it as, a "real estate
mortgage investment conduit" ("REMIC") as defined in and in accordance with the
REMIC Provisions. In furtherance of such intentions, the Servicer covenants and
agrees that it shall not take any action or omit to take any action reasonably
within the Servicer's control and the scope of its duties more specifically set
forth herein that would (i) result in a taxable event to the Holders of the
Certificates of Trust 1A or endanger the REMIC status of the Trust 1A REMIC or
(ii) result in the imposition on the Trust 1A REMIC of a tax on "prohibited
transactions" (either clause (i) or (ii) shall be an "Adverse REMIC Event.") The
Servicer shall not take any action or fail to take any action (whether or not
authorized hereunder) as to which the Trustee has advised it in writing that it
has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action, and the Servicer shall have no
liability hereunder for any action taken by it in accordance with the written
instruments of the Trustee. In addition, prior to taking any action with respect
to the Trust 1A REMIC that is not expressly permitted under the terms of this
Agreement, the Servicer will consult with the Trustee or its designee and the
Certificate Insurer, in writing, with respect to whether such action could cause
an Adverse REMIC Event to occur. The Trustee may consult with counsel to make
such written advice, and the cost of same shall be borne by the party seeking to
take the action not permitted by this Agreement. At all times as may be required
by the Code, the Servicer shall use its best efforts to ensure that
substantially all of the assets of the Trust 1A REMIC will consist of "qualified
mortgages" as defined in Section 860G(a)(3) of the Code and "permitted
investments" as defined in Section 860G(a)(5) of the Code. In the event any
specified time period or other requirement set forth in this Agreement in
respect of compliance with the REMIC Provisions becomes inconsistent with the
REMIC Provisions as the same may be amended, such specified time period or other
requirement shall also be deemed amended to comply with the requirements of this
Section, unless such amended time period or other requirements shall be less
protective of the interests of the Certificateholders of Trust 1A and the
Certificate Insurer, in which case, to the extent consistent with the REMIC
Provisions, the former time period or requirement shall continue in force.
Section 5.2 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS; COLLECTION
ACCOUNT.
(a) The Servicer shall make its 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,
follow the Accepted Servicing Practices. Consistent with the foregoing, the
Servicer may in its discretion waive any assumption fees or other fees which may
be collected in the ordinary course of servicing such Mortgage Loans.
(b) Unless the Trustee and the Certificate Insurer otherwise agree,
the Servicer shall establish and maintain for each Trust a related Collection
Account, with Union Bank of California, which shall be titled "Collection
Account Norwest Bank Minnesota, National Association, as trustee for the
registered holders of Life Financial Services Trust 1997-1A, Mortgage
Pass-Through Certificates, Series 1997-1A, Class A-1" and "Collection Account
Norwest Bank Minnesota, National Association, as Trustee for the registered
holders of Life Financial Services Trust 1997-1B, Mortgage Pass-Through
Certificates, Series 1997-1B, Class A-2", respectively. Each Collection Account
shall be established and maintained as an Eligible Account.
(c) The Servicer shall deposit in the related Collection Account for
each Trust any amounts representing Monthly Payments on the related Mortgage
Loans due or to be applied after the Cut-Off Date or with respect to the related
Subsequent Mortgage Loans, on or after the applicable Subsequent Cut-Off Date,
and thereafter, on a daily basis (except as otherwise permitted herein), the
following payments and collections received or made by it (other than in respect
of principal of and interest on such Mortgage Loans due on or before the Cut-Off
Date or with respect to such Subsequent Mortgage Loans, before the applicable
Subsequent Cut-Off Date):
(i) Payments of interest on the related Mortgage Loans;
(ii) Payments of principal of the related Mortgage Loans;
(iii) The Loan Repurchase Price of related Mortgage Loans repurchased
pursuant to Sections 2.6 or 3.3;
(iv) The Substitution Adjustment received in connection with related
Mortgage Loans for which Qualified Replacement Mortgages are received
pursuant to Sections 2.6 and 3.3;
(v) All related Net Liquidation Proceeds and related Net REO Proceeds;
and
(vi) All related Insurance Proceeds (including, for this purpose, any
amounts required to be deposited by the Servicer pursuant to Section
5.4(b).
It is understood that the Servicer need not deposit amounts
representing fees, prepayment premiums, late payment charges or extension or
other administrative charges payable by Mortgagors, or amounts received by the
Servicer for the account of Mortgagors for application towards the payment of
taxes, insurance premiums, assessments and similar items.
(d) The Servicer shall invest any funds in the related Collection
Account for a Trust in Permitted Investments which shall mature not later than
the Business Day next preceding the Servicer Distribution Date next following
the date of such investment (except that any investment held by the Trustee may
mature on such Servicer Distribution Date) and shall not be sold or disposed of
prior to its maturity. All net income and gain realized from any such investment
shall be for the benefit of the Servicer and shall be subject to its withdrawal
or order on a Distribution Date. The Servicer shall deposit from its own funds
the amount of any loss, to the extent not offset by investment income or
earnings, in the related Collection Account upon the realization of such loss.
No Permitted Investment related to Trust 1A shall be sold or disposed of at a
gain prior to maturity unless the Servicer has obtained an Opinion of Counsel
(at the Servicer's expense) that such sale or disposition will not cause the
Trust Fund to be subject to the tax on income from prohibited transactions
imposed by Code Section 860F(a)(1), otherwise subject the Trust Fund of Trust 1A
to tax or cause Trust 1A to fail to qualify as a REMIC. All income (other than
any gain from a sale or disposition of the type referred to in the preceding
sentence) realized from any such Permitted Investment shall be for the benefit
of the Servicer as additional servicing compensation.
Section 5.3 PERMITTED WITHDRAWALS FROM THE COLLECTION ACCOUNT.
On each Servicer Distribution Date, the Servicer shall deposit in the
related Certificate Account for a Trust from the related Collection Account the
amount set forth in Section 6.1(c). In addition, the Servicer shall make
withdrawals from the related Collection Account, on any Servicer Distribution
Date, for the following purposes:
(a) To reimburse the Servicer for Liquidation Expenses theretofore
incurred in respect of any related Mortgage Loan in an amount not to exceed the
amount of the related Insurance Proceeds and Liquidation Proceeds deposited in
the related Collection Account pursuant to Section 5.2(c)(v)-(vi);
(b) To reimburse the Servicer for amounts expended by it pursuant to
Section 5.4 in good faith in connection with the restoration of related damaged
property of such Trust, in an amount not to exceed the amount of the related
Insurance Proceeds and Liquidation Proceeds (net of withdrawals pursuant to
clause (a) above) and amounts representing proceeds of other insurance policies
covering the property subject to the related Mortgage deposited in the related
Collection Account pursuant to Section 5.2(c)(v)- (vi);
(c) To pay to the Seller amounts received in respect of any related
Defective Mortgage Loan of a Trust purchased or substituted for by the Seller to
the extent that the distribution of any such amounts on the Distribution Date
upon which the proceeds of such purchase are distributed would make the total
amount distributed in respect of any such Mortgage Loan on such Distribution
Date greater than the Loan Repurchase Price or the Substitution Adjustment
therefor;
(d) To reimburse the Servicer for unreimbursed Servicing Advances,
without interest, with respect to a related Mortgage Loan of such Trust for
which it has made a Servicing Advance, from subsequent collections with respect
to interest on such Mortgage Loans and from Liquidation Proceeds, Insurance
Proceeds and/or the Loan Repurchase Price or Substitution Adjustment of or
relating to such Mortgage Loan;
(e) To reimburse the Servicer for any Periodic Advances to such Trust
determined in good faith to have become Nonrecoverable Advances, such
reimbursement to be made from any funds in the Collection Account;
(f) To withdraw any amount received from a related Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code in accordance with a
final, nonappealable order of a court having competent jurisdiction;
(g) To return to the Servicer any funds deposited in the related
Collection Account that were not required to be deposited therein; and
(h) To pay the Servicer Servicing Compensation with respect to such
Trust pursuant to Section 5.8 hereof to the extent not retained or paid.
The Servicer shall keep and maintain a separate accounting for each
Mortgage Loan for the purpose of accounting for withdrawals from the related
Collection Account pursuant to subclause (a).
Section 5.4 HAZARD INSURANCE POLICIES; PROPERTY PROTECTION EXPENSES.
(a) The Servicer shall cause to be maintained for each Mortgage Loan a
fire and hazard insurance policy with extended coverage which contains a
standard mortgagee's clause with an appropriate endorsement in an amount which
is not less than (a) the full insurable value of the related Mortgaged Property
or (b) the Principal Balance of such Mortgage Loan. The Servicer shall also
maintain or cause to be maintained on property acquired upon foreclosure, or by
deed in lieu of foreclosure, fire and hazard insurance with extended coverage in
an amount which is at least equal to the lesser of (i) the maximum insurable
value from time to time of the improvements which are a part of such property or
(ii) the Principal Balance of such Mortgage Loan at the time of such foreclosure
plus accrued interest and related Liquidation Expenses to be incurred in
connection therewith provided, however, that such insurance may not be less than
the minimum amount required to fully compensate for any loss or damage on a
replacement cost basis. 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 unpaid Principal Balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
Amounts collected by the Servicer under any such policies shall be deposited in
the related Collection Account to the extent that they constitute Liquidation
Proceeds or Insurance Proceeds with respect to related Mortgage Loans. Each
hazard insurance policy shall contain a standard mortgagee clause naming the
Seller, its successors and assigns, as mortgagee. The Servicer shall be under no
obligation to require that any Mortgagor maintain earthquake or, except as set
forth in Section 5.4(c), flood or other additional insurance and shall be under
no obligation itself to maintain any such additional insurance on property
acquired in respect of a Mortgage Loan, other than pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance.
(b) If the Servicer shall obtain and maintain a blanket policy issued
by an insurer acceptable to the Rating Agencies and the Certificate Insurer
insuring against hazard losses on all of the Mortgaged Properties and REO
Properties, it shall conclusively be deemed to have satisfied its obligations as
set forth in Section 5.4(a), 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 a policy
complying with Section 5.4(a), and there shall have been a loss which would have
been covered by such policy, deposit in the Collection Account the amount not
otherwise payable under the blanket policy because of such deductible clause.
(c) If the Mortgaged Property or REO Property is located at the time
of origination of the Mortgage Loan in a federally designated special flood
hazard area (and if the flood insurance policy referenced herein has been made
available), the Servicer will cause to be maintained flood insurance in respect
thereof. Such flood insurance shall be in an amount equal to the lesser of (i)
the Principal Balance of the related Mortgage Loan and the balance of the
related first lien, if any, (ii) the maximum insurable value of the related
Mortgaged Property, and (iii) 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).
Section 5.5 ASSUMPTION AND MODIFICATION AGREEMENTS.
In any case in which a Mortgaged Property has been or is about to be
conveyed by the Mortgagor, the Servicer shall exercise its right to accelerate
the maturity of the related Mortgage Loan and require that the Principal Balance
thereof be paid in full on or prior to such conveyance by the Mortgagor under
any "due-on-sale" clause applicable thereto. If such "due-on-sale" clause, by
its terms, is not operable or the Servicer is prevented, as provided in the last
paragraph of this Section 5.5, from enforcing any such clause, the Servicer is
authorized, subject to the consent of the Certificate Insurer, to take or enter
into an assumption and modification agreement from or with the Person to whom
such property has been or is about to be conveyed, pursuant to which such Person
becomes liable under the Mortgage Note and the Mortgagor remains liable thereon
or, if the Servicer in its reasonable judgment finds it appropriate, is released
from liability thereon. The Servicer shall notify the Trustee that any
assumption and modification agreement has been completed by delivering to the
Trustee and the Certificate Insurer an Officer's Certificate certifying, that
such agreement is in compliance with this Section 5.5 together with the original
copy of such assumption and modification agreement. Any such assumption and
modification agreement shall, for all purposes, be considered a part of the
related Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such agreement, the then
current Mortgage Interest Rate thereon shall not be increased or decreased. Any
fee collected by the Servicer for entering into any such agreement will be
retained by the Servicer as additional servicing compensation. At its sole
election, the Servicer may purchase from the related Trust Fund any Mortgage
Loan that has been assumed in accordance with this Section 5.5 within one month
after the date of such assumption at a price equal to the greater of (i) the
fair market value of such Mortgage Loan (as determined by the Servicer in its
good faith judgment) and (ii) the Loan Repurchase Price. Such amount, if any,
shall be deposited into the related Collection Account in the Due Period in
which such repurchase is made. Notwithstanding the foregoing, the Servicer shall
not enter into an assumption, modification or substitution of liability
agreement unless it has received an Opinion of Counsel that such assumption,
modification or substitution of liability will not adversely affect the status
of the related Trust Fund as a grantor trust for federal income tax purposes, in
the case of Trust 1B, or will not constitute a Prohibited Transaction, in the
case of Trust 1A.
Notwithstanding the foregoing paragraph of this Section 5.5 or any
other provision of this Agreement, the Servicer shall not be deemed to be in
default, breach or any other violation of its obligations hereunder by reason of
any assumption of a Mortgage Loan, or transfer of any Mortgaged Property without
the assumption thereof, by operation of law or any assumption or transfer which
the Servicer reasonably believes it may be restricted by law from preventing for
any reason whatsoever.
Section 5.6 REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) The Servicer shall foreclose upon or otherwise comparably convert
to ownership Mortgaged 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 5.2(a). Prior to
conducting any sale in a foreclosure proceeding or accepting a deed-in-lieu of
foreclosure with respect to any Mortgaged Property, the Servicer shall cause an
environmental review to be performed, in accordance with Accepted Servicing
Practices on the Mortgaged Property by a company such as Equifax, Inc. or
Toxicheck. If such review reveals that the Mortgaged Property has on it, under
it or is near hazardous or toxic material or waste or reveals any other
environmental problem, the Servicer shall not foreclose or accept a deed-in-lieu
of foreclosure without the prior written consent of the Certificate Insurer. In
connection with such foreclosure or other conversion, the Servicer shall follow
such practices (including, in the case of any default on a related senior
mortgage loan, the advancing of funds to correct such default) and procedures
which are not inconsistent with the Accepted Servicing Practices as it shall
deem necessary or advisable and as shall be normal and usual in its general
first and second mortgage loan servicing activities. The foregoing is subject to
the proviso that the Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the correction of any default on a
related senior mortgage loan or restoration of any property unless, in the
reasonable judgment of the Servicer, such expenses will be recoverable from
Liquidation Proceeds.
(b) In the event that title to any Mortgaged Property is acquired 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
Certificateholders of the related Trust and the Certificate Insurer.
(c) Any Insurance Proceeds or Liquidation Proceeds received with
respect to a Mortgage Loan or REO Property will be applied in the following
order of priority, in each case to the extent of available funds: first, to pay
the Servicer any accrued and unpaid Servicing Fees relating to such Mortgage
Loan; second, to reimburse the Servicer or any subservicer for any related
unreimbursed Servicing Advances, and any related unreimbursed Periodic Advances
theretofore funded by the Servicer or any Subservicer from its own funds, in
each case, with respect to the related Mortgage Loan; third, to accrued and
unpaid interest on the Mortgage Loan, at the Mortgage Loan Rate (or at such
lesser rate as may be in effect for such Mortgage Loan pursuant to application
of the Civil Relief Act) on the Principal Balance of such Mortgage Loan, to the
date such Mortgage Loan is determined to be a Liquidated Mortgage Loan if it is
a Liquidated Mortgage Loan, or to the Due Date in the Due Period prior to the
Distribution Date on which such amounts are to be distributed if such
determination has not yet been made, minus any unpaid Servicing Fees with
respect to such Mortgage Loan; fourth, to the extent of the Principal Balance of
the Mortgage Loan outstanding immediately prior to the receipt of such proceeds,
as a recovery of principal of the related Mortgage Loan; fifth, to reimburse the
Certificate Insurer for any Insured Payment made by the Certificate Insurer in
respect of such Mortgage Loans, and sixth, to any prepayment or late payment
charges or penalty interest payable in connection with the receipt of such
proceeds and to all other fees and charges due and payable with respect to such
Mortgage Loan. The amount of any gross Insurance Proceeds and Liquidation
Proceeds received with respect to any Mortgage Loan or REO Property minus the
amount of any unreimbursed Servicing Advances, unreimbursed Periodic Advances or
unpaid Servicing Fees, in each case, with respect to the related Mortgage Loan,
are the "Net Recovery Proceeds" with respect to such Mortgage Loan or REO
Property.
In the event that Trust 1A acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, such Mortgaged Property shall be disposed of by or on behalf of
such Trust within two years after its acquisition thereby unless (a) the
Servicer shall have provided to the Trustee and the Certificate Insurer an
Opinion of Counsel to the effect that the holding by such Trust of such
Mortgaged Property subsequent to two years after its acquisition (and specifying
the period beyond such two-year period for which the Mortgaged Property may be
held) will not cause such Trust to be subject to the tax on prohibited
transactions imposed by Code Section 860F(a)(1), otherwise subject such Trust or
the related Trust Fund to tax or cause the applicable REMIC to fail to qualify
as a REMIC at any time that any Certificates are outstanding, or (b) the
Servicer or the Trustee (at the Servicer's expense) shall have applied for, at
least 60 days prior to the expiration of such two-year period, an extension of
such two-year period in the manner contemplated by Code Section 856(e)(3), in
which case the two-year period shall be extended by the applicable period. The
Servicer shall further ensure that the Mortgaged Property is administered so
that it constitutes "foreclosure property" within the meaning of Code Section
860G(a)(8) at all times, that the sale of such property does not result in the
receipt by the applicable REMIC of any income from non-permitted assets as
described in Code Section 860F(a)(2)(B), and that such REMIC does not derive any
"net income from foreclosure property" within the meaning of Code Section
860G(c)(2) with respect to such property.
In lieu of foreclosing upon any defaulted Mortgage Loan, the Servicer
may, in its discretion, permit the assumption of such Mortgage Loan if, in the
Servicer's judgment, such default is unlikely to be cured and if the assuming
borrower satisfies the Servicer's underwriting guidelines with respect to
mortgage loans owned by the Servicer. In connection with any such assumption,
the Mortgage Interest Rate of the related Mortgage Note and the payment terms
shall not be changed. Any fee collected by the Servicer for entering into an
assumption agreement will be retained by the Servicer as servicing compensation.
Alternatively, the Servicer may encourage the refinancing of any defaulted
Mortgage Loan by the Mortgagor.
Section 5.7 TRUSTEE TO COOPERATE.
Upon the payment in full of the Principal Balance of any Mortgage
Loan, the Servicer will notify the Trustee by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment which are required to be deposited in the
related Collection Account pursuant to Section 5.2 have been so deposited) of a
Servicing Officer. Upon any such payment in full, the Servicer is authorized to
execute, pursuant to the authorization contained in Section 5.1, an instrument
of satisfaction regarding the related Mortgage, which instrument of satisfaction
shall be recorded by the Servicer if required by applicable law and be delivered
to the Person entitled thereto, it being understood and agreed that no expenses
incurred in connection with such instrument of satisfaction shall be reimbursed
from the related Collection Account. 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 Trustee of a trust receipt in the
form of Exhibit H signed by a Servicing Officer, release the related Mortgage
File to the Servicer and shall execute such documents as shall be necessary to
the prosecution of any such proceedings. Such trust receipt shall obligate the
Servicer to return the Mortgage File to the Trustee when the need therefor by
the Servicer no longer exists unless the Mortgage Loan shall be liquidated, in
which case, upon receipt of a certificate of a Servicing Officer similar to that
hereinabove specified, the trust receipt shall be released by the Trustee to the
Servicer.
Section 5.8 SERVICING COMPENSATION; PAYMENT OF CERTAIN EXPENSES BY
SERVICER.
On each Servicer Distribution Date, the Servicer shall be entitled to
retain and not include in the Servicer Distribution Amount, as servicing
compensation for the Due Period immediately preceding such Servicer Distribution
Date, an amount equal to the Servicing Fee. Additional servicing compensation in
the form of assumption fees, late payment charges or extension and other
administrative charges, release fees, bad check charges and other similar
servicing-related fees shall be retained by the Servicer. Net Liquidation
Proceeds not otherwise required to be deposited in a Certificate Account or a
Collection Account pursuant to this Agreement, to the extent set forth in
Section 6.6(d), earnings paid on Permitted Investments and amounts held on
deposit as investment earnings on a Collection Account shall be retained by or
remitted to the Servicer to the extent not required to be remitted to the
Trustee for deposit in a Certificate Account. The Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder
(including payment of the Trustee Fee to the extent that monies in the
Collection Account of a Trust are insufficient therefor, as provided in Section
9.5 hereof, and all other fees and expenses not expressly stated hereunder to be
payable by or from another source) and shall not be entitled to reimbursement
therefor except as specifically provided herein.
Section 5.9 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer will deliver to the Trustee, the Rating Agencies and the
Certificate Insurer, on or before April 30 of each year, beginning April 30,
1998, an Officer's Certificate of the Servicer stating that (a) a review of the
activities of the Servicer during the preceding calendar year and of its
performance under this Agreement has been made under such Officer's supervision
and (b) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its material 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.
Section 5.10 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING REPORT.
On or before April 30 of each year, beginning April 30, 1998, the
Servicer at its expense shall cause a firm of independent public accountants
that is a member of the American Institute of Certified Public Accountants (who
may also render other services to the Servicer) to furnish a report to the
Trustee, the Rating Agencies and the Certificate Insurer to the effect that such
firm has examined certain documents and records relating to the servicing of
mortgage loans under pooling and servicing agreements (including this Agreement)
substantially similar to this Agreement, and that such examination, which has
been conducted substantially in compliance with the Uniform Single Attestation
Program for Mortgage Bankers (to the extent that the procedures in such audit
guide are applicable to the servicing obligations set forth in such agreements),
has disclosed no items of noncompliance with the provisions of this Agreement
which, in the opinion of such firm, are material, except for such items of
noncompliance as shall be set forth in such report.
Section 5.11 ACCESS TO CERTAIN DOCUMENTATION.
Each of the Servicer and the Seller shall permit the designated agents
or representatives of each Certificateholder, the Certificate Insurer and the
Trustee (i) to examine and make copies of and abstracts from all books, records
and documents (including computer tapes and disks) in the possession or under
the control of the Servicer or the Seller relating to the Mortgage Loans and
(ii) to visit the offices and properties of the Servicer and of the Seller for
the purpose of examining such materials and to discuss matters relating to the
Mortgage Loans and the Servicer's and the Seller's performance under this
Agreement with any of the officers or employees of the Servicer and the Seller
having knowledge thereof and with the independent public accountants of the
Servicer (and by this provision the Servicer and the Seller each authorize their
respective accountants to discuss their respective finances and affairs), all at
such reasonable times, as often as may be reasonably requested and without
charge to such Certificateholder, the Certificate Insurer or the Trustee.
Section 5.12 MAINTENANCE OF FIDELITY BOND.
The Servicer shall during the term of its service as servicer maintain
in force a fidelity bond and errors and omissions insurance in respect of its
officers, employees or agents. Such bond and insurance shall comply with the
requirements from time to time of the Federal National Mortgage Association for
Persons performing servicing for mortgage loans purchased by such association.
Section 5.13 REPORTS TO THE TRUSTEE; COLLECTION ACCOUNT STATEMENTS.
(a) For each Trust, the Servicer shall deliver to the Trustee the
monthly report regarding information as to each related Mortgage Loan pursuant
to Section 6.5(a) and the monthly report regarding the payment status of each
related Mortgage Loan pursuant to Section 5.16(a). The Servicer shall be
responsible for all the information and data contained in such reports delivered
by it to the Trustee and the Trustee shall be entitled to rely thereon without
investigation. In addition, the Servicer shall deliver to the Trustee any
documentation and information as necessary or appropriate to fulfill the
obligations of successor servicer (including, without limitation such
documentation and information in computer readable form) as the Trustee may
reasonably request.
(b) Notwithstanding anything to the contrary set forth in this
Agreement, for each Trust the Servicer shall deliver to the Trustee each of the
monthly reports regarding information as to each related Mortgage Loan pursuant
to Section 6.5(a) and the monthly reports regarding the payment status of each
related Mortgage Loan pursuant to Section 5.16(a) which is due on or prior to
the first anniversary of the Closing Date both in printed form and in such
computer readable format as agreed upon by the Trustee and the Servicer. The
Servicer shall be responsible for all the information and data contained in such
reports in printed form and computer readable format delivered by it to the
Trustee and the Trustee shall be entitled to rely thereon without investigation.
(c) It is understood that the delivery of such reports in computer
readable format pursuant to Section 5.13(b) shall be solely for the purpose of
enabling the Trustee to promptly undertake the responsibilities of successor
servicer in the event it is required to do so on or before the first anniversary
of the Closing Date as provided in Section 7.2. The Trustee shall have full
discretion in determining how it prepares itself to undertake such
responsibilities and, unless the Trustee becomes successor servicer (and except
in its capacity as Back-up Servicer), the Trustee shall not be required to
provide any information or produce any reports based on the reports in printed
form or computer readable format provided to it by the Servicer.
(d) Not later than 15 days after each Servicer Distribution Date, for
each Trust the Servicer shall provide to the Trustee, the Back-up Servicer and
the Certificate Insurer a statement, certified by a Servicing Officer, setting
forth the status of the related Collection Account as of the close of business
on the related Distribution Date, stating that all distributions required by
this Agreement to be made by the Trustee pursuant to the written instructions of
the Servicer have been made (or if any required distribution has not been made
pursuant to the written instructions of the Servicer, specifying the nature and
status thereof) and showing, for the period covered by such statement, the
aggregate of deposits into and withdrawals from the related Collection Account
for each category of deposit specified in Section 5.2 and each category of
withdrawal specified in Section 5.3 and the aggregate of deposits into the
related Certificate Account as specified in Section 6.1(c). Such statement shall
also state the aggregate unpaid principal balance of all the related Mortgage
Loans as of the close of business on the last day of the month preceding the
month in which such Distribution Date occurs. Copies of such statement shall be
provided by the Trustee to any Certificateholder upon request.
Section 5.14 REPORTS TO BE PROVIDED BY THE SERVICER.
(a) In connection with the transfer of the Certificates, the Trustee
on behalf of any Certificateholder may request that the Servicer make available
to any prospective Certificateholder annual audited financial statements of the
Servicer for one or more of the most recently completed five fiscal years for
which such statements are available, which request shall not be unreasonably
denied or unreasonably delayed. Such annual audited financial statements also
shall be made available to the Certificate Insurer upon request.
(b) The Servicer also agrees to make available on a reasonable basis
to the Certificate Insurer or any prospective Certificateholder a knowledgeable
financial or accounting officer for the purpose of answering reasonable
questions respecting recent developments affecting the Servicer or the financial
statements of the Servicer and to permit the Certificate Insurer or any
prospective Certificateholder to inspect the Servicer's servicing facilities
during normal business hours for the purpose of satisfying the Certificate
Insurer or such prospective Certificateholder that the Servicer has the ability
to service the Mortgage Loans in accordance with this Agreement.
Section 5.15 ADJUSTMENT OF SERVICING COMPENSATION IN RESPECT OF
PREPAID MORTGAGE LOANS.
For each Trust, the aggregate amount of the Servicing Fees that the
Servicer shall be entitled to receive with respect to all of the related
Mortgage Loans and each Distribution Date shall be offset on such Distribution
Date by an amount equal to the aggregate Prepayment Interest Shortfall with
respect to all related Mortgage Loans which were subjects of Principal
Prepayments during the month preceding the month of such Distribution Date. The
amount of any offset against the aggregate Servicing Fee with respect to any
Distribution Date under this Section 5.15 shall be limited to the aggregate
amount of the Servicing Fees otherwise payable to the Servicer (without
adjustment on account of Prepayment Interest Shortfalls) with respect to (i)
scheduled payments having the Due Date occurring in the month preceding the
month of such Distribution Date received by the Servicer prior to the Servicer
Distribution Date, and (ii) Principal Prepayments, Curtailments and Liquidation
Proceeds received in the month preceding the month in which such Distribution
Date occurs, and the rights of the Certificateholders to the offset of the
aggregate Prepayment Interest Shortfalls shall not be cumulative.
Section 5.16 PERIODIC ADVANCES; SPECIAL ADVANCE.
(a) If, on any Servicer Distribution Date for a Trust, the Servicer
determines that any Monthly Payments due on the Due Date immediately preceding
such Servicer Distribution Date have not been received as of the close of
business on the Business Day preceding such Servicer Distribution Date, the
Servicer shall determine the amount of any Periodic Advance required to be made
with respect to the related Distribution Date. The Servicer shall, one Business
Day after such Servicer Distribution Date, deliver a report to the Trustee, the
Certificate Insurer and the Back-Up Servicer indicating the payment status of
each Mortgage Loan as of such Servicer Distribution Date. The Servicer shall
include in the amount to be deposited in the related Certificate Account on such
Servicer Distribution Date an amount equal to the Periodic Advance, if any,
which deposit may be made in whole or in part from funds in the related
Collection Account being held for future distribution or withdrawal on or in
connection with Distribution Dates in subsequent months. Any funds being held
for future distribution to Certificateholders and so used shall be replaced by
the Servicer from its own funds by deposit in the related Collection Account on
or before the Business Day preceding any such future Servicer Distribution Date
to the extent that funds in the related Collection Account on such Servicer
Distribution Date shall be less than payments to Certificateholders required to
be made on such date.
The Servicer shall designate on its records the specific Mortgage
Loans and related installments (or portions thereof) as to which such Periodic
Advance shall be deemed to have been made, such determination being conclusive
for purposes of withdrawals from the related Collection Account pursuant to
Section 5.3.
(b) In addition to the Periodic Advances the Servicer shall make
special advances (each a "Special Advance") on the Closing Date, of $77,974, in
the case of Trust 1A, and $222,072, in the case of Trust 1B with respect to
interest on Mortgage Loans with first payment dates on or after April 1, 1997.
Each Special Advance shall be held in a separate account for each Trust, such
accounts to be established pursuant to 6.1(b). The Special Advance shall be made
without regard to recoverability, and shall not be reimbursable. In no event
shall the Trustee, as successor Servicer, be liable for the payment of the
Special Advance.
Section 5.17 INDEMNIFICATION; THIRD PARTY CLAIMS.
(a) The Servicer agrees to indemnify and to hold each of the
Depositor, each Trust Fund, the Trustee, the Seller, the Certificate Insurer and
each Certificateholder harmless against any and all claims, losses, penalties,
fines, forfeitures, legal fees and related costs, judgments, and any other
costs, fees and expenses that the Depositor, any Trust Fund, the Trustee, the
Seller, the Certificate Insurer and any Certificateholder may sustain in any way
related to the failure of the Servicer to perform its duties and service the
Mortgage Loans in compliance with the terms of this Agreement. Each indemnified
party and the Servicer shall immediately notify the other indemnified parties if
a claim is made by a third party with respect to this Agreement, and the
Servicer shall assume the defense of any such claim and pay all expenses in
connection therewith, including reasonable counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Depositor, the Servicer, a Trust Fund, the Trustee, the Seller, the Certificate
Insurer and/or Certificateholder in respect of such claim.
Section 5.18 MAINTENANCE OF CORPORATE EXISTENCE AND LICENSES; MERGER
OR CONSOLIDATION OF THE SERVICER.
(a) The Servicer will keep in full effect its existence, rights and
franchises as a Federal savings bank, will obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction necessary to
protect the validity and enforceability of this Agreement or any of the Mortgage
Loans and to perform its duties under this Agreement and will otherwise operate
its business so as to cause the representations and warranties under Section 3.1
to be true and correct at all times under this Agreement.
(b) Any Person into which the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, or any Person succeeding to the business of
the Servicer, shall be an established mortgage loan servicing institution that
has a net worth of at least $15,000,000, and in all events shall be, with the
prior written consent of the Certificate Insurer, the successor of the Servicer
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Servicer shall send notice of any such merger or consolidation to the Trustee
and the Certificate Insurer.
Section 5.19 ASSIGNMENT OF AGREEMENT BY SERVICER; SERVICER NOT TO
RESIGN.
The Servicer shall not assign this Agreement nor resign from the
obligations and duties hereby imposed on it except by mutual consent of the
Servicer, the Seller, the Certificate Insurer and the Trustee or upon the
determination that the Servicer's duties hereunder are no longer permissible
under applicable law and that such incapacity cannot be cured by the Servicer
without incurring, in the reasonable judgment of the Certificate Insurer,
unreasonable expense. Any such determination that the Servicer's duties
hereunder are no longer permissible under applicable law permitting the
resignation of the Servicer shall be evidenced by a written Opinion of Counsel
(who may be counsel for the Servicer) to such effect delivered to the Trustee,
the Seller, the Depositor and the Certificate Insurer. No such resignation shall
become effective until the Trustee or a successor appointed in accordance with
the terms of this Agreement has assumed the Servicer's responsibilities and
obligations hereunder in accordance with Section 7.2. The Servicer shall provide
the Trustee, the Rating Agencies and the Certificate Insurer with 30 days prior
written notice of its intention to resign pursuant to this Section 5.19.
Section 5.20 PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION; ADDITIONAL INFORMATION.
The Trustee shall prepare or cause to be prepared for filing with the
Commission (other than the initial Current Report on Form 8-K to be filed by the
Depositor in connection with the issuance of the Certificates) any and all
reports, statements and information respecting each Trust and/or the
Certificates required to be filed, and shall solicit any and all proxies of the
Certificateholders whenever such proxies are required to be solicited, pursuant
to the Securities Exchange Act of 1934, as amended. To the extent it does not
already have such relief, the Depositor shall promptly file, and exercise its
reasonable best efforts to obtain a favorable response to, no-action requests
with, or other appropriate exemptive relief from, the Commission seeking the
usual and customary exemption from such reporting requirements granted to
issuers of securities similar to the Certificates. Fees and expenses incurred by
the Trustee in connection with the foregoing shall be reimbursed pursuant to
Section 9.5 and shall not be paid by either Trust.
The Servicer and the Depositor each agree to promptly furnish to the
Trustee, from time to time upon request, such further information, reports and
financial statements as the Trustee deems appropriate to prepare and file all
necessary reports with the Securities and Exchange Commission.
ARTICLE VI.
DISTRIBUTIONS AND PAYMENTS
Section 6.1 ESTABLISHMENT OF ACCOUNTS; WITHDRAWALS FROM ACCOUNTS;
DEPOSITS TO THE CERTIFICATE ACCOUNT.
(a) For each Trust, the Trustee shall establish and maintain a
Certificate Account which shall be titled "Certificate Account, Norwest Bank
Minnesota, National Association, as trustee for the registered holders of Life
Financial Services Trust 1997-1A, Mortgage Pass-Through Certificates, Series
1997-1A, Class A-1," and "Certificate Account, Norwest Bank Minnesota, National
Association, as trustee for the registered holders of Life Financial Services
Trust 1997-1B, Mortgage Pass-Through Certificates, Series 1997-1B, Class A-2,"
respectively, a Pre-Funding Account, which shall be titled "Pre-Funding Account,
Norwest Bank Minnesota, National Association, as trustee for the registered
holders of Life Financial Services Trust 1997-1A, Mortgage Pass-Through
Certificates, Series 1997-1A, Class A-1," and "Pre-Funding Account, Norwest Bank
Minnesota, National Association, as trustee for the registered holders of Life
Financial Services Trust 1997-1B, Mortgage Pass-Through Certificates, Series
1997-1B, Class A-2," respectively, a Capitalized Interest Account, which shall
be titled "Capitalized Interest Account, Norwest Bank Minnesota, National
Association, as trustee for the registered holders of Life Financial Services
Trust 1997-1A, Mortgage Pass-Through Certificates, Series 1997-1A, Class A-1,"
and "Capitalized Interest Account, Norwest Bank Minnesota, as trustee for the
registered holders of Life Financial Services Trust 1997-1B, Mortgage
Pass-Through Certificates, Series 1997-1B, Class A-2," respectively, and a
Special Advance Account, which shall be titled "Special Advance Account, Norwest
Bank Minnesota, National Association, as trustee for the registered holders of
Life Financial Services Trust 1997-1A, Mortgage Pass- Through Certificates,
Series 1997-1A, Class A-1," and "Special Advance Account, Norwest Bank
Minnesota, National Association, as trustee for the registered holders of Life
Financial Services Trust 1997- 1B, Mortgage Pass-Through Certificates, Series
1997-1B, Class A-2," respectively, each of which shall be an Eligible Account.
Upon receipt of the proceeds of the sale of the Certificates, on the Closing
Date, the Trustee shall, upon the Depositor's direction, from the proceeds of
the sale of the Certificates, deposit, on behalf of the Certificateholders (i)
in each Pre-Funding Account, the related Original Pre-Funded Amount and (ii) in
each Capitalized Interest Account, an amount equal to $73,276, in the case of
Trust 1A, and $262,617, in the case of Trust 1B. Neither Capitalized Interest
Account and neither Pre-Funding Account shall be deemed part of the related
Trust Fund. Each shall be deemed an outside reserve fund, the owner of which,
for Federal income tax purposes, shall be deemed the Seller.
(b) The Trustee shall invest the funds in each Certificate Account
and, as directed by the Seller in each Special Advance Account, only in
Permitted Investments. All income realized from any such Permitted Investment in
a Certificate Account shall be for the benefit of the Trustee. All income
realized from any such Permitted Investment in a Special Advance Account shall
be for the benefit of the Seller. The amount of any losses incurred in respect
of any such investments relating to the Certificate Account shall be deposited
in the related Certificate Account by the Trustee out of its own funds
immediately as realized and the amount of any losses incurred in respect of any
such investments relating to the Special Advance Account shall be deposited in
the related Special Advance Account by the Seller out of its own funds
immediately as realized.
(c) On each Servicer Distribution Date for a Trust, the Servicer shall
cause to be deposited in the related Certificate Account, from funds on deposit
in the related Collection Account, (i) an amount equal to the related Servicer
Distribution Amount and (ii) related Net Foreclosure Profits, if any with
respect to the related Distribution Date, minus any portion thereof payable to
the Servicer pursuant to Section 5.3. On each Servicer Distribution Date for a
Trust, the Servicer shall also deposit into the related Certificate Account any
Periodic Advances with respect to the related Distribution Date calculated in
accordance with Section 5.16 and any related Compensating Interest Payment with
respect to the related Distribution Date in accordance with Section 6.9.
(d) The Trustee shall cause to be deposited into the Certificate
Account for each Trust amounts received from the related Reserve Account Trustee
pursuant to Section 6.4 (b) (i) and (ii) and amounts received from the related
Insurance Account pursuant to Section 6.4(f). In addition, on the Distribution
Dates occurring in April and May 1997, the Trustee shall cause to be deposited
in the Certificate Account for Trust 1A an amount equal to $53,747 and $24,227,
respectively, from the Trust 1A Special Advance Account and in the Certificate
Account for Trust 1B an amount equal to $161,517 and $60,555, respectively, from
the Trust 1B Special Advance Account.
(e) On the April 1997 and the May 1997 Distribution Dates, the Trustee
shall transfer from the Capitalized Interest Account for each Trust to the
related Certificate Account the related Capitalized Interest Requirement, if
any, for such Distribution Date.
(f) On the Distribution Date for a Trust following the final
Subsequent Transfer Date, or the May 1997 Distribution Date, whichever is
earlier, any amounts remaining in the related Capitalized Interest Account,
after taking into account the transfers on such Distribution Date described in
clause (e) above, shall be paid to the Seller, and the related Capitalized
Interest Account shall be closed.
(g) On any Subsequent Transfer Date for a Trust, the Depositor and the
Seller shall instruct in writing the Trustee to withdraw from the related
Pre-Funding Account an amount equal to 100% of the aggregate Principal Balances
as of the related Subsequent Cut-Off Date of the Subsequent Mortgage Loans sold
to the Trust on such Subsequent Transfer Date and pay 97.2% of such amount with
respect to Trust 1A, or 93.3% with respect to Trust 1B to or upon the order of
the Seller upon satisfaction of the conditions set forth in Section 2.3(b) and
(c) hereof with respect to such transfer and transfer 2.8% of such amount with
respect to Trust 1A, or 6.7% with respect to Trust 1B to the related Reserve
Account. The Trustee may conclusively rely on such written instructions from the
Depositor and the Seller.
(h) If (x) the Pre-Funded Amount for a Trust has not been reduced to
zero by May 15, 1997 or (y) the Pre-Funded Amount has been reduced to less than
$100,000 by the April 1997 Distribution Date, after giving effect to any
reductions in the Pre-Funded Amount on such date, the Trustee shall withdraw
from the Pre-Funding Account on such date and deposit in the related Certificate
Account the amount on deposit in the Pre-Funding Account other than any related
Pre-Funding Earnings.
(i) On the April 1997 and the May 1997 Distribution Dates, the Trustee
shall transfer from the Pre-Funding Account for a Trust to the related
Certificate Account the Pre-Funding Earnings, if any, applicable to each such
Distribution Date.
Section 6.2 PERMITTED WITHDRAWALS FROM THE CERTIFICATE ACCOUNT.
The Trustee shall withdraw or cause to be withdrawn funds from the
Certificate Account for each Trust for the following purposes:
(a) to effect the distributions described in Section 6.5;
(b) to pay to the Seller with respect to each Mortgage Loan or
property acquired in respect thereof that has been repurchased or replaced
pursuant to Section 2.6 or 3.3 or to pay to the Servicer with respect to each
related Mortgage Loan or property acquired in respect thereof that has been
purchased all amounts received thereon and not required to be distributed as of
the date on which the related repurchase or purchase price or Principal Balance
was determined;
(c) to pay itself any interest earned on or investment income earned
with respect to funds in the Certificate Account;
(d) to return to the related Collection Account any amount deposited
in the Certificate Account that was not required to be deposited therein; and
(e) to clear and terminate the Certificate Account upon termination of
the Trust Fund pursuant to Article VIII.
The Trustee shall keep and maintain a separate accounting for
withdrawals from the Certificate Account pursuant to each of subclauses (a)
through (f) listed above.
Section 6.3 COLLECTION OF MONEY.
Except as otherwise expressly provided herein, for each Trust the
Trustee may demand payment or delivery from the Servicer of all money and other
property payable to or receivable by the Trustee pursuant to this Agreement,
including (a) all payments due on the related Mortgage Loans in accordance with
the respective terms and conditions of such Mortgage Loans and required to be
paid over to the Trustee by the Servicer or by any sub servicer and (b) related
Insured Payments. The Trustee shall hold all such money and property received by
it, as part of the related Trust Fund and shall apply it as provided in this
Agreement.
Section 6.4 THE RESERVE ACCOUNT TRUST AND THE CERTIFICATE INSURANCE
POLICIES.
(a) For each Trust, the parties hereto do hereby create and establish
a trust, the "LFS 1997-1A Reserve Account Trust" and the "LFS 1997-1B Reserve
Account Trust," respectively (each, a "Reserve Account Trust"). Each Reserve
Account Trust shall hold a trust account (each a "Reserve Account") entitled
"Reserve Account, Norwest Bank Minnesota, National Association, as trustee for
LFS 1997-1A Reserve Account Trust," and "Reserve Account, Norwest Bank
Minnesota, National Association, as trustee for LFS 1997-1B Reserve Account
Trust," respectively, for the benefit of the related Certificateholders, the
Certificate Insurer, the Trustee and, in the case of Trust 1B, the Seller;
provided, however, that the Seller shall be entitled to receive distributions
from the Trust 1B Reserve Account only in accordance with Section 6.4(b)(v)(2).
Norwest Bank Minnesota, National Association, so long as it is acting as Trustee
hereunder (or if it is no longer acting as Trustee, than the successor Trustee)
shall serve as the Reserve Account Trustee for each Reserve Account Trust. The
LFS 1997-1A Reserve Account Trust is for credit enhancement purposes and shall
not be part of its related Trust Fund, and for Federal income tax purposes, the
LFS 1997-1A Reserve Account Trust shall be deemed to be owned by the Class R
Certificateholder (who shall pay the taxes, if any, imposed on the Trust 1A
Reserve Account and the LFS 1997-1A Reserve Account Trust from its own funds).
The LFS 1997-1B Reserve Account Trust is for credit enhancement purposes and
shall not be part of its related Trust Fund, and for Federal income tax
purposes, the the Trust 1B Reserve Account and the LFS 1997-1B Reserve Account
Trust shall be deemed to be owned by the Seller (who shall pay the taxes, if
any, imposed on the LFS 1997-1B Reserve Account Trust from its own funds).
Subject to the terms hereof, the funds held in each Reserve Account may be
invested solely in Permitted Investments at the direction of the Servicer. No
Permitted Investment shall be sold prior to its maturity unless needed to make
required transfers from the related Reserve Account. The Servicer shall be
liable for any losses occurring with respect to the Permitted Investments held
in a Reserve Account. Neither the Class R Certificateholder nor the Seller will
be required to refund any amount previously distributed to it, regardless of
whether there are sufficient funds to make a full distribution to
Certificateholders on such Distribution Date. For each Trust, the Trustee or the
Reserve Account Trustee, as the case may be, shall promptly upon receipt,
deposit into the related Reserve Account, or, in the case of the Trustee,
transfer to the related Reserve Account Trustee for deposit in the related
Reserve Account:
(i) On the Closing Date, an amount equal to $941,065 in the case of
Trust 1A to be deposited from the proceeds of the sale of the Class A-1
Certificates, and $3,115,053, in the case of Trust 1B to be deposited from
the proceeds of the sale of the Class A-2 Certificates, which represents
2.8% in the case of Trust 1A, and 6.7% in the case of Trust 1B, of the
Principal Balance of the related Mortgage Loans as of the Cut-Off Date. On
each Subsequent Transfer Date the Trustee shall transfer amounts from the
related Pre- Funding Account to the related Reserve Account pursuant to
Section 6.1(g). In addition, on any Subsequent Transfer Date, the
Certificate Insurer may require the Seller to deposit an amount into the
related Reserve Account as discussed in the last paragraph of the
definition of "Required Reserve Account Level."
(ii) On each Distribution Date thereafter, amounts for such Trust
described in Section 6.5(vi) or (vii); and
(iii) Amounts for such Trust required to be paid by the Servicer
pursuant to Section 6.6(d) in connection with losses on investments of
amounts in the related Reserve Account.
(b) For each Trust, amounts on deposit in the related Reserve Account
shall be withdrawn by the Reserve Account Trustee and transferred to the Trustee
for distribution in the following order of priority:
(i) on the Business Day prior to each Distribution Date for such
Trust, (1) for which an Insured Payment is required, the Reserve Account
Trustee shall withdraw all funds on deposit in the related Reserve Account
and transfer such funds to the Trustee for deposit in the related
Certificate Account and (2) for which no Insured Payment is required, the
Reserve Account Trustee shall withdraw from the related Reserve Account an
aggregate amount equal to the related Credit Enhancement Distribution
Amount and transfer such funds to the Trustee for deposit in the related
Certificate Account, in each case to be used to make distributions to the
related Certificateholders on the Distribution Date;
(ii) on each Distribution Date for such Trust, to deposit in the
related Certificate Account the amount, if any, required to make the full
distribution for such Trust under Section 6.5(i)-(ii);
(iii) on each Distribution Date for such Trust, to deposit in the
related Certificate Account the amount, if any, required to make the full
distribution for such Trust under Section 6.5(v);
(iv) on each Distribution Date for such Trust, to the extent there are
insufficient funds in the related Reserve Account to make deposits
described in Section 6.4(b)(i) through (iii) above, withdraw from amounts
on deposit in the Reserve Account of the other Trust remaining after the
application of Section 6.4(b)(i) through (iii) for such other Trust, the
amount of such insufficiency and deposit it in the Certificate Account of
such Trust;
(v) on each Distribution Date for such Trust, to the extent that the
amount then on deposit in the related Reserve Account after giving effect
to all required transfers for such Trust, described in Section 6.5(i)-(v)
on or prior to such Distribution Date exceeds the related Required Reserve
Account Level (such excess, a "Reserve Account Excess"), an amount equal to
such Reserve Account Excess shall be distributed by the Reserve Account
Trustee to the Trustee and shall be distributed by the Trustee as follows:
(1) to the Reserve Account of the other Trust until the amount therein is
at its required Reserve Account Level, (2) to the Trustee, any
indemnification owed the Trustee and any director, officer, employee or
agent of the Trustee pursuant to Section 9.5(b) and (3) any remaining
amounts in the Trust 1A Reserve Account to the Class R Certificateholder
and any remaining amounts in the Trust 1B Reserve Account to the Seller, in
either case of (2) or (3), free and clear of any lien or encumbrance; and
(vi) to clear and terminate the Reserve Account for such Trust upon
the termination of this Agreement in accordance with the terms of Section
8.1;
and also, in no particular order of priority:
(vii) to invest amounts on deposit in the Reserve Account for such
Trust in Permitted Investments pursuant to Section 6.6; and
(viii) to withdraw any amount not required to be deposited in the
Reserve Account for such Trust or deposited therein in error.
(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 related Certificate Insurance 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 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 Certificates.
Each Certificateholder, by its purchase of Certificates, 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,
supersedeas or performance bond pending any such appeal. In addition and without
limitation of the foregoing, the Certificate Insurer shall be subrogated to, and
each Certificateholder, 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 Certificateholder 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.
(e) No later than three Business Days prior to each Distribution Date
for each Trust, the Trustee shall determine whether a Deficiency Amount for such
Trust exists. If the Trustee determines that a Deficiency Amount exists, the
Trustee shall complete a notice in the form of Exhibit A to the related
Certificate Insurance Policy (the "Notice") and submit the Notice to the
Certificate Insurer or its agent no later than 12:00 noon New York City time on
the second Business Day preceding such Distribution Date, as a claim for an
Insured Payment in an amount equal to such Deficiency Amount. The Trustee shall,
as necessary, make a claim on the related Certificate Insurance Policy in
respect to Preference Amounts of a Trust in accordance with the terms of the
related Certificate Insurance Policy.
(f) For each Trust, the Trustee shall establish and maintain an
Eligible Account for the benefit of the related Class A Certificateholders for
the exclusive use as an account into which to deposit any proceeds of the
related Certificate Insurance Policy (each, an "Insurance Account"). Upon
receipt of an Insured Payment with respect to a Trust from the Insurer, the
Trustee shall deposit the related Insured Payment in the related Insurance
Account. All amounts on deposit in an Insurance Account shall remain uninvested.
On each Distribution Date for each Trust, the Trustee shall (i) transfer any
Deficiency Amount then on deposit in the related Insurance Account to the
related Certificate Account and (ii) return any money in the related Insurance
Account which does not constitute an Insured Payment to the Certificate Insurer.
The Trustee shall distribute on each Distribution Date for each Trust, to the
related Class A Certificateholders, the Deficiency Amount of such Trust for such
Distribution Date from the related Certificate Account in accordance with the
priorities set forth in Section 6.5 hereof.
(g) The Trustee shall (i) receive as attorney-in-fact of each Class A
Certificateholder any Insured Payment from the Certificate Insurer and (ii)
distribute such Insured Payment as set forth in subsection (f) above.
Section 6.5 DISTRIBUTIONS.
For each Trust, no later than 12:00 noon California time on the fourth
Business Day following each Record Date, the Servicer shall deliver to the
Trustee, the Certificate Insurer and the Back- Up Servicer a report containing
such information as to each related Mortgage Loan as of such Record Date
necessary to calculate the allocations, disbursements and transfers set forth
below and such other information as the Trustee or the Certificate Insurer shall
reasonably require.
With respect to the Certificate Account for each Trust and to the
extent the Servicer has delivered the report pursuant to the preceding sentence,
on each Distribution Date, the Trustee shall make the following allocations,
disbursements and transfers with respect to such Trust in the following order of
priority, and each such allocation, transfer and disbursement shall be treated
as having occurred only after all preceding allocations, transfers and
disbursements have occurred (provided, however, that amounts on deposit in the
Certificate Account of such Trust in respect of Insured Payments shall be
distributed pursuant to Section 6.5(iii) and (iv) only):
(i) from amounts then on deposit in the Certificate Account for such
Trust (including any amounts withdrawn from either Reserve Account) to the
Trustee an amount equal to the Trustee Fee then due to it with respect to
such Trust;
(ii) from amounts then on deposit in the Certificate Account for such
Trust (including any amounts withdrawn from either Reserve Account), to the
Certificate Insurer, the related Premium Amount;
(iii) from amounts then on deposit in the Certificate Account for such
Trust (including any Insured Payments, amounts withdrawn from either
Reserve Account and, on any Distribution Date on or before the Distribution
Date immediately following the end of the related Pre-Funding Period, any
amounts withdrawn from the related Capitalized Interest Account), to the
related Class A Certificateholders an amount equal to the related Class A
Interest Distribution Amount;
(iv) from amounts then on deposit in the Certificate Account for such
Trust (including any Insured Payments and amounts withdrawn from either
Reserve Account) to the related Class A Certificateholders an amount equal
to the related Class A Principal Distribution Amount until the related
Class A Certificate Principal Balance has been reduced to zero;
(v) from amounts then on deposit in the Certificate Account for such
Trust (excluding any Insured Payments but including amounts withdrawn from
either Reserve Account) to the Certificate Insurer, the related
Reimbursement Amount for such Distribution Date; and
(vi) from amounts then on deposit in the Certificate Account for such
Trust (excluding any Insured Payments), to the Reserve Account for the
other Trust an amount up to the excess, if any, of (x) the sum of the
Trustee Fee for such other Trust, the Premium Amount for such other Trust,
the Class A Interest Distribution Amount for such other Trust, the Class A
Principal Distribution Amount for such other Trust and the Reimbursement
Amount for such other Trust for such Distribution Date over (y) the amounts
to be distributed to the Trustee, the Certificate Insurer and the Class A
Certificateholders of such other Trust from the amounts on deposit in the
Certificate Account for such other Trust (other than from Insured Payments
or the Reserve Accounts);
(vii) an amount equal to any amount then remaining in the Certificate
Account for such Trust after the applications described in clauses (i)
through (vi) above shall be deposited first into the Reserve Account of
such Trust until the amount therein is at its required Reserve Account
Level; and then into the Reserve Account of the other Trust until the
amount therein is at its required Reserve Account Level;
(viii) from amounts then on deposit in the Certificate Account for
Trust 1A (excluding any Insured Payments), to the Class A
Certificateholders, the Certificateholders' Interest Carryover;
(ix) any remaining amounts on deposit in the Certificate Account for
Trust 1A, to the Class R Certificateholders; and
(x) any remaining amounts on deposit in the Certificate Account for
Trust 1B, to the Reserve Account for Trust 1B.
Notwithstanding the foregoing, the aggregate amounts distributed on
all Distribution Dates to the Holders of the Class A Certificates of a Trust on
account of principal shall not exceed the related Original Class A Principal
Balance. In addition, the Trustee shall distribute any funds remaining in the
Special Advance Account for each Trust to the Seller after the Distribution Date
occurring in May 1997 to the extent such amounts constitute earnings from
Permitted Investments on the Special Advance Account.
Section 6.6 INVESTMENT OF ACCOUNTS.
(a) So long as no Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of any Account (other than the Insurance Account) held by the Trustee or the
Reserve Account Trustee, shall be invested and reinvested by the Trustee or the
Reserve Account Trustee, as the case may be, as directed in writing by the
Servicer (or with respect to a Certificate Account, as directed by the Trustee),
solely in one or more Permitted Investments, in the name of the Trustee or the
Reserve Account Trustee, as the case may be, for the benefit of the related
Certificateholders and the Certificate Insurer, bearing interest or sold at a
discount. If an Event of Default shall have occurred and be continuing or if the
Servicer does not provide investment directions, the Trustee shall invest all
Accounts (other than the Insurance Account) in Permitted Investments described
in paragraph (d) of the definition of Permitted Investments. No such investment
in any Account shall mature later than the Business Day immediately preceding
the next Distribution Date for the related Trust (except that if such Permitted
Investment is an obligation of the Trustee, then such Permitted Investment shall
mature not later than such Distribution Date).
(b) Subject to Section 6.1(b), if any amounts are needed for
disbursement from any Account held by the Trustee or the Reserve Account Trustee
and sufficient uninvested funds are not available to make such disbursement, the
Trustee or the Reserve Account Trustee, as the case may be, shall cause to be
sold or otherwise converted to cash a sufficient amount of the investments in
such Account. The Trustee and the Reserve Account Trustee shall not be, and the
Servicer shall be, liable for any investment loss or other charge resulting
therefrom unless the Trustee's or the Reserve Account Trustee's, as the case may
be, failure to perform in accordance with this Section 6.6 is the cause of such
loss or charge.
(c) Subject to Section 9.1 hereof, the Trustee and the Reserve Account
Trustee shall not in any way be held liable by reason of any insufficiency in
any Account held by the Trustee or the Reserve Account Trustee, as the case may
be, resulting from any investment loss on any Permitted Investment included
therein (except to the extent that the Trustee or the Reserve Account Trustee is
the obligor and has defaulted thereon or as provided in subsection (b) of this
Section 6.6).
(d) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in each Collection Account shall be for the benefit
of the Servicer as servicing compensation (in addition to the related Servicing
Fees). The Servicer shall deposit in the related Account the amount of any loss
incurred in respect of any Permitted Investment held therein which is in excess
of the income and gain thereon immediately upon realization of such loss,
without any right to reimbursement therefor from its own funds.
Section 6.7 REPORTS BY THE TRUSTEE.
(a) For each Trust, on each Distribution Date the Trustee shall
provide to each Holder, to the Servicer, to the Certificate Insurer, to the
Underwriter, to the Depositor, to the Back-Up Servicer and to the Rating
Agencies a written report (the "Trustee Remittance Report"), setting forth
information including, without limitation, the following information:
(i) the amount of the distribution with respect to the related Class A
Certificates;
(ii) the amount of such distributions allocable to principal,
separately identifying the aggregate amount of any Principal Prepayments or
other unscheduled recoveries of principal included therein;
(iii) the amount of such distributions allocable to interest and the
calculation thereof;
(iv) the Certificate Principal Balance of the related Class A
Certificates as of such Distribution Date, together with the principal
amount of such Class A Certificates (based on a Certificate in an original
principal amount of $1,000) then outstanding, in each case after giving
effect to any payment of principal on such Distribution Date;
(v) the amount of any Insured Payment included in the amounts
distributed to such Class A Certificateholders on such Distribution Date;
(vi) the amount of any Credit Enhancement Distribution Amount
withdrawn from the related Reserve Account on such Remittance Date;
(vii) the amount then on deposit in the related Reserve Account
together with the related current Required Reserve Account Level
(indicating the calculation for each in such report);
(viii) the amounts, if any, of any Liquidated Loan Losses for related
Mortgage Loans for the related Due Period;
(ix) the amount, if any, of Reimbursement Amounts for such Trust,
included in such distribution; and
(x) during the Pre-Funding Period for such Trust, the aggregate
Principal Balance of Subsequent Mortgage Loans purchased by such Trust
during the prior Due Period and the amount on deposit in the related
Pre-Funding Account as of the end of such Due Period.
Items (i), (ii) and (iii) above shall, with respect to the
Class A Certificates, be presented on the basis of a Certificate having a $1,000
denomination. In addition, by January 31 of each calendar year following any
year during which the Certificates are outstanding, the Trustee shall furnish a
report to each Holder of record if so requested in writing at any time during
each calendar year as to the aggregate of amounts reported pursuant to (i), (ii)
and (iii) with respect to the Certificates for such calendar year.
(b) All distributions made to the Class A Certificateholders
of a Trust on each Distribution Date will be made on a pro rata basis among such
Class A Certificateholders on the next preceding Record Date based on the
Percentage Interest represented by their respective Certificates, and shall be
made 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 shall own of record Certificates which have
denominations aggregating at least $5,000,000 appearing in the Certificate
Register and shall have provided complete wiring instructions at least five
Business Days prior to the Record Date, and otherwise by check mailed to the
address of such Certificateholder appearing in the Certificate Register.
(c) In addition, for each Trust on each Distribution Date the
Trustee will distribute to each related Holder, to the Certificate Insurer, to
the Underwriter, to the Servicer, to the Depositor, to the Back-Up Servicer and
to the Rating Agencies, together with the information described in subsection
(a) preceding, the following information with respect to the Mortgage Loans as
of the close of business on the last Business Day of the prior calendar month
(except as otherwise provided in clause (v) below), which is hereby required to
be prepared by the Servicer and furnished to the Trustee in computer tape or
electronic transmission format for such purpose on or prior to the related
Servicer Distribution Date (The Trustee shall have no duty or obligation with
respect to the accuracy of the information contained in such computer tape or
electronic transmission):
(i) the total number of related Mortgage Loans
and the aggregate Principal Balances
thereof, together with the number, aggregate
principal balances of such Mortgage Loans
and the percentage (based on the aggregate
Principal Balances of such Mortgage Loans)
of the aggregate Principal Balances of such
Mortgage Loans to the aggregate Principal
Balance of all related Mortgage Loans (A)
30-59 days Delinquent, (B) 60-89 days
Delinquent and (C) 90 or more days
Delinquent;
(ii) the number, aggregate Principal Balances of
all related Mortgage Loans and percentage
(based on the aggregate Principal Balances
of such Mortgage Loans) of the aggregate
Principal Balances of such Mortgage Loans
to the aggregate Principal Balance of all
related Mortgage Loans in foreclosure
proceedings and the number, aggregate
Principal Balances of all related Mortgage
Loans and percentage (based on the aggregate
Principal Balances of such Mortgage Loans)
of any such Mortgage Loans also included in
any of the statistics described in the
foregoing clause (i);
(iii) the number, aggregate Principal
Balances of all related Mortgage Loans and
percentage (based on the aggregate Principal
Balances of such Mortgage Loans) of the
aggregate Principal Balances of such
Mortgage Loans to the aggregate Principal
Balance of all related Mortgage Loans
relating to Mortgagors in bankruptcy
proceedings and the number, aggregate
Principal Balances of all related Mortgage
Loans and percentage (based on the
aggregate Principal Balances of such
Mortgage Loans) of any such Mortgage Loans
also included in any of the statistics
described in the foregoing clause (i);
(iv) the number, aggregate Principal Balances of
all related Mortgage Loans and percentage
(based on the aggregate Principal Balances
of such Mortgage Loans) of the aggregate
Principal Balances of such Mortgage Loans
to the aggregate Principal Balance of all
related Mortgage Loans relating to REO
Properties and the number, aggregate
Principal Balances of all related Mortgage
Loans and percentage (based on the aggregate
Principal Balances of the Mortgage Loans)
of any such Mortgage Loans also included in
any of the statistics described in the
foregoing clause (i);
(v) the weighted average Mortgage Interest Rate
of all related Mortgage Loans as of the Due
Date occurring in the Due Period related to
such Distribution Date;
(vi) the weighted average remaining term to
stated maturity of all related Mortgage
Loans;
(vii) the book value of any related REO
Property; and
(viii) for all related Mortgage Loans, the three
month rolling average of 60+ day
delinquencies, the Three Month Average
Annualized Default Rate, Liquidated Loan
Losses for such Due Period, Cumulative
Liquidated Loan Losses, Total Expected
Losses and Monthly Excess Cashflow.
Section 6.8 ADDITIONAL REPORTS BY TRUSTEE.
(a) The Trustee shall report to the Depositor, the Servicer,
the Back-Up Servicer and the Certificate Insurer with respect to the amount then
held in each Account (including investment earnings accrued or scheduled to
accrue) held by the Trustee and the identity of the investments included
therein, as the Depositor, the Servicer or the Certificate Insurer may from
time to time request in writing.
(b) From time to time, at the request of the Certificate
Insurer, the Trustee shall report to the Certificate Insurer with respect to its
actual knowledge, without independent investigation, of any breach of any of the
representations or warranties relating to individual Mortgage Loans set forth in
any Purchase Agreement or in Section 3.1 or 3.2 hereof. The Trustee shall also
provide the Certificate Insurer such other information as may be reasonably
requested by it.
Section 6.9 COMPENSATING INTEREST.
For each Trust, not later than the close of business on each
Servicer Distribution Date, the Servicer shall remit to the Trustee (without
right or reimbursement therefor) for deposit into the related Certificate
Account an amount equal to the lesser of (a) the aggregate of the Prepayment
Interest Shortfalls for such Trust for the related Distribution Date resulting
from Principal Prepayments during the related Due Period and (b) its aggregate
Servicing Fees for such Trust received in the related Due Period and shall not
have the right to reimbursement therefor (the "Compensating Interest").
Section 6.10 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 Certificates which is made with
moneys received pursuant to the terms of the Certificate Insurance Policy shall
not be considered payment of the Certificates from a Trust Fund. The Depositor,
the Servicer and the Trustee acknowledge, and each Holder by its acceptance of a
Certificate agrees, that without the need for any further action on the part of
the Certificate Insurer, the Depositor, the Servicer, the Trustee or the
Certificate Registrar (a) to the extent the Certificate Insurer makes payments,
directly or indirectly, on account of principal of or interest on the
Certificates to the Holders of such Certificates, the Certificate Insurer will
be fully subrogated to, and each Certificateholder, the Servicer and the Trustee
hereby delegate and assign to the Certificate Insurer, to the fullest extent
permitted by law, the rights of such Holders to receive such principal and
interest from such Trust Fund, including, without limitation, any amounts due to
the Certificateholders in respect of securities law violations arising from the
offer and sale of the Certificates, and (b) the Certificate Insurer shall be
paid such amounts from the sources and in the manner provided herein for the
payment of such amounts and as provided in the Insurance Agreement. The Trustee
and the Servicer shall cooperate in all respects with any reasonable request by
the Certificate Insurer for action to preserve or enforce the Certificate
Insurer's rights or interests under this Agreement without limiting the rights
or affecting the interests of the Holders as otherwise set forth herein.
ARTICLE VII.
DEFAULT
Section 7.1 EVENTS OF DEFAULT.
(a) In case one or more of the following Events of
Default shall occur and be continuing, that is to say:
(i) any failure by the Servicer to remit to the
Trustee any payment (including Periodic
Advances) required to be made by the
Servicer under the terms of this Agreement
which continues unremedied for one (1)
Business Day;
(ii) the failure by the Servicer to make any
required Servicing Advance which failure
continues unremedied for a period of one (1)
Business Day after the date on which
written notice of such failure, requiring
the same to be remedied, shall have been
given to the Servicer by the Trustee or to
the Servicer and the Trustee by any
Certificateholder or the Certificate
Insurer;
(iii) any failure on the part of the Servicer
or the Seller duly to observe or perform in
any material respect any other of the
covenants or agreements on the part of the
Servicer or the Seller, as the case may be,
contained in this Agreement or the
Insurance Agreement, respectively, or the
breach of any representation and warranty
made pursuant to Section 3.1 or the
Insurance Agreement, as the case may be,
which continues unremedied for a period of
30 days after the date on which written
notice of such failure, requiring the same
to be remedied, shall have been given to the
Servicer or the Seller, as the case may be,
by the Depositor or the Trustee, or to the
Servicer or the Seller, as the case may be,
and the Trustee by any Certificateholder or
the Certificate Insurer;
(iv) a decree or order of a court or agency or
supervisory authority having jurisdiction
in an involuntary case under any present or
future federal or state bankruptcy,
insolvency or similar law or for the
appointment of a conservator or receiver or
liquidator in any insolvency, readjustment
of debt, marshaling of assets and
liabilities or similar proceedings, or for
the winding-up or liquidation of its
affairs, shall have been entered against the
Servicer and such decree or order shall
have remained in force, undischarged or
unstayed for a period of 60 days;
(v) the Servicer shall consent to the
appointment of a conservator or receiver or
liquidator in, or otherwise voluntarily
consent to, any insolvency, readjustment of
debt, marshaling of assets and liabilities
or similar proceedings of or relating to
the Servicer or of or relating to all or
substantially all of the Servicer's
property;
(vi) the Servicer shall admit in writing its
inability to pay its debts as they become
due, file a petition to take advantage of
any applicable insolvency or reorganization
statute, make an assignment for the benefit
of its creditors, or voluntarily suspend
payment of its obligations;
(vii) for either Trust, as of any Distribution
Date prior to the 60th Distribution Date,
Total Expected Losses exceed 6.75% of the
related Original Certificate Principal
Balance;
(viii) for either Trust, as of any Distribution
Date following the 60th Distribution Date
but prior to the 120th Distribution Date,
Total Expected Losses exceed 10.00% of the
related Original Certificate Principal
Balance; or
(ix) so long as the Seller is the Servicer, any
failure of the Seller to repurchase,
substitute or to indemnify the Certificate
Insurer or the related Trust for any
Mortgage Loan as required by the Mortgage
Loan Purchase Agreement or this Agreement.
(b) then, and in each and every such case, so long as an Event
of Default shall not have been remedied: (x) with respect solely to clause (i)
above, if such payment is in respect of Periodic Advances or Compensating
Interest owing by the Servicer and such payment is not made by 12:00 noon New
York time on the second Business Day prior to the applicable Distribution Date,
the Trustee, upon receipt of written notice or discovery by a Responsible
Officer of such failure, shall give immediate telephonic notice of such failure
to a Servicing Officer of the Servicer and to the Certificate Insurer and the
Trustee shall, with the consent of the Certificate Insurer, terminate all of the
rights and obligations of the Servicer under this Agreement and the Trustee, or
a successor servicer appointed in accordance with Section 7.2, shall immediately
make such Periodic Advance or payment of Compensating Interest and assume,
pursuant to Section 7.2 hereof, the duties of a successor Servicer; and (y) with
respect to that portion of clause (i) above not referred to in the preceding
clause (x) and clauses (ii), (iii), (iv), (v), (vi), (vii), (viii) and (ix)
above, the Trustee shall, but only at the direction of the Certificate Insurer
or the Majority Certificateholders of each Trust, by notice in writing to the
Servicer and a Responsible Officer of the Trustee and subject to the prior
written consent of the Certificate Insurer, in the case of any removal at the
direction of the Majority Certificateholders, or the Certificate Insurer may,
and in addition to whatever rights such Certificateholders or the Certificate
Insurer may have at law or equity to damages, including injunctive relief and
specific performance, terminate all the rights and obligations of the Servicer
under this Agreement and in and to the Mortgage Loans and the proceeds thereof,
as servicer. Upon receipt by the Servicer of such written notice, or notice
pursuant to Section 7.1(c), all authority and power of the Servicer under this
Agreement, whether with respect to the Mortgage Loans or otherwise, shall,
subject to Section 7.2, pass to and be vested in the Trustee or its designee
approved by the Certificate Insurer and the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, at the expense of the Servicer, any and all documents and other
instruments and do or cause to be done all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, including, but
not limited to, the transfer and endorsement or assignment of the Mortgage Loans
and related documents. The Servicer agrees to cooperate (and pay any related
costs and expenses) with the Trustee in effecting the termination of the
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer to the Trustee or its designee for administration by it of all
amounts which shall at the time be credited by the Servicer to a Collection
Account or thereafter received with respect to the Mortgage Loans. The Trustee
shall promptly notify the Certificate Insurer and the Rating Agencies of the
occurrence of an Event of Default.
(c) Additionally, the Certificate Insurer may direct the
Trustee to remove the Servicer if, upon the death, incapacity or termination of
employment of ▇▇▇▇▇▇ ▇. Perl, President and Chief Executive Officer of the
Servicer, (i) the Certificate Insurer, at its expense, causes a full and
complete review of the servicing capabilities of the Servicer by a
nationally-recognized public accounting firm, (ii) the report of such review
concludes that the Servicer does not have the ability to service adequately the
Mortgage Loans and (iii) the Servicer does not correct identified material
deficiencies within 90 days of notification. The Servicer shall promptly notify
the Certificate Insurer of the death, incapacity or termination of employment of
▇▇▇▇▇▇ ▇. Perl.
Section 7.2 TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 7.1, or the Trustee receives the resignation of
the Servicer evidenced by an Opinion of Counsel pursuant to Section 5.19, or the
Servicer is removed as Servicer pursuant to Article VII, in which event the
Trustee shall promptly notify the Rating Agencies, except as otherwise provided
in Section 7.1, the Trustee shall be the successor in all respects to the
Servicer in its capacity as servicer under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Servicer
by the terms and provisions hereof arising on or after the date of succession;
provided, however, that the Trustee shall not be liable for any actions or the
representations and warranties of any servicer prior to it and including,
without limitation, the obligations of the Servicer set forth in Sections 2.5
and 3.3. The Trustee, as successor servicer, shall be obligated to pay
Compensating Interest pursuant to Section 6.9 in any event and to make advances
pursuant to Section 5.16 unless, and only to the extent the Trustee determines
reasonably and in good faith that such advances would not be recoverable
pursuant to Section 5.3, such determination to be evidenced by a certification
of a Responsible Officer of the Trustee delivered to the Certificate Insurer.
(b) Notwithstanding the above, the Trustee shall, if it is
unable to so act or if the Majority Certificateholders of each Trust with the
consent of the Certificate Insurer or the Certificate Insurer so requests in
writing to the Trustee, or (after the second anniversary of the Closing Date)
the Trustee may, if it shall be unwilling to so act, appoint, pursuant to the
provisions set forth in paragraph (c) below, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
acceptable to the Certificate Insurer that has a net worth of not less than
$15,000,000 as the successor to the Servicer hereunder in the assumption of all
or any part of the responsibilities, duties or
liabilities of the Servicer hereunder.
(c) In the event the Trustee is the successor servicer, it
shall be entitled to the same Servicing Compensation (including the Servicing
Fee as adjusted pursuant to the definition thereof) and other funds pursuant to
Section 5.8 hereof as the Servicer if the Servicer had continued to act as
servicer hereunder. In the event the Trustee is unable or (after the second
anniversary of the Closing Date) unwilling to act as successor servicer, the
Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor servicer shall be entitled to not more than the full amount of the
aggregate Servicing Fees hereunder as servicing compensation, together with the
other Servicing Compensation. Within thirty days after any such public
announcement, the Trustee shall negotiate and effect the sale, transfer and
assignment of the servicing rights and responsibilities hereunder to the
qualified party submitting the highest qualifying bid so long as such party is
acceptable to the Certificate Insurer. The Trustee shall deduct from any sum
received by the Trustee from the successor to the Servicer in respect of such
sale, transfer and assignment all costs and expenses of any public announcement
and of any sale, transfer and assignment of the servicing rights and
responsibilities hereunder and the amount of any unreimbursed Servicing Advances
and Periodic Advances owed to the Trustee. After such deductions, the remainder
of such sum shall be paid by the Trustee to the Servicer at the time of such
sale, transfer and assignment to the Servicer's successor.
(d) The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. The Servicer agrees to cooperate with the Trustee and any successor
servicer in effecting the termination of the Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Trustee or
such successor servicer, as applicable, at the Servicer's cost and expense, all
documents and records reasonably requested by it to enable it to assume the
Servicer's functions hereunder and shall promptly also transfer to the Trustee
or such successor servicer, as applicable, all amounts that then have been or
should have been deposited in a Collection Account by the Servicer or that are
thereafter received with respect to the Mortgage Loans. Any collections received
by the Servicer after such removal or resignation shall be endorsed by it to the
Trustee and remitted directly to the Trustee or, at the direction of the
Trustee, to the successor servicer. Neither the Trustee nor any other successor
servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer hereunder. Notwithstanding anything to the
contrary herein, no appointment of a successor to the Servicer under this
Agreement shall be effective until the Trustee and the Certificate Insurer shall
have consented thereto, and written notice of such proposed appointment shall
have been provided by the Trustee to the Certificate Insurer and to each
Certificateholder. The Trustee shall not resign as servicer until a successor
servicer reasonably acceptable to the Certificate Insurer has been appointed.
The Certificate Insurer shall have the right to remove the Trustee as successor
servicer under this Section 7.2 without cause, and the Trustee shall appoint
such other successor servicer as directed by the Certificate Insurer.
(e) Pending appointment of a successor to the Servicer
hereunder, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; PROVIDED, HOWEVER, that no such
compensation shall be in excess of that permitted the Servicer pursuant to
Section 5.8, together with other Servicing Compensation. The Servicer, the
Trustee and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
Section 7.3 WAIVER OF DEFAULTS.
The Majority Certificateholders of each Trust may, on behalf
of all Certificateholders, and subject to the consent of the Certificate
Insurer, or the Certificate Insurer may, waive any events permitting removal of
the Servicer as servicer pursuant to this Article VII; provided, however, that
the Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies and the Certificate Insurer.
Section 7.4 TRUSTEE TO ACT SOLELY WITH CONSENT OF THE
CERTIFICATE INSURER.
Unless a Certificate Insurer Default exists, the Trustee shall
not, without the Certificate Insurer's consent or unless directed by the
Certificate Insurer:
(a) terminate the rights and obligations of the
Servicer as Servicer pursuant to Section 7.1 hereof;
(b) agree to any amendment pursuant to Section 10.3
hereof; or
(c) undertake any litigation.
The Certificate Insurer may, in writing and in its sole
discretion renounce all or any of its rights under Section 7.4 or any
requirement for the Certificate Insurer's consent for any period of time.
Section 7.5 MORTGAGE LOANS, TRUST FUND AND ACCOUNTS HELD FOR
BENEFIT OF THE CERTIFICATE INSURER.
(a) The Trustee shall hold each Trust Fund and the related
Mortgage Files for the benefit of the related Certificateholders and the
Certificate Insurer and all references in this Agreement and in the Certificates
to the benefit of Holders of the Certificates or the benefit of the
Certificateholders shall be deemed to include the Certificate Insurer. The
Trustee shall cooperate in all reasonable respects with any reasonable request
by the Certificate Insurer for action to preserve or enforce the Certificate
Insurer's rights or interests under this Agreement and the Certificates unless,
as stated in an Opinion of Counsel addressed to the Trustee and the Certificate
Insurer, such action is contrary to the terms of the Agreement.
(b) The Servicer hereby acknowledges and agrees that it shall
service the Mortgage Loans for the benefit of the related Certificateholders and
for the benefit of the Certificate Insurer, and all references in this Agreement
to the benefit of or actions on behalf of the Certificateholders or Holders of
the Certificates shall be deemed to include the Certificate Insurer.
ARTICLE VIII.
TERMINATION
Section 8.1 TERMINATION.
(a) This Agreement shall terminate upon notice to the Trustee
and the Certificate Insurer of either: (a) the later of (i) the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Periodic Advances of same by the Servicer), or (ii) the
disposition of all funds with respect to the last Mortgage Loan and the
remittance of all funds due hereunder or (iii) the payment of all amounts due
and payable to the Certificate Insurer and the Trustee or (b) mutual consent of
the Servicer, the Certificate Insurer and all Certificateholders in writing;
PROVIDED, HOWEVER, that in no event shall the Trusts established by this
Agreement terminate later than twenty-one years after the death of the last
surviving lineal descendant of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, late Ambassador of the United
States to the Court of St. ▇▇▇▇▇, alive as of the date hereof.
(b) In addition, the Servicer may, at its option (or if the
Servicer fails to exercise such option, the Certificate Insurer may, at its
option) and at its sole cost and expense, terminate this Agreement on any date
on which the combined aggregate Principal Balance of the Mortgage Loans of each
Trust is less than 5% of the sum of (i) the combined aggregate Original Pool
Principal Balance of each Trust and (ii) the combined aggregate Original
Pre-Funded Amount of each Trust by purchasing from the applicable Trust, on the
next succeeding Distribution Date, all of the outstanding Mortgage Loans of each
Trust and REO Properties of each Trust at a price equal to the sum of (i) 100%
of the aggregate Principal Balance of each outstanding Mortgage Loan and each
REO Property and (ii) the greater of (1) the aggregate amount of accrued and
unpaid interest on the Mortgage Loans through the related Due Period and (2) 30
days' accrued interest thereon computed at a rate equal to the related Mortgage
Interest Rate, in each case net of the Servicing Fee, (3) any accrued and unpaid
Certificateholders' Interest Carryover and (4) any unreimbursed amounts due to
the Certificate Insurer and the Trustee under this Agreement and the Insurance
Agreement and any accrued and unpaid Insured Payments (the "Termination Price").
Any such purchase shall be accomplished by deposit into the related Certificate
Account of the related Termination Price. No such termination is permitted
without the prior written consent of the Certificate Insurer if it would result
in a draw on the Certificate Insurance Policy.
(c) If on any Distribution Date, the Servicer determines that
there are no outstanding Mortgage Loans and no other funds or assets in either
Trust Fund other than funds in a Certificate Account, the Servicer shall send a
final distribution notice promptly to each related Certificateholder in
accordance with paragraph (d) below.
(d) Notice of any termination, specifying the Distribution
Date upon which a Trust Fund will terminate and the related Certificateholders
shall surrender their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Servicer by letter
to such Certificateholders mailed during the month of such final distribution
before the Servicer Distribution Date in such month, specifying (i) the
Distribution Date upon which final payment of such Certificates will be made
upon presentation and surrender of such Certificates at the office of the
Trustee therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of such
Certificates at the office of the Trustee therein specified. The Servicer shall
give such notice to the Trustee therein specified. The Servicer shall give such
notice to the Trustee at the time such notice is given to Certificateholders.
The obligations of the Certificate Insurer hereunder shall terminate upon the
deposit by the Servicer with the Trustee of a sum sufficient to purchase all of
the Mortgage Loans and REO Properties as set forth above or when the Class A
Principal Balance of each Trust has been reduced to zero.
(e) In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the time
specified in the above-mentioned written notice, the Servicer shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within six months after the second notice, all of the Certificates
shall not have been surrendered for cancellation, the Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates and
the cost thereof shall be paid out of the funds and other assets which remain
subject hereto. If within nine months after the second notice all the
Certificates shall not have been surrendered for cancellation, the Servicer
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 only to the
Servicer for payment and not to the Certificate Insurer. Such funds shall remain
uninvested.
Section 8.2 ACCOUNTING UPON TERMINATION OF SERVICER.
Upon termination of the Servicer, the Servicer shall, at its expense:
(a) deliver to its successor or, if none shall yet
have been appointed, to the Trustee, the funds in any Account;
(b) deliver to its successor or, if none shall yet have been
appointed, to the Trustee all Mortgage Files and related documents and
statements held by it hereunder and a Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been
appointed, to the Trustee and, upon request, to the Certificateholders or the
Certificate Insurer a full accounting of all funds, including a statement
showing the Monthly Payments collected by it and a statement of monies held in
trust by it for the payments or charges with respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts
reasonably requested in order to effect the orderly and efficient transfer of
servicing of the Mortgage Loans to its successor and to more fully and
definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the "Servicer" under this
Agreement.
ARTICLE IX.
THE TRUSTEE
Section 9.1 DUTIES OF TRUSTEE.
(a) The Trustee, prior to the occurrence of an Event of
Default and after the curing of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Default has occurred and has not been
cured or waived, 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 its
exercise as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs.
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee which are specifically required to be
furnished pursuant to any provision of this Agreement, shall examine them to
determine whether they conform on their face to the requirements of this
Agreement; PROVIDED, HOWEVER, that the Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Servicer, the Seller, the
Depositor or the Certificate Insurer hereunder. If any such instrument is found
not to conform on its face to the requirements of this Agreement, the Trustee
shall take action as it deems appropriate to have the instrument corrected and,
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will, at the expense of the Servicer notify the Certificate Insurer and request
written instructions as to the action it deems appropriate to have the
instrument corrected, and if the instrument is not so corrected, the Trustee
will provide notice thereof to the Certificate Insurer who shall then direct the
Trustee as to the action, if any, to be taken.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of
Default, and after the curing of all such
Events of Default which may have occurred,
the duties and obligations of the Trustee
shall be determined solely by the express
provisions of this Agreement, the Trustee
shall not be liable except for the
performance of such duties and obligations
as are specifically set forth in this
Agreement, no implied covenants or
obligations shall be read into this
Agreement against the Trustee and, in the
absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely,
as to the truth of the statements and the
correctness of the opinions expressed
therein, upon any certificates or opinions
furnished to the Trustee and conforming to
the requirements of this Agreement;
(ii) The Trustee shall not be personally liable
for an error of judgment made in good faith
by a Responsible Officer or other officers
of the Trustee, unless it shall be proved
that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) The Trustee shall not be personally
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 Certificate Insurer or with the
consent of the Certificate Insurer, the
Class A Certificateholders holding Class A
Certificates evidencing Percentage
Interests in each Trust of at least 25%,
relating to the time, method and place of
conducting any proceeding for any remedy
available to the Trustee, or exercising any
trust or power conferred upon the Trustee,
under this Agreement;
(iv) The Trustee, in its capacity as trustee,
shall not be required to take notice or be
deemed to have notice or knowledge of any
default or Event of Default (except an
Event of Default with respect to the
nonpayment of any amount described in
Section 7.1(a)(i) and separately itemized in
the report relating to the applicable
Servicer Distribution Date delivered to the
Trustee pursuant to Section 5.16(a) hereof),
unless a Responsible Officer of the Trustee
shall have received written notice thereof
or otherwise has actual knowledge thereof.
In the absence of receipt of such notice or
having actual knowledge, the Trustee, in its
capacity as trustee, may conclusively
assume that there is no default or Event of
Default (except a failure to make a
Periodic Advance or other nonpayment of any
amount described in Section 7.1(a)(i) and
separately itemized in the report relating
to the applicable Servicer Distribution Date
delivered to the Trustee pursuant to
Section 5.16(a) hereof);
(v) The Trustee shall not be required to expend
or risk its own funds or otherwise incur
financial liability for the performance of
any of its duties hereunder or the exercise
of any of its rights or powers if there is
reasonable ground for believing that the
repayment of such funds or adequate
indemnity against such risk or liability is
not reasonably assured to it and none of
the provisions contained in this Agreement
shall in any event require the Trustee to
perform, or be responsible for the manner of
performance of, any of the obligations of
the Servicer under this Agreement except
during such time, if any, as the Trustee
shall be the successor to, and be vested
with the rights, duties, powers and
privileges of, the Servicer in accordance
with the terms of this Agreement; and
(vi) Subject to the other provisions of this
Agreement (and except in its capacity as
successor servicer) and without limiting the
generality of this Section, the Trustee
shall have no duty (A) to cause or see to
any recording, filing, or depositing of
this Agreement, any agreement referred to
herein, any Mortgage or assignment of
Mortgage or any financing statement or
continuation statement evidencing a security
interest, or to cause or see to the
maintenance of any such recording or filing
or depositing or to any rerecording,
refiling or redepositing of any thereof,
(B) to cause or see to any insurance, (C) to
cause or see to the payment or discharge of
any tax, assessment, or other governmental
charge or any lien or encumbrance of any
kind owing with respect to, assessed or
levied against, any part of a Trust, a
Trust Fund, the Certificateholders or the
Mortgage Loans, (D) to confirm or verify the
contents of any reports or certificates of
the Servicer delivered to the Trustee
pursuant to this Agreement believed by the
Trustee to be genuine and to have been
signed or presented by the proper party or
parties.
Section 9.2 CERTAIN MATTERS AFFECTING THE TRUSTEE.
Except as otherwise provided in Section 9.1:
(i) the Trustee may rely and shall be protected
in acting or refraining from acting upon
any resolution, Officers' Certificate,
Opinion of Counsel, certificate of auditors
or any other certificate, statement,
instrument, opinion, report, notice,
request, consent, order, appraisal, bond or
other paper or document 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 chosen
by it with due care and any written advice
of counsel (a copy of which is received by
the Certificate Insurer) or 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 be under no
obligation to exercise any of the trusts or
powers vested in it by this Agreement or to
institute, conduct or defend by litigation
hereunder or in relation hereto at the
request, order or direction of the
Certificate Insurer or any of the
Certificateholders, pursuant to the
provisions of this Agreement, unless such
Certificateholders or the Certificate
Insurer, as applicable, shall have offered
to the Trustee reasonable security or
indemnity against the costs, expenses and
liabilities which may be incurred therein
by the Trustee or thereby; nothing
contained herein shall, however, relieve the
Trustee of the obligation, upon the
occurrence of an Event of Default of which
the Trustee has notice or knowledge
pursuant to Section 9.1(c)(iv) (which has
not been cured), 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 its 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 Trustee having notice or
knowledge pursuant to Section 9.1(c)(iv) of
an Event of Default hereunder and after the
curing of all Events of Default 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 Holders of Class A
Certificates evidencing Percentage Interests
in each Trust aggregating not less than
25%; PROVIDED, HOWEVER, that if the payment
-------- -------
within a reasonable time to the Trustee of
the costs, expenses or liabilities likely to
be incurred by it in the making of such
investigation is, in the opinion of the
Trustee, not reasonably assured to the
Trustee by the security afforded to it by
the terms of this Agreement, the Trustee may
require reasonable indemnity against such
expense or liability as a condition to
taking any such action. The reasonable
expense of every such examination shall be
paid by the Servicer or, if paid by the
Trustee, shall be repaid by the Servicer
upon demand from the Servicer's own funds;
(vi) the right of the Trustee to perform any
discretionary act enumerated in this
Agreement shall not be construed as a duty,
and the Trustee shall not be answerable for
other than its negligence or willful
misconduct in the performance of such act;
(vii) the Trustee shall not be required to
give any bond or surety in respect of the
execution of the Trust created hereby or the
powers granted hereunder; and
(viii) 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 the
Trustee shall not be responsible for any
negligence or willful misconduct on the
part of any such agent or attorney appointed
by the Trustee with due care.
Section 9.3 TRUSTEE NOT LIABLE FOR CERTIFICATES OR
MORTGAGE LOANS.
The statements contained herein and in the Certificates (other
than the certificate of authentication on the Certificates) shall be taken as
the statements of the Depositor, the Seller or the Servicer as the case may be,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Agreement,
the Certificates or of any Mortgage Loan or related document. The Trustee shall
not be accountable for the use or application of the following: (i) any
Certificates delivered to the Depositor, (ii) any proceeds from such
Certificates or (iii) any funds paid to the Servicer in respect of the Mortgage
Loans or deposited in or withdrawn from a Collection Account by the Servicer.
The Trustee shall not be responsible for the legality or validity of the
Agreement or the validity, priority, perfection or sufficiency of the security
for the Certificates issued or intended to be issued hereunder.
Section 9.4 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become
the owner or pledgor of Certificates with the same rights it would have if it
were not Trustee, and may otherwise deal with the parties hereto.
Section 9.5 TRUSTEE'S FEES AND EXPENSES; INDEMNITY.
(a) The Trustee acknowledges that in consideration of the performance of
its duties hereunder it is entitled to receive the Trustee's Fee (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) in accordance with the provision of Section 6.5(a).
Additionally, the Trustee hereby covenants, for the benefit of the Depositor,
that the Trustee has arranged separately with the Servicer for the payment to
the Trustee of all of the Trustee's expenses in connection only with the
negotiation and initial execution of this Agreement. For the avoidance of doubt,
the parties hereto acknowledge that it is the intent of the parties that the
Depositor and the Certificate Insurer shall not pay any of the Trustee's fees
and expenses in connection with this transaction. The Trustee shall not be
entitled to compensation for any expense, disbursement or advance as may arise
from its negligence or bad faith, and the Trustee shall have no lien on a Trust
Fund for the payment of its fees and expenses.
(b) Each Trust Fund, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Servicer, the Seller and the
related Reserve Account Trust pursuant to Section 6.4(b)(v) and held harmless
against any loss, liability, claim, damage or expense arising out of, or imposed
upon the related Trust or the Trustee in connection with this Agreement, other
than any loss, liability or expense incurred by the Trustee by reason of willful
misfeasance, bad faith or negligence of the Trustee in the performance of its
duties hereunder or by reason of the Trustee's reckless disregard of its
obligations and duties hereunder. The obligations of the Servicer under this
Section 9.5 arising prior to any resignation or termination of the Servicer
hereunder shall survive termination of the Servicer and payment of the
Certificates, and shall extend to any co-trustee appointed pursuant to this
Article IX.
Section 9.6 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times be a banking association (a)
organized and doing business under the laws of any state or the United States of
America subject to supervision or examination by federal or state authority, (b)
authorized under such laws to exercise corporate trust powers, (c) having a
combined capital and surplus of at least $50,000,000, (d) whose long-term
deposits, if any, shall be rated at least "BBB" by S&P and Baa2 by ▇▇▇▇▇'▇
(except as provided herein) or such lower long-term deposit rating as may be
approved in writing by the Certificate Insurer, and (e) reasonably acceptable to
the Certificate Insurer as evidenced in writing. If such banking entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of determining an entity's combined capital and surplus for clause (c)
of this Section, the amount set forth in its most recent report of condition so
published shall be deemed to be its combined capital and surplus. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.7.
Section 9.7 RESIGNATION AND REMOVAL OF THE TRUSTEE.
(a) The Trustee may at any time resign and be discharged from
the trusts hereby created by giving written notice thereof to the Servicer, the
Certificate Insurer and all Certificateholders. Upon receiving such notice of
resignation, the Servicer at the direction of, or with the consent of, the
Certificate Insurer shall promptly appoint a 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 Depositor, the Certificateholders, the Certificate Insurer and
the Seller by the Servicer. Unless a successor trustee shall have been so
appointed and shall have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee acceptable to
the Certificate Insurer.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 9.6 and shall fail to resign after
written request therefor by the Servicer or the Certificate Insurer, 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 (with the consent of the Certificate Insurer) or
the Certificate Insurer may remove the Trustee and the Servicer shall, within 30
days after such removal, appoint, at the direction of, or with the consent of,
the Certificate Insurer, a successor trustee by written instrument, in
duplicate, which instrument shall be delivered to the Trustee so removed and to
the successor trustee. A copy of such instrument shall be delivered to the
Depositor, the Certificateholders, the Certificate Insurer and the Seller by the
Servicer.
(c) If the Trustee fails to perform in accordance with the
terms of this Agreement, the Majority Certificateholders of each Trust, with the
prior written consent of the Certificate Insurer, or the Certificate Insurer may
remove the Trustee and appoint a successor trustee by written instrument or
instruments, in triplicate, signed by such Holders or their attorneys-in-fact
duly authorized or by the Certificate Insurer, respectively, one complete set of
which instruments shall be delivered to the Servicer, one complete set to the
Trustee so removed and one complete set to the successor Trustee so appointed.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 9.8.
Section 9.8 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 9.7
also shall be appointed as successor Reserve Account Trustee and shall execute,
acknowledge and deliver to the Depositor, the Certificate Insurer, the Seller,
the Servicer and to its predecessor trustee an instrument accepting such
appointments 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, and 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 unless at
the time of such acceptance such successor trustee shall be eligible under the
provisions of Section 9.6. Upon acceptance of appointment by a successor trustee
as provided in this Section, the Servicer shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to the Rating Agencies. If the Servicer
fails to mail such notice within 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 Servicer.
Section 9.9 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person into which the Trustee may be merged or converted
or with which it may be consolidated or any corporation or national banking
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or national banking association
succeeding to the business of the trustee, shall be the successor of the Trustee
hereunder, provided such corporation or national banking association shall be
eligible under the provisions of Section 9.6, 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.
Section 9.10 APPOINTMENT OF CO-TRUSTEE OR SEPARATE
TRUSTEE.
(a) Notwithstanding any other provisions hereof, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of a Trust Fund or property securing the same may at the time be
located, the Servicer and the Trustee acting jointly and with the prior written
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 such Trust Fund, and to vest
in such Person or Persons, in such capacity, such title to such Trust Fund, or
any part thereof, and, subject to the other provisions of this Section 9.10 and
the consent of the Certificate Insurer, such powers, duties, obligations, rights
and trusts as the Servicer and the Trustee may consider necessary or desirable.
If the Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request so to do, or in case an Event of Default shall
have occurred and be continuing, the Trustee alone, with the prior written
consent of 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 9.6 hereunder
and no notice to Holders of Certificates of the appointment of co-trustee(s) or
separate trustee(s) shall be required under Section 9.8 hereof.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 9.10, 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 (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 a
Trust Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee.
(c) 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 IX. 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.
(d) 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. The Trustee shall not
be responsible for any action or inaction of any such separate trustee or
co-trustee, provided that the Trustee appointed such separate trustee or
co-trustee with due care. 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 9.11 TAX RETURNS.
The Servicer and the Depositor, as applicable, upon request,
will promptly furnish the Trustee with all such information as may be reasonably
required in connection with the Trustee's preparation of all Tax Returns of each
Trust Fund or for the purpose of the Trustee responding to reasonable requests
for information made by Certificateholders in connection with tax matters and,
upon request within five (5) Business Days after its receipt thereof, the
Servicer shall (a) sign on behalf of each Trust Fund any Tax Return that the
Servicer is required to sign pursuant to applicable federal, state or local tax
laws, and (b) cause such Tax Return to be returned to the Trustee for filing and
for distribution to Certificateholders if required.
Section 9.12 RETIREMENT OF CERTIFICATES.
The Trustee shall, upon the retirement of the Certificates
pursuant hereto or otherwise, furnish to the Certificate Insurer a notice of
such retirement, and, upon retirement of the Certificates and the expiration of
the term of the Certificate Insurance Policy, shall surrender the Certificate
Insurance Policy to the Certificate Insurer for cancellation.
Section 9.13 TRUSTEE MAY ENFORCE CLAIMS WITHOUT
POSSESSION OF CERTIFICATES.
All rights of action and claims under this Agreement or the
Certificates of a Trust may be prosecuted and enforced by the Trustee without
the possession of any of the Certificates or the production thereof in any
proceeding relating thereto. Any such proceeding instituted by the Trustee shall
be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the related Certificateholders and the Certificate
Insurer in respect of which such judgment has been recovered.
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 10.1 LIMITATION ON LIABILITY OF THE DEPOSITOR AND THE
SERVICER.
Neither the Depositor nor the Servicer nor any of the
directors, officers, employees or agents of the Depositor or the Servicer shall
be under any liability to a Trust, the related Certificateholders or the
Certificate Insurer 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 Depositor or the
Servicer or any such Person against any breach of covenants, warranties or
representations made herein, or against any specific liability imposed on each
such party pursuant to this Agreement or against any liability which would
otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations or duties hereunder. The Depositor or the Servicer and
any director, officer, employee or agent of the Depositor or the Servicer may
rely in good faith on any document of any kind which, PRIMA FACIE, is properly
executed and submitted by any appropriate Person respecting any matters arising
hereunder.
Section 10.2 ACTS OF CERTIFICATEHOLDERS.
(a) Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders of such Trust if
the Majority Certificateholders of such Trust or the Certificate Insurer agrees
to take such action or give such consent or approval.
(b) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the related Trust Fund, nor entitle such
Certificateholder's legal representatives or heir to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
related Trust Fund, nor otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
(c) No Certificateholder shall have any right to vote (except
as expressly provided for herein) or in any manner otherwise control the
operation and management of the related Trust Fund, or the obligations of the
parties hereto, nor shall anything herein set forth, or contained in the terms
of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(d) No Certificateholder shall have any right by virtue or by
availing itself of any provisions 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 and the
Certificate Insurer a written notice of default and of the continuance thereof,
as herein before provided, and unless also the Holders of Certificates
evidencing Percentage Interests in a Trust aggregating not less than 51% shall
have made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding and unless
the Certificate Insurer has consented in writing thereto; it being understood
and intended, and being expressly covenanted by each Certificateholder with
every other Certificateholder, the Trustee and the Certificate Insurer, that no
one or more Holders of Certificates shall have any right in any manner whatever
by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb or prejudice the rights of the Holders of any other
of the Certificates, or to obtain or seek to obtain priority over or preference
to any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the equal, ratable and common benefit of
all Certificateholders. For the protection and enforcement of the provisions of
this Section 10.2, each and every Certificateholder, the Certificate Insurer and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
Section 10.3 AMENDMENT.
(a) This Agreement may be amended from time to time by the
Servicer, the Depositor and the Trustee by written agreement, with the prior
written consent of the Certificate Insurer, without notice to or consent of the
Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, or 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 such action shall not, as
evidenced by an Opinion of Counsel, at the expense of the party requesting the
change, delivered to the Trustee, adversely affect in any material respect the
interests of any Certificateholder; and provided further, that no such amendment
shall reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, or change the
rights or obligations of any other party hereto without the consent of such
party. The Trustee shall give prompt written notice to the Rating Agencies of
any amendment made pursuant to this Section 10.3 or pursuant to Section 6.09 of
the Purchase Agreement.
(b) This Agreement may be amended from time to time by the
Servicer, the Depositor and the Trustee with the consent of the Certificate
Insurer and the Holders of 66 2/3% of the Class A Certificate Principal Balance
of each Trust 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; provided, however, that no such amendment
shall be made unless the Trustee receives an Opinion of Counsel, at the request
of the party requesting the change, that such change will not adversely affect
the status of any Trust Fund as a grantor trust or a REMIC, as the case may be,
or cause a tax to be imposed on such Trust Fund, and provided further, that no
such amendment shall reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate or reduce the
percentage for the Holders of which are required to consent to any such
amendment without the consent of the Holders of 100% of the Certificates
affected thereby.
(c) It shall not be necessary for the consent of Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof.
(d) The Trustee shall provide the Rating Agencies
with copies of all amendments to this Agreement.
Section 10.4 RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Agreement, or
a memorandum thereof if permitted under applicable law, is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
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 related Certificateholders' expense on direction and at the
expense of the related Majority Certificateholders or the Certificate Insurer
requesting such recordation, but only when accompanied by an Opinion of Counsel
to the effect that such recordation materially and beneficially affects the
interests of the related Certificateholders or the Certificate Insurer or is
necessary for the administration or servicing of the related Mortgage Loans.
Section 10.5 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until
terminated as herein provided.
Section 10.6. NOTICES.
All demands, notices and communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered to (i) in the
case of the Servicer, Life Savings Bank, Federal Savings Bank, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. Perl, Chief Executive Officer,
(ii) in the case of the Seller, Life Savings Bank, Federal Savings Bank, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. Perl, Chief
Executive Officer, (iii) in the case of the Trustee and the Back-Up Servicer,
Norwest Bank Minnesota, Norwest Center, Sixth and Marquette, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (iv) in the case of the Certificateholders, as set forth in the
Certificate Register, (v) in the case of ▇▇▇▇▇'▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: Home Equity Monitoring Group, (vi) in the case of S&P,
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: Residential Mortgage
Surveillance Group, (vii) in the case of the Certificate Insurer, MBIA Insurance
Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Insured
Portfolio Management - Structured Finance (IPM-SF) (in each case in which notice
or other communication to the Certificate Insurer refers to an Event of Default,
a claim on the Certificate Insurance 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 should
also be sent to the attention of the General Counsel and shall be marked to
indicate "URGENT MATERIAL ENCLOSED") and (viii) in the case of the Depositor or
the Underwriter, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇
▇▇▇▇. Any such notices shall be deemed to be effective with respect to any party
hereto upon the receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 10.7 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be held invalid for any reason whatsoever, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 10.8 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificateholders.
Section 10.9 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
Section 10.10 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding
upon the Servicer, the Depositor, the Trustee and the Certificateholders and
their respective successors and permitted assigns.
Section 10.11 HEADINGS.
The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
Section 10.12 THE CERTIFICATE INSURER DEFAULT.
Any right conferred to the Certificate Insurer shall be
suspended during any period in which a Certificate Insurer Default exists. At
such time as the Certificates of each Class are no longer outstanding hereunder,
no amounts owed to the Certificate Insurer hereunder or under the Insurance
Agreement remain unpaid, the Certificate Insurer is no longer subject to claims
under the Certificate Insurance Policies (including claims for Preference
Amounts) and the original Certificate Insurance Policies have been surrendered
to the Certificate Insurer, the Certificate Insurer's rights hereunder shall
terminate.
Section 10.13 THIRD PARTY BENEFICIARY.
The parties agree that each of the Seller and the Certificate
Insurer is intended and shall have all rights of a third-party beneficiary of
this Agreement.
Section 10.14 GOVERNING LAW; CONSENT TO JURISDICTION;
WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS)
OF THE STATE OF NEW YORK.
(b) THE SELLER, SERVICER, DEPOSITOR AND THE TRUSTEE AND BACK-
UP SERVICER HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND THE UNITED STATES DISTRICT COURT LOCATED IN THE BOROUGH OF
MANHATTAN IN NEW YORK CITY, AND EACH WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY
REGISTERED MAIL DIRECTED TO THE ADDRESS SET FORTH IN SECTION 10.06 HEREOF AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME SHALL
HAVE BEEN DEPOSITED IN THE U.S. MAILS, POSTAGE PREPAID. THE DEPOSITOR, THE
SELLER, THE SERVICER AND THE TRUSTEE AND BACK-UP SERVICER EACH HEREBY WAIVE ANY
OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION
SHALL AFFECT THE RIGHT OF THE DEPOSITOR, THE SELLER, THE SERVICER OR THE TRUSTEE
AND BACK-UP SERVICER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR AFFECT ANY OF THEIR RIGHTS TO BRING ANY ACTION OR PROCEEDING IN THE COURTS OF
ANY OTHER JURISDICTION.
(c) THE DEPOSITOR, THE SELLER, THE SERVICER AND THE TRUSTEE
AND BACK-UP SERVICER EACH HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH THIS AGREEMENT.
INSTEAD, ANY DISPUTE WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
Section 10.15 INTENT OF THE PARTIES.
It is the intent of the Depositor and Certificateholders that,
for federal income taxes, state and local income or franchise taxes and other
taxes imposed on or measured by income, the Certificates of Trust 1A will be
treated as evidencing beneficial ownership interests in a REMIC. The parties to
this Agreement and the holder of each Certificate of Trust 1A, by acceptance of
its Certificate, and each beneficial owner thereof, agree to treat, and to take
no action inconsistent with the treatment of, the Certificates of Trust 1A in
accordance with the preceding sentence for purposes of federal income taxes,
state and local income and franchise taxes and other taxes imposed on or
measured by income.
Section 10.16 APPOINTMENT OF TAX MATTERS PERSON.
The Holders of the Class R Certificates hereby appoint
the Trustee to act as the Tax Matters Person for the Trust 1A
REMIC for all purposes of the Code. The Tax Matters Person will
perform, or cause to be performed, such duties and take, or cause to be taken,
such actions as are required to be performed or taken by the Tax Matters Person
under the code. The Holders of the Class R Certificates may hereafter appoint a
different entity as their agent, or may appoint one of the Class R
Certificateholders to be the Tax Matters Person.
ARTICLE XI.
THE BACK-UP SERVICER
Section 11.1 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, BACK-UP SERVICER.
Any Person (i) into which the Back-Up Servicer may be merged
or consolidated, (ii) which may result from any merger or consolidation to which
the Back-Up Servicer shall be a party, or (iii) which may succeed to the
properties and assets of the Back-Up Servicer substantially as a whole, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Back-Up Servicer hereunder, shall be the
successor to the Back-Up Servicer under this Agreement with the prior written
consent of the Certificate Insurer and without any further act on the part of
any of the parties to this Agreement. In the event that the resulting entity
does not meet the eligibility requirements for the Trustee set forth in this
Agreement, the Back-Up Servicer, upon the written request of Certificate Insurer
shall resign from its obligations and duties under this Agreement.
Section 11.2 BACK-UP SERVICER RESIGNATION.
The Back-Up Servicer shall not resign from its obligations and
duties under this Agreement or the Insurance Agreement except (i) as provided in
Section 11.1 above, (ii) upon determination that the performance of its duties
shall no longer be permissible under applicable law (any such determination
permitting the resignation of the Back-Up Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee and the Certificate
Insurer) or (iii) notwithstanding the provisions of Section 11.3(f), after the
second anniversary of the Closing Date, upon 90 days' notice to the Certificate
Insurer and the Servicer. Upon the Back-Up Servicer's resignation or termination
pursuant to Section 11.1 hereof or this Section 11.2, notice thereof shall be
provided to the Certificate Insurer and the Rating Agencies and the Back-Up
Servicer shall comply with the provisions of this Agreement until the acceptance
of a successor back-up servicer; PROVIDED, HOWEVER, that if after 60 days from
the date the Back-Up Servicer has submitted to the Certificate Insurer a notice
of resignation pursuant to clause (iii) of this Section 11.2, no acceptance of a
successor back-up servicer has been received by the Back-Up Servicer and the
Certificate Insurer, the Back-Up Servicer shall be entitled to petition a court
of competent jurisdiction to appoint a successor back-up servicer.
Section 11.3 OVERSIGHT OF SERVICING.
(a) Prior to each Distribution Date, the Back-Up Servicer
shall review the reports received from the Servicer pursuant to Sections 5.16
and 6.5 (together, the "Reports") and shall determine the following:
(i) that the Reports are complete in all
material respects on their face for the
purpose of calculating the amounts and
making the comparisons set forth in
subsection (b) below; and
(ii) that the amount credited to and withdrawn
from each Certificate Account, Reserve
Account, Pre-Funding Account, Capitalized
Interest Account and Insurance Account, and
the balance of each such account, as set
forth in the records of the Back-Up
Servicer, is the same as the amount set
forth in the Reports.
(b) The Servicer shall deliver to the Back-Up Servicer on the
fourth day following each Record Date, a computer tape containing the servicing
information necessary for the Back-Up Servicer to perform its obligations
pursuant to this Article and in the format set forth in Exhibit O hereto. The
Back- Up Servicer shall prior to each Distribution Date, load such computer tape
and make sure such computer tape is in readable form.
Prior to such Distribution Date, the Back-Up Servicer shall, based solely on the
information contained in such computer tape:
(i) as to each Mortgage Loan, calculate the
amount of principal and interest due on the
Due Date preceding such Distribution Date
and verify the Principal Balance as of such
Due Date, and
(ii) as of such Due Date, calculate the number
and aggregate principal balance of
Mortgage Loans that are (1) 30 days
delinquent, (2) 60 days delinquent, (3) 90
days delinquent or more than 90 days
delinquent, (4) under foreclosure
proceedings and (5) REO Mortgage Loans.
In addition, the Back-Up Servicer shall compare the information it calculates
pursuant to clauses (i) and (ii) above to the comparable information provided by
the Servicer in the Reports.
(c) In the event the Back-Up Servicer identifies any
discrepancy of $100.00 or more (a "Material Discrepancy") between the
information calculated by the Back-Up Servicer pursuant to subsection (b) above
and the comparable information provided by the Servicer in the Reports, the
Back-Up Servicer shall promptly notify the Servicer and the Trustee of such
Material Discrepancy and shall attempt to resolve it with the Servicer. If prior
to the related Distribution Date, the Servicer and the Back-Up Servicer are
unable to resolve such Material Discrepancy, the Back-Up Servicer shall promptly
notify in writing the Rating Agencies, the Trustee and the Certificate Insurer
of such Material Discrepancy.
(d) Other than as specifically set forth in this Article XI,
the Back-Up Servicer shall have no obligation to supervise, verify, monitor or
administer the performance of the Servicer and shall have no liability for any
action taken or omitted by the Servicer.
(e) The Back-Up Servicer may consult fully with the Servicer
as the Back-Up Servicer may deem it in its sole discretion to be necessary from
time to time to perform or carry out the Back-Up Servicer's obligations
hereunder, including the obligation to succeed at any time to the duties and
obligations of the Servicer under Article VII hereof.
(f) The obligation of the Back-Up Servicer to perform its
obligations pursuant to subsections (a) through (e) to this Section 11.3 shall
continue for at least one calendar year following the Closing Date. At the end
of the first calendar year and the end of each following calendar year during
which the Back-Up Servicer has acted as Back-Up Servicer pursuant to subsections
(a) through (e) of this Section 11.3, the Certificate Insurer will evaluate the
performance of the Servicer and in its sole discretion determine if the
obligations of the Back-Up Servicer pursuant to subsections (a) through (e)
shall continue for another calendar year. If the Certificate Insurer determines
that such obligations of the Back-Up Servicer shall cease, the Certificate
Insurer shall promptly give written notice to the Back-Up Servicer, the Trustee
and the Servicer specifying the date of cessation. Following notice from the
Certificate Insurer that the Back-Up Servicer is no longer required to perform
its obligations pursuant to subsections (a) through (e), the Servicer every
month shall continue to deliver the Reports and the computer tape referenced in
subsection (b) above to the Back-Up Servicer; PROVIDED, HOWEVER, that the
Back-Up Servicer shall have no obligation to load the tape onto its computer
system or verify or compare any amounts in the Reports or computer tape. It is
understood by the parties hereto that pursuant to the preceding sentence the
role of the Back-Up Servicer shall be solely to receive the Reports and the
computer tape in order to be ready to assume the servicing of the Mortgage Loans
if the Servicer is removed, but the Back-Up Servicer in such role shall not have
any obligation to verify or compare any amounts calculated by the Servicer or
included in such Reports or computer tape.
(g) Notwithstanding anything to the contrary provided for in
this Agreement, if on or following the second anniversary of the Closing Date
the Back-Up Servicer is still performing the back-up servicer obligations
pursuant to subsections (a) though (e) of this Section 11.3 and no Material
Discrepancy has been identified by the Back-Up Servicer in the preceding twelve
months, all responsibilities of the Back-Up Servicer pursuant to subsections (a)
through (e) of this Section 11.3 shall terminate on the first day after the
first anniversary of the last date such a Material Discrepancy was identified;
PROVIDED, HOWEVER, that the Servicer every month shall continue to deliver the
Reports and the computer tape referenced in subsection (b) above to the Back-Up
Servicer; PROVIDED, FURTHER, that the Back-Up Servicer shall have no obligation
to load the tape onto its computer system or verify or compare any amounts in
the Reports or computer tape. In the event that the Trustee becomes successor
servicer pursuant to the terms of this Agreement, all responsibilities of the
Back-Up Servicer pursuant to this Article XI shall terminate as of the date of
such event.
Section 11.4 BACK-UP SERVICER COMPENSATION.
As compensation for the performance of its obligations as
Back-Up Servicer under this Agreement the Back-Up Servicer shall receive no
compensation other than the compensation received in its capacity as Trustee.
Section 11.5 DUTIES AND RESPONSIBILITIES.
(a) The Back-Up Servicer shall perform such duties and only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Back-Up
Servicer.
(b) In the absence of bad faith or negligence on its part, the
Back-Up Servicer may conclusively rely, without investigation on its part, as to
the truth and accuracy of the information and data contained in any Report or
computer tape furnished to the Back-Up Servicer and the Servicer shall be fully
responsible for such information and data and for its conforming to the
requirements of this Agreement.
(c) The Back-Up Servicer shall upon reasonable notice from the
Certificate Insurer, permit the Certificate Insurer to review any books, records
or reports of the Back-Up Servicer relating to it obligations under this
Agreement.
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer,
the Trustee and the Back-Up Servicer have caused their names to be signed hereto
by their respective officers thereunto duly authorized as of the day and year
first above written.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION, as
Depositor
By:_________________________________
Name:
Title:
LIFE SAVINGS BANK, FEDERAL SAVINGS
BANK, as Seller and Servicer
By:_________________________________
Name: ▇▇▇▇▇▇ ▇. Perl
Title: President and Chief
Executive Officer
NORWEST BANK MINNESOTA, N.A., as
Trustee and Back-Up Servicer
By:_________________________________
Name:
Title:
[Signature Page to Pooling and Servicing Agreement]
ACCEPTANCE OF RESERVE ACCOUNT TRUSTEE
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, hereby accepts
its appointment pursuant to Section 6.4 of the within instrument to serve as the
Reserve Account Trustee with respect to each Reserve Account Trust. In
connection therewith, Norwest Bank Minnesota, National Association, agrees to be
bound by all applicable provisions of such instrument.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
By:_________________________________
Name:
Title:
State of California )
) ss.:
County of )
On the ____ day of March, 1997 before me, a Notary Public in
and for the State of California, personally appeared ▇▇▇▇▇▇ ▇. Perl, known to me
to be President of the Seller and the Servicer, the corporation that executed
the within instrument and also known to me to be the person who executed it
on behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------
Notary Public
My Commission expires
---------------
State of Maryland )
) ss.:
County of )
On the __ day of March, 1997 before me, a Notary Public in and
for the State of Maryland, personally appeared ____________, known to me to be a
___________ of the Trustee, Back-Up Servicer and Reserve Account Trustee, the
bank that executed the within instrument and also known to me to be the person
who executed it on behalf of said bank, and acknowledged to me that such bank
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-------------------------
Notary Public
My Commission expires
---------------
State of New York )
) ss.:
County of New York )
On the __ day of March, 1997, before me, a Notary Public in
and for the State of New York, personally appeared ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, known to me
to be a Vice President of Prudential Securities Secured Financing Corporation,
the corporation that executed the within instrument and also known to me to be
the person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunder to set my hand and
affixed my official seal the day and year in this certificate first above
written.
-------------------------
Notary Public
My Commission expires
---------------
EXHIBITS TO POOLING AND SERVICING AGREEMENT
EXHIBIT A-1
CLASS A-1 CERTIFICATE INSURANCE POLICY
EXHIBIT A-2
CLASS A-2 CERTIFICATE INSURANCE POLICY
EXHIBIT B-1
FORM OF CLASS A-1 CERTIFICATE
LIFE FINANCIAL SERVICES TRUST 1997-1A
MORTGAGE PASS-THROUGH CERTIFICATES
CLASS A-1 CERTIFICATE
Series 1997-1A Original Certificate Principal
Balance:
$38,500,000
Initial Pass-Through Original Dollar
Amount as
Rate: 5.866% of the Cut-Off Date
Represented
by this Certificate
No. A-1-1 $38,500,000
Date of Pooling and
Servicing Agreement
As of February 28, 1997
Cut-Off Date: Percentage Interest of
close of business this Certificate
February 28, 1997 100%
Servicer: Life Savings Bank,
Federal Savings Bank
First Distribution Date: Latest Maturity Date:
April 15, 1997 June 15, 2028
Closing Date:
March 26, 1997
Trustee: Norwest Bank
Minnesota, National
Association
CUSIP:531843 AB6
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Life Savings Bank, Federal Savings Bank, or Prudential Securities Secured
Financing Corporation or any of their subsidiaries. This Certificate represents
a fractional ownership interest in the Trust described herein.)
This certifies that CEDE & Co. is the registered owner of a
Class A Certificate percentage interest (the "percentage Interest") in certain
first and second lien mortgage loans (the "Mortgage Loans") serviced by Life
Savings Bank, Federal Savings Bank (hereinafter called the "Servicer"), in its
capacity as servicer under that certain Pooling and Servicing Agreement (the
"Agreement") dated as of February 28, 1997 among Life Savings Bank, Federal
Savings Bank, as seller and servicer, Prudential Securities Secured Financing
Corporation, as depositor (the "Depositor") and Norwest Bank Minnesota, National
Association, as trustee and back-up servicer (the "Trustee"). The Mortgage Loans
were originated or acquired by Life Savings Bank, Federal Savings Bank (the
"Seller") which in turn sold the Mortgage Loans to the Depositor pursuant to
that certain Mortgage Loan Purchase Agreement dated as of March 26, 1997 between
the Depositor and the Seller. The Mortgage Loans will be serviced by the
Servicer pursuant to the terms and conditions of the Agreement, certain of the
pertinent provisions of which are set forth herein. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the holder of
this Certificate by virtue of the acceptance hereof assents and by which such
holder is bound.
On each Distribution Date, commencing in April 1997, the
Trustee shall distribute to the Person in whose name this Certificate is
registered on the last day of the month next preceding the month of such
distribution (the "Record Date"), an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Class A-1 Certificates on such Distribution Date
pursuant to Section 6.5 of the Agreement.
Distributions on this Certificate will be made by the Trustee
by wire transfer of immediately available funds to the account of the Person
entitled thereto as shall appear on the Certificate Register without the
presentation or surrender of this Certificate (except for the final distribution
as described below) or the making of any notation thereon, at a bank or other
entity having appropriate facilities therefor, if such Person shall own of
record Certificates which have denominations aggregating at least $5,000,000
appearing in the Certificate Register and shall have so notified the Trustee at
least five business days prior to the related Record Date, or by
check mailed to the address of such person appearing in the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in New York, New
York.
This Certificate is one of a duly authorized issue of
Certificates designated as Life Financial Services Trust 1997-1A, Mortgage
Pass-Through Certificates, Series 1997-1A, Class A-1 (herein called the "Class
A-1 Certificates") and representing undivided ownership of (i) such Mortgage
Loans as from time to time are transferred to Trust 1A pursuant to the
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 the Agreement and any proceeds thereof; any other
security for such Mortgage Loan, including, without limitation, pledged
equipment, inventory and working capital and assignments of rights and interests
made by the related mortgagor; (v) the Certificate Insurance Policy relating to
Trust 1A; (vi) the rights and remedies of the Trustee against any Person making
any representation or warranty to the Trustee thereunder, to the extent provided
therein; (vii) all rights (but not obligations) of the Depositor under the
Purchase Agreement; and (viii) each Account (other than the Trust 1A Capitalized
Interest Account, the Trust 1A Pre-Funding Account and the Trust 1A Reserve
Account) and 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.
This Certificate does not represent an obligation of, or an
interest in, the Depositor, the Seller, the Servicer or the Trustee, and is not
insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, the Federal Housing Administration or
the Veterans Administration or any other governmental agency. The Certificates
are limited in right of payment to certain collections and recoveries respecting
the Mortgage Loans and Insured Payments under the Certificate Insurance Policy
relating to Trust 1A, all as more specifically set forth herein and in the
Agreement. In the event Servicer funds are advanced with respect to any Mortgage
Loan, such advance is reimbursable to the Servicer from related recoveries on
such Mortgage Loan.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or
Trustee, or for any other remedy under the Pooling and Servicing Agreement
except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Holder of any Certificate shall have the right, which
is absolute and unconditional, to receive distributions to the extent provided
in the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Holder.
The Certificates are issuable only as registered Certificates in
the minimum Percentage Interest corresponding to a minimum denomination of
$1,000 original principal amount and integral multiples of $1,000. As provided
in the Pooling and Servicing Agreement, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Percentage Interest.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
MBIA Insurance Corporation (the "Certificate Insurer") has
issued a surety bond with respect to the Class A-1 Certificates, a copy of which
is attached as Exhibit A-1 to the Agreement.
Subject to certain restrictions, the Agreement permits the
amendment thereof by the Depositor, the Servicer and the Trustee. Subject to the
rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on
behalf of all Certificateholders, any default by the Servicer in the performance
of its obligations under the Agreement and its consequences , except in a
default in making any required distribution on a Certificate. Any such consent
or waiver by the Majority Certificateholders shall be conclusive and binding on
the holder of this Certificate and upon all future holders of this Certificate
and of any Certificate issued upon the transfer hereof or in exchange hereof or
in lieu hereof whether or not notation of such consent is made upon this
Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer of the offices or agencies maintained by the Trustee in new York,
New York, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only in fully-registered form.
As provided in the Agreement and subject to certain limitations therein set
forth, the Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Servicer, the Depositor, the Seller and the Trustee and
any agent of any of the foregoing, may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon
notice to the Trustee of (i) the later of (a) the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Periodic 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 under the Agreement or the payment of all amounts due and payable to
the Certificate Insurer and the Trustee or (b) mutual written consent of the
Servicer, the Certificate Insurer and all Certificateholders. Unless this
Certificate has been authenticated by the trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
Unless this Certificate has been countersigned by the Trustee, by manual
signature, this Certificate shall not be entitled to any benefit under the
Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed by its authorized officer.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual
capacity but
solely as Trustee
By:_________________________
Authorized Officer
Attest:
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is a Class A-1 Certificate referred to in the
within-mentioned Agreement, which Certificate is
issued to Cede & Co. in
the initial denomination of $38,500,000
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Trustee
By:_____________________________
Authorized Signatory
Dated: March 26, 1997
EXHIBIT B-2
FORM OF CLASS A-2 CERTIFICATE
LIFE FINANCIAL SERVICES TRUST 1997-1B
MORTGAGE PASS-THROUGH CERTIFICATES
CLASS A-2 CERTIFICATE
Series 1997-1B Original Certificate Principal
Balance:
$61,500,000
Pass-Through Original Dollar Amount as
Rate: 7.485% of the Cut-Off Date
Represented
by this Certificate
No. A-2-1 $61,500,000
Date of Pooling and
Servicing Agreement
As of February 28, 1997
Cut-Off Date: Percentage Interest of
close of business this Certificate
February 28, 1997 100%
Servicer: Life Savings Bank,
Federal Savings Bank
First Distribution Date: Latest Maturity Date:
April 15, 1997 June 15, 2028
Closing Date:
March 26, 1997
Trustee: Norwest Bank
Minnesota,
National Association
CUSIP: 531843 AC 4
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No sale or other transfer of record or beneficial ownership of
any Class A-2 Certificate shall be made for, or on behalf of, any employee
benefit plan or other retirement arrangement which is subject to Title 1 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and/or
Section 4975 of the Internal Revenue Code of 1986, as amended or any entity
whose underlying assets include plan assets by reason of such plan or account
investing in such entity (including insurance company separate or general
accounts and collective investment funds). By acceptance of a Class A
Certificate, each Person acquiring a Class A Certificate will be deemed to have
represented and warranted that it is not subject to the foregoing limitations.
(This Certificate does not represent an interest in, or an
obligation of, nor are the underlying Mortgage Loans insured or guaranteed by,
Life Savings Bank, Federal Savings Bank, or Prudential Securities Secured
Financing Corporation or any of their subsidiaries. This Certificate represents
a fractional ownership interest in Trust 1B described herein.)
This certifies that CEDE & Co. is the registered owner of a
Class A-2 Certificate percentage interest (the "Percentage Interest") in certain
first and second lien mortgage loans (the "Mortgage Loans") serviced by Life
Savings Bank, Federal Savings Bank (hereinafter called the "Servicer"), in its
capacity as servicer under that certain Pooling and Servicing Agreement (the
"Agreement") dated as of February 28, 1997 among Life Savings Bank, Federal
Savings Bank, as seller and servicer, Prudential Securities Secured Financing
Corporation, as depositor (the "Depositor") and Norwest Bank Minnesota, National
Association, as trustee and back-up servicer (the "Trustee"). The Mortgage Loans
were originated or acquired by Life Savings Bank, Federal Savings Bank (the
"Seller") which in turn sold the Mortgage Loans to the Depositor pursuant to
that certain Mortgage Loan Purchase Agreement dated as of March 26, 1997 between
the Depositor and the Seller. The Mortgage Loans will be serviced by the
Servicer pursuant to the terms and conditions of the Agreement, certain of the
pertinent provisions of which are set forth herein. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the holder of
this Certificate by virtue of the acceptance hereof assents and by which such
holder is bound.
On each Distribution Date, commencing in April 1997, the
Trustee shall distribute to the Person in whose name this Certificate is
registered on the last day of the month next preceding the month of such
distribution (the "Record Date"), an amount equal to the product of the
Percentage Interest evidenced by this Certificate and the amount required to be
distributed to Holders of Class A-2 Certificates on such Distribution Date
pursuant to Section 6.5 of the Agreement.
Distributions on this Certificate will be made by the Trustee
by wire transfer of immediately available funds to the account of the Person
entitled thereto as shall appear on the Certificate Register without the
presentation or surrender of this Certificate (except for the final distribution
as described below) or the making of any notation thereon, at a bank or other
entity having appropriate facilities therefor, if such Person shall own of
record Certificates which have denominations aggregating at least $5,000,000
appearing in the Certificate Register and shall have so notified the Trustee at
least five business days prior to the related Record Date, or by
check mailed to the address of such person appearing in the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in New York, New
York.
This Certificate is one of a duly authorized issue of
Certificates designated as Life Financial Services Trust 1997-1B, Mortgage
Pass-Through Certificates, Series 1997-1B, Class A-2 (herein called the "Class
A-2 Certificates") and representing undivided ownership of (i) such Mortgage
Loans as from time to time are transferred to the Trust pursuant to the
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 the Agreement and any proceeds thereof; any other
security for such Mortgage Loan, including, without limitation, pledged
equipment, inventory and working capital and assignments of rights and interests
made by the related mortgagor; (v) the Certificate Insurance Policy related to
Trust 1B; (vi) the rights and remedies of the Trustee against any Person making
any representation or warranty to the Trustee thereunder, to the extent provided
therein; (vii) all rights (but not obligations) of the Depositor under the
Purchase Agreement; and (viii) each Account (other than the Capitalized Interest
Account, the Pre-Funding Account and the Reserve Account) and 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.
This Certificate does not represent an obligation of, or an
interest in, the Depositor, the Seller, the Servicer or the Trustee, and is not
insured or guaranteed by the Federal Deposit Insurance Corporation, the
Government National Mortgage Association, the Federal Housing Administration or
the Veterans Administration or any other governmental agency. The Certificates
are limited in right of payment to certain collections and recoveries respecting
the Mortgage Loans and Insured Payments under the Certificate Insurance Policy,
all as more specifically set forth herein and in the Agreement. In the event
Servicer funds are advanced with respect to any Mortgage Loan, such advance is
reimbursable to the Servicer from related recoveries on such Mortgage Loan.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to the Pooling and Servicing Agreement, or
for the appointment of a receiver or
Trustee, or for any other remedy under the Pooling and Servicing Agreement
except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and
Servicing Agreement, the Holder of any Certificate shall have the right, which
is absolute and unconditional, to receive distributions to the extent provided
in the Pooling and Servicing Agreement with respect to such Certificate or to
institute suit for the enforcement of any such distribution, and such right
shall not be impaired without the consent of such Holder.
The Certificates are issuable only as registered Certificates in
the minimum Percentage Interest corresponding to a minimum denomination of
$1,000 original principal amount and integral multiples of $1,000. As provided
in the Pooling and Servicing Agreement, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Percentage Interest.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar or Trustee may require
payment of a sum sufficient to
cover any tax or other governmental charge payable in
connection therewith.
MBIA Insurance Corporation (the "Certificate Insurer") has
issued a surety bond with respect to the Class A-2 Certificates, a copy of which
is attached as Exhibit A-2 to the Agreement.
Subject to certain restrictions, the Agreement permits the
amendment thereof by the Depositor, the Servicer and the Trustee. Subject to the
rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the performance of its obligations under the Agreement and its
consequences , except in a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer of the offices or agencies maintained by the Trustee in new York,
New York, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable only in fully-registered form.
As provided in the Agreement and subject to certain limitations therein set
forth, the Certificate is exchangeable for a new Certificate evidencing the same
undivided ownership interest, as requested by the holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Servicer, the Depositor, the Seller and the Trustee and
any agent of any of the foregoing, may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon
notice to the Trustee of (i) the later of (a) the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or Periodic 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 under the Agreement or the payment of all amounts due and payable to
the Certificate Insurer and the Trustee or (b) mutual written consent of the
Servicer, the Certificate Insurer and all Certificateholders. Unless this
Certificate has been authenticated by the trustee, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
Unless this Certificate has been countersigned by the Trustee, by
manual signature, this Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed by its authorized officer.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual
capacity but
solely as Trustee
By:_______________________________
Authorized Officer
Attest:
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is a Class A-2 Certificate referred to in the
within-mentioned Agreement, which Certificate is
issued to Cede & Co. in
the initial denomination of $61,500,000
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Trustee
By:_____________________________
Authorized Signatory
Dated: March 26, 1997
EXHIBIT B-3
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE SECURITIES LAW OF ANY STATE. ANY RESALE, TRANSFER OR
OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION
MAY BE MADE ONLY (i) IN A TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION
OR QUALIFICATION AND (ii) IN ACCORDANCE WITH THE PROVISIONS OF SECTION 4.2 OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE" MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY BE
ONLY IF THE PROPOSED TRANSFEREE PROVIDES AN OPINION OF COUNSEL AND AN AFFIDAVIT
TO THE TRUSTEE THAT SUCH TRANSFEREE IS A PERMITTED TRANSFEREE (AS DEFINED IN THE
POOLING AND SERVICING AGREEMENT) OR AN AGENT OF A PERMITTED TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER OF
THIS CLASS R CERTIFICATE TO A PERSON OTHER THAN A PERMITTED TRANSFEREE OR AN
AGENT OF A PERMITTED TRANSFEREE, 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 ON THIS CERTIFICATE.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST THEREIN SHALL BE
MADE TO ANY EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, INCLUDING INDIVIDUAL RETIREMENT ACCOUNTS AND ANNUITIES, ▇▇▇▇▇ PLANS
AND COLLECTIVE INVESTMENT FUNDS AND SEPARATE ACCOUNTS IN WHICH SUCH PLANS,
ACCOUNTS OR ARRANGEMENTS ARE INVESTED THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE
OF 1986 ("CODE"), EXCEPT IN ACCORDANCE WITH THE PROCEDURES DESCRIBED HEREIN.
LIFE FINANCIAL SERVICES TRUST 1997-1A
MORTGAGE PASS-THROUGH CERTIFICATES
CLASS R CERTIFICATE
Series 1997-1A Percentage Interest of this
Certificate 100%
No. R-1 First Distribution Date:
April 15, 1997
Date of Pooling and Servicing Closing Date:
Agreement March 26, 1997
February 28, 1996
Cut-Off Date Latest Maturity Date:
June 15, 2028
close of business
February 28, 1996
Servicer: Life Savings Bank, Trustee: Norwest
Bank Minnesota, National
Federal Savings Bank Association
This certifies Life Savings Bank, Federal Savings Bank is the
registered owner of the Class R percentage interest (the "Percentage Interest")
in a segregated pool of assets ("Trust 1A") within a trust fund consisting
primarily of a pool of closed-end loans secured by mortgages on
one-to-four-family, residential properties (the "Mortgage Loans") serviced by
Life Savings Bank, Federal Savings Bank (hereinafter called the "Servicer", in
its capacity as a servicer under that certain Pooling and Servicing Agreement
(the "Agreement")), dated as of February 28, 1997 among Life Savings Bank,
Federal Savings Bank, as servicer, Prudential Securities Secured Financing
Corporation, as depositor (the "Depositor"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). The Mortgage Loans were
originated or acquired by Life Savings Bank, Federal Savings Bank (the "Seller")
which in turn sold the Mortgage Loans to the Depositor in accordance with that
certain Mortgage Loan Purchase Agreement, dated as of March 26, 1997 between the
Depositor and the Seller. The Mortgage Loans will be serviced by the Servicer
pursuant to the terms and conditions of the Agreement, certain of the pertinent
provisions of which are set forth herein. To the extent not defined herein, the
capitalized terms used herein have the meanings assigned in the Agreement. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the holder of this Certificate
by virtue of the acceptance hereof assents and by which such holder is bound.
The Trust 1A Mortgage Loans have aggregate outstanding principal balances, at
the close of business on the Cut-Off Date herein referred to, after application
of payments made on or before such date, of $_______________ and the Pre-Funding
Account contains a deposit as of the Issue Date of $____________________.
On each Distribution Date, commencing on April 15, 1997, the
Trustee shall distribute to the Person in whose name this Certificate is
registered on the last day of the calendar month immediately preceding the month
of such Distribution Date (the "Record Date"), in an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the amount required
to be distributed to Holders of Class R Certificates on such Distribution Date
Pursuant to Section 6.5 of the Agreement.
Distributions on this Certificate will be made by the Trustee
by wire transfer of immediately available funds to the account of the Person
entitled thereto as shall appear on the Certificate Register without the
presentation or surrender of this Certificate (except for the final distribution
as described below) or the making of any notation thereon, at a bank or other
entity having appropriate facilities thereof, if such Person shall own of record
Certificates of the same Class which have denominations aggregating at least
$5,000,000 appearing in the Certificate Register and shall have so notified the
Trustee at least five business days prior to the related Record Date, or by
check mailed to the address of such Person appearing in the Certificate
Register. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency maintained for that purpose by the Trustee in New York, New
York.
This Certificate is one of the duly authorized issue of
Certificates designated as Life Financial Services Trust 1997-1A Mortgaged
Backed Certificates, Series 1997-1A, Class R (herein called the "Certificate")
and representing undivided
ownership.
The Certificates do not represent an obligation of, or an
interest in, the Depositor, the Seller, the Servicer, the Certificate Insurer or
the Trustee and are not Insured or guaranteed by the Federal Deposit Insurance
Corporation, the Government National Mortgage Association, the Federal Housing
Administration or the Veterans Administration or any other governmental agency.
The Certificates are limited in right of payment to certain collections and
recoveries respecting the Mortgage Loans, all as more specifically set forth
hereinafter and in the Agreement. In the event Servicer funds are advanced with
respect to any Mortgage Loan, such advance is reimbursable to the Servicer from
related recoveries on such Mortgage Loans.
MBIA Insurance Corporation (the "Certificate Insurer") has
issued two surety bonds, one with respect to the Class A-1 Certificate, and the
other with respect to the Class A-2 Certificates, copies of which are attached
as Exhibits A-1 and A-2 respectively to the Agreement.
Subject to certain restrictions, the Agreement permits the
amendment thereof by the Depositor, the Servicer and the Trustee. Subject to the
rights of the Certificate Insurer, the Agreement permits the Majority
Certificateholders to waive, on behalf of all Certificateholders, any default by
the Servicer in the Performance of its obligations under the Agreement and its
consequences, except a default in making any required distribution on a
Certificate. Any such consent or waiver by the Majority Certificateholders shall
be conclusive and binding on the holder of this Certificate and upon all future
holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent is made upon this Certificate.
As provided in the Agreement and subject to certain
limitations therein set forth, including, without limitation, with respect to
Class R Certificates, execution and delivery as appropriate of the Transfer
Affidavit and Agreement (attached as an exhibit to the Agreement) and the
Transfer Certificate (attached as an exhibit to the Agreement) described in
Section 4.2(i) of the Agreement, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in New York,
New York, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to, the Trustee, duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same aggregate undivided
Percentage Interest will be issued to the designated transferee or transferees.
No transfer of a Class R Certificate or any interest therein
shall be made to any employee benefit plan or other retirement arrangement,
including individual retirement accounts
and annuities, ▇▇▇▇▇ plans and collective investment funds and separate
accounts in which such plans, accounts or arrangements are invested, that is
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the Code (each, a "Plan"), unless the prospective transferee of a
Class R Certificate provides the Servicer and the Trustee with a certification
of facts and, at its own expense, an Opinion of Counsel which establish to the
satisfaction of the Servicer and the Trustee that such transfer will not result
in a violation of Section 406 of ERISA or Section 4975 of the Code or cause the
Servicer or the Trustee to be deemed a fiduciary of such Plan or result in the
imposition of an excise tax under Section 4975 of the Code.
The Certificates are issuable only in fully-registered form.
As provided in the Agreement and subject to certain limitations therein set
forth, this Certificate is exchangeable for a new Certificate evidencing the
same undivided ownership interest, as requested by the holder surrendering the
same.
The Service charge will be made for any such registration of
transfer or exchange, but the Trustee may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
The Servicer, the Depositor, the Seller and the Trustee and
any agent of any of the foregoing, may treat the person in whose name this
Certificate is registered as owner hereof for all purposes, and none of the
foregoing shall be affected by notice to the contrary.
The obligations created by the Agreement shall terminate upon notice to the
Trustee of: (i) the later of (a) the distribution to Certificateholders of the
final payment or collection with respect to the last Mortgage Loan (or Periodic
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 under the
Agreement and the payment of all amounts due and payable to the Certificate
Insurer and the Trustee or (b) mutual consent of the Servicer, the Certificate
insurer and all Certificateholders, or (ii) subject to certain restrictions
described in the Agreement, the purchase by the Servicer of the last of two
Groups of all outstanding Mortgage Loans and REO Properties at a price
determined as provided in the Agreement (the exercise of the right of the
Servicer to purchase all Mortgage Loans and property in respect to Mortgage
Loans will result in early retirement of the Certificates), such right of the
Servicer to purchase being subject to the related Class A Principal Balance at
the time of purchase being less than ten percent (10%) of the related original
Class A Principal Balance. By its attorney-in-fact to negotiate the sale and
effect the transfer of a Class R Certificate in accordance with Section 4.2(i)
of the Agreement and to adopt a plan of liquidation of the Trust fund. Unless
this Certificate has been countersigned by the Trustee, by manual signature,
this Certificate shall not entitled to any benefit under the Agreement or be
valid for any purpose.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly executed
by its authorized officer.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not it individual capacity
but solely as Trustee
By:___________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R
Certificates referred to in
the with-in named Agreement
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not its individual capacity
but solely as Trustee
By:__________________________________
Authorized Officer
Dated: March 26, 1997
EXHIBIT C
MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall
include each of the following items (copies to the extent the originals have
been delivered to the Trustee pursuant to Section 2.5 of the Agreement), all of
which shall be available for inspection by the Certificateholders, to the extent
required by applicable laws:
(i) the original Mortgage Note, endorsed without
recourse in blank by the Seller, including all
intervening endorsements showing a complete chain of
endorsement;
(ii) the related Mortgage with evidence of
recording indicated thereon or a copy thereof
certified by the applicable recording office;
(iii) the recorded mortgage assignment(s), or
copies thereof certified by the applicable recording
office, if any, showing a complete chain of assignment
from the originator of the related Mortgage Loan to the
Seller (which assignment may, at the Seller's option, be
combined with the assignment referred to in subpart (iv)
hereof);
(iv) a mortgage assignment in recordable form (which,
if acceptable for recording in the relevant jurisdiction, may
be included in a blanket assignment or assignments) of the
related Mortgage from the Seller to the Trustee;
(v) originals of all assumption, modification and
substitution agreements in those instances where the terms or
provisions of the related Mortgage or Mortgage Note have been
modified or such Mortgage or Mortgage Note has been assumed;
and
(vi) evidence of title insurance (which may consist
of (A) a copy of the title insurance or PERT policy, or (B) a
binder thereof or copy of such binder) together with a
certificate from the Seller that the original Mortgage has
been delivered to the title insurance company that issued such
binder for recordation.
EXHIBIT D-1
MORTGAGE LOAN SCHEDULE
TRUST 1A
[See Schedule A-1 to Mortgage Loan Purchase Agreement]
EXHIBIT D-2
MORTGAGE LOAN SCHEDULE
TRUST 1B
[See Schedule A-2 to Mortgage Loan Purchase Agreement]
EXHIBIT E
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
March __, 1997
Prudential Securities Secured
Financing Corporation
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Life Savings Bank, Federal Savings Bank
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement, dated as of February
28, 1997 among Prudential Securities Secured Financing
Corporation, as Depositor, Life Savings Bank,
Federal Savings Bank, as Servicer, and Norwest Bank Minnesota,
National Association, as Trustee, Mortgage Pass
through Certificates, Series 1997-1A and 1997-1B, CLASS A-1,
CLASS R AND CLASS A-2
Ladies and Gentlemen:
In accordance with Section 2.6 of the above-captioned Pooling
and Servicing Agreement, the undersigned, as Trustee, hereby acknowledges
receipt by it in good faith without notice of adverse claims, subject to the
provisions of Sections 2.5 and 2.6 of the Pooling and Servicing Agreement (as
such provisions relate to the Mortgage Loans), of (x) the documents relating to
the Mortgage Loans referred to in Section 2.5(a) of the Pooling and Servicing
Agreement, and any amendments, replacements or supplements thereto, as well as
any other assets included in the definition of each Trust Fund except with
respect to the list of exceptions attached hereto, and based on its examination
and only as to the foregoing, the information set forth in each Mortgage Loan
Schedule accurately reflects information set forth in the related Mortgage File
as well as the assignment to it of all other assets included in clauses (i) and
(iii) of the definition of "Trust Fund", (y) the Certificate Accounts and the
Reserve Accounts and (z) the Certificate Insurance Policies and declares that it
holds and will hold the Policies and such documents and the other documents
delivered to it constituting the Mortgage Files, and that it holds or will hold
all such assets and such other assets included in the definition of "Trust Fund"
that are delivered to it, in trust for the exclusive use and benefit of all
present and future Certificateholders and the Certificate Insurer.
The Trustee has made no independent examination of any such
documents beyond the review specifically required in the above-referenced
Pooling and Servicing Agreement. The Trustee makes no representations as to: (i)
the validity, legality, sufficiency, enforceability or genuineness of any such
documents or any of the Mortgage Loans identified on the Mortgage Loan Schedule,
or (ii) the collectability, insurability, effectiveness or suitability of any
such Mortgage Loan.
The Schedule of Mortgage Loans for each Trust is attached to
this Receipt.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:_________________________
Name:
Title:
EXHIBIT F
INITIAL CERTIFICATION OF TRUSTEE
---------------, 1997
Prudential Securities Secured
Financing Corporation
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Life Savings Bank, Federal Savings Bank
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement, dated as of
February 28, 1997 among Prudential Securities
Secured Financing Corporation, as Depositor, Life
Savings Bank, Federal Savings Bank, as Servicer,
and Norwest Bank Minnesota, National Association,
as Trustee, Mortgage Pass-Through CERTIFICATES,
SERIES 1997-1A AND 1997-1B, CLASS A-1, CLASS R AND
CLASS A-2
Ladies and Gentlemen:
In accordance with the provisions of Section 2.6 of the above-referenced
Pooling and Servicing Agreement, the undersigned, as Trustee, hereby certifies
that as to each Mortgage Loan listed in the related Mortgage Loan Schedule
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified on the attachment hereto), it has reviewed the documents delivered to
it pursuant to Section 2.5 of the Pooling and Servicing Agreement and has
determined that (i) all documents required to be delivered to it pursuant to the
above-referenced Pooling and Servicing Agreement are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
have not been mutilated, damaged, torn or otherwise physically altered and
relate to such Mortgage Loan, (iii) based on its examination and only as to the
foregoing documents, the information set forth in the related Mortgage Loan
Schedule as to the information set forth in clauses (i), (ii), (v) and (vi) of
the definition "Mortgage Loan Schedule" set forth in the Pooling and Servicing
Agreement accurately reflects the information set forth in the Trustee's related
Mortgage File and (iv) the related Mortgage Note has been endorsed as provided
in Section 2.5 of the Pooling and Servicing Agreement. The Trustee has made no
independent examination of such documents beyond the review specifically
required in the above-referenced Pooling and Servicing Agreement. The Trustee
makes no representations as to: (i) the validity, legality, enforceability or
genuineness of any such documents contained in each or any of the Mortgage Loans
identified on the Mortgage Loan Schedule, or (ii) the collectability,
insurability, effectiveness or suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:_______________________________
Name:
Title:
EXHIBIT G
FINAL CERTIFICATION OF THE TRUSTEE
_______________, 1997
Prudential Securities Secured
Financing Corporation
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Life Savings Bank, Federal Savings Bank
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Pooling and Servicing Agreement, dated as of
February 28, 1997 among Prudential Securities
Secured Financing Corporation, as Depositor, Life
Savings Bank, Federal Savings Bank, as Servicer,
and Norwest Bank Minnesota, National Association,
as Trustee, Mortgage Pass-Through Certificates,
Series 1997-1A and Series 1997-1B, Class A-1, Class
R AND CLASS A-2
Ladies and Gentlemen:
In accordance with Section 2.6 of the above-captioned Pooling and Servicing
Agreement, the undersigned, as Trustee, hereby certifies that, except as noted
on the attachment hereto, as to each Mortgage Loan in the related Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or specifically identified
on the attachment hereto) it has reviewed the documents delivered to it pursuant
to Section 2.5 of the Pooling and Servicing Agreement and has determined that
(i) all documents required to be delivered to it pursuant to the
above-referenced Pooling and Servicing Agreement are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
have not been mutilated, damaged, torn or otherwise physically altered and
relate to such Mortgage Loan, and (iii) based on its examination, and only as to
the foregoing documents, the information set forth in the related Mortgage Loan
Schedule as to the information set forth in clauses (i), (ii), (v) and (vi) of
the definition "Mortgage Loan Schedule" set forth in the Pooling and Servicing
Agreement accurately reflects the information set forth in the Trustee's related
Mortgage File. The Trustee has made no independent examination of such documents
beyond the review specifically required in the above-referenced Pooling and
Servicing Agreement. The Trustee makes no representations as to: (i) the
validity, legality, enforceability or genuineness of any such documents
contained in each or any of the Mortgage Loans identified on the Mortgage Loan
Schedule, or (ii) the collectability, insurability, effectiveness or suitability
of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the
respective meanings assigned to them in the above-captioned Pooling and
Servicing Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:_______________________________
Name:
Title:
EXHIBIT H
REQUEST FOR RELEASE OF DOCUMENTS
------------------, 1997
To: Norwest Bank Minnesota, National Association
Re: Prudential Securities Secured Financing
Corporation Trust, Mortgage Pass-Through
Certificates, Series 1997-1A and Series 1997-1B,
CLASS A-1, CLASS R AND CLASS A-2
In connection with the administration of the pool of Mortgage
Loans held by you as Trustee for the Certificateholders of Trust [specify
trust], we request the release, and acknowledge receipt, of the (Trustee's
Mortgage File/[specify document]) for the Mortgage Loan described below, for the
reason indicated.
MORTGAGOR'S NAME. ADDRESS & ZIP CODE:
MORTGAGE LOAN NUMBER:
REASON FOR REQUESTING DOCUMENTS (check one)
____ 1. Mortgage Loan Paid in Full
(Servicer hereby certifies that all amounts
received in connection therewith have been
credited to the Collection Account.)
____ 2. Mortgage Loan Liquidated
(Servicer hereby certifies that all proceeds
of foreclosure, insurance or other
liquidation have been finally received and
credited to the Collection Account.)
____ 3. Mortgage Loan in Foreclosure
____ 4. Mortgage Loan Repurchased Pursuant to Section
5.18 of the Pooling and Servicing Agreement.
____ 5. Mortgage Loan Repurchased or Substituted pursuant
to Article II or III of the Pooling and
Servicing Agreement (Servicer hereby certifies
that the repurchase price or Substitution
Adjustment has been credited to the Certificate
Account and that the substituted mortgage loan is
a Qualified Substitute Mortgage Loan.)
___ 6. Other
(explain)______________________________________________
If box 1 or 2 above is checked, and if all or
part of the Trustee's Mortgage File was previously released to us, please
release to us our previous receipt on file with you, as well as any additional
documents in your possession relating to the above specified Mortgage Loan.
If box 3,4,5 or 6 above is checked, upon our
return of all of the above documents to you as Trustee, please acknowledge your
receipt by signing in the space indicated below, and returning this form.
By:__________________________
Name:________________________
Title:_______________________
Documents returned to Trustee:
Norwest Bank Minnesota, National Association, as
Trustee
By: ____________________
Date: __________________
EXHIBIT I
TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF
: ss.:
COUNTY OF
[NAME OF OFFICER], being first duly sworn, deposes and
says:
1. That he is [Title of Officer] of [Name of Owner] (record or
beneficial owner of Life Financial Services Trust 1997-1A Mortgage Pass-Through
Certificates, Series 1997-1A, Class R (the "Owner")), a [savings institution]
[corporation] duly organized and existing under the laws of [the State
of_______1 [the United States], on behalf of which he makes this affidavit and
agreement.
2. That the Owner (i) is not and will not be a "disqualified
organization" as of [date of transfer] within the meaning of Section 860E(e)(5)
of the Internal Revenue Code of 1986 (the "Code"), (ii) will endeavor to remain
other than a disqualified organization for so long as it retains its ownership
interest in the Class R Certificates, and (iii) is acquiring the Class R
Certificates for its own account or for the account of another Owner from which
it has received an affidavit and agreement in substantially the same form as
this affidavit and agreement. A "Permitted Transferee" is any person other than
a "disqualified organization" or a possession of the United States. (For this
purpose, a "disqualified organization" means the United States, any state or
political subdivision thereof, any agency or instrumentality of any of the
foregoing (other than an instrumentality all of the activities of which are
subject to tax and, except for the Federal Home Loan Mortgage Corporation, a
majority of whose board of directors is not selected by any such governmental
entity) or any foreign government, international organization or any agency or
instrumentality of such foreign government or organization, any rural electric
or telephone cooperative, or any organization (other than certain farmers'
cooperatives) that is generally exempt from federal income tax unless such
organization is subject to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of Class R Certificates to disqualified organizations under
the Code, that applies to all transfers of Class R Certificates after March 31,
1988; (ii) that such tax would be on the transferor, or, if such transfer is
through an agent (which person includes a broker, nominee or middleman) for a
disqualified organization, on the agent; (iii) that the person otherwise liable
for the tax shall be relieved of liability for the tax if the transferee
furnishes to such person an affidavit that the transferee is not a disqualified
organization and, at the time of transfer, such person does not have actual
knowledge that the affidavit is false; and (iv) that the Class R Certificates
may be "noneconomic residual interests" within the meaning of proposed Treasury
regulations promulgated pursuant to the Code and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer was to impede the assessment or collection of tax.
4. That the Owner is aware of the tax imposed on a
"pass-through entity" holding Class R Certificates if at any time during the
taxable year of the pass-through entity a disqualified organization is the
record holder of an interest in such entity. (For this purpose, a "pass through
entity" includes a regulated investment company, a real estate investment trust
or common trust fund, a partnership, trust or estate, and certain cooperatives.)
5. That the Owner is aware that the Trustee will not register
the transfer of any Class R Certificates unless the transferee, or the
transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it knows
or believes that any of the representations contained in such affidavit and
agreement are false.
6. That the Owner has reviewed the restrictions set forth on
the face of the Class R Certificates and the provisions of Section 4.02(i) of
the Pooling and Servicing Agreement under which the Class R Certificates were
issued (in particular, clauses (g) and (h) of Section 4.02(i) which authorize
the Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such
Certificates in violation of Section 4.02(i)). The Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.
7. That the Owner consents to any additional
restrictions or arrangements that shall be deemed necessary
upon advice of counsel to constitute a reasonable arrangement to
ensure that the Class R Certificates will only be owned, directly or
indirectly, by an Owner that is not a disqualified organization.
8. That the Owner's Taxpayer Identification Number is
------------.
9. This affidavit and agreement relates only to the Class R
Certificates held by the Owner and not to any other holder of the Class R
Certificates. The Owner understands that the liabilities described herein relate
only to the Class R Certificates.
10. That no purpose of the Owner relating to the transfer of
any of the Class R Certificates by the Owner is or will be to impede the
assessment or collection of any tax.
11. That the Owner has no present knowledge or expectation
that it will be unable to pay any United States taxes owed by it so long as any
of the Certificates remain outstanding.
12. That the Owner has no present knowledge or expectation
that it will become insolvent or subject to a bankruptcy proceeding for so long
as any of the Class R Certificates remain outstanding.
13. That the Owner is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includable in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
14. That the Owner will, in connection with any transfer that
it makes of the Class R Certificates, deliver to the Trustee an affidavit in
form and substance satisfactory to the Trustee, representing and warranting that
it is not transferring the Class R Certificates to impede the assessment or
collection of any tax and that it has no actual knowledge that the proposed
transferee: (i) has insufficient assets to pay any taxes owned by such
transferee as holder of the Class R Certificates; (ii) may become insolvent or
subject to a bankruptcy proceeding, for so long as the Class R Certificates
remains outstanding and; (iii) is not a Permitted Transferee.
15. That the Owner agrees to require a Transfer Affidavit and
Agreement from any person to whom the Owner attempts to transfer a percentage
interest in the Class R Certificates, and in connection with any transfer by a
person for whom the Owner is acting as nominee, trustee or agent, and the Owner
will not transfer its percentage interest or cause any
percentage interest to be transferred to any person that the Owner knows is not
a Permitted Transferee. In connection with any such transfer by the Owner, the
Owner agrees to deliver to the Trustee a transfer certificate in the form
attached to the Pooling and Servicing Agreement as Exhibit J to the effect that
the Owner has no actual knowledge that the person to which the transfer is to be
made is not a Permitted Transferee.
IN WITNESS WHEREOF, the Owner has caused this
instrument to be executed on its behalf, pursuant to the authority of its Board
of Directors, by its [Title of Officer] and its corporate seal to be hereunto
attached, attested by its [Assistant] Secretary, this _ day of __________, 199_.
[NAME OF OWNER]
By:___________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named
[Name of Officer], known or proved to me to be the same person who executed the
foregoing instrument and to be the [Title of Officer] of the Owner, and
acknowledged to me that he executed the same as his free act and deed and the
free act and deed of the Owner.
Subscribed and sworn before me this ____ day of
----------------
NOTARY PUBLIC
COUNTY OF_____________
STATE OF ____________
My Commission expires
the ____
day of ____________,
EXHIBIT J
TRANSFEROR' S CERTIFICATE
______________ 19__
Norwest Bank Minnesota
Norwest Center
Sixth & Marquette
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Life Financial Services Trust 1997-1A, Mortgage Pass-Through
CERTIFICATES, SERIES 1997-1A, CLASS R CERTIFICATES
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
____________ (the "Seller") to _______________________ (the "Purchaser") of
a___% Percentage Interest of Life Financial Service Trust 1997-1A Mortgage Pass
Through Certificates, Series 1997-1A, Class R (the "Certificates"), pursuant to
Section 4.02 of the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of February 28, 1997 among Life Savings Bank, Federal
Savings Bank, as seller and servicer (the "Company"), Prudential
Securities Secured Financing Corporation, as depositor, and Norwest Bank
Minnesota, as trustee and back-up servicer (the "Trustee"). All terms used
herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement. The Seller hereby certifies, represents and
warrants to, and covenants with, the Company and the Trustee that:
1. No purpose of the Seller relating to the transfer of the
Certificates by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has delivered to
the Trustee and the Company a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit I. The Seller does
not know or believe that any representation contained therein is false.
3. The Seller has no actual knowledge that the proposed
Transferee is not both a United States Person and a Permitted Transferee.
Very truly yours.
[SELLER]
By:
Name:
Title:
EXHIBIT K
ERISA INVESTMENT REPRESENTATION LETTER
Prudential Securities Secured
Financing Corporation
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Life Savings Bank, Federal Savings Bank
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Norwest Bank Minnesota, National Association
Re: Life Savings Bank Trust 1997-1A and 1997-1B
Mortgage Pass-Through Certificates, Series
1997-1A and Series 1997-1B, Class A-1, Class R and
CLASS A-2 CERTIFICATES
The undersigned (the "Purchaser") proposes to purchase certain
Class A Certificates (the "Class A Certificates"). In doing so, the Purchaser
hereby acknowledges and agrees as follows:
Section l. DEFINITIONS. Each capitalized term used herein and
not otherwise defined shall have the meaning given it in the Pooling and
Servicing Agreement, dated as of February 28, 1997 (the "Agreement"), among
Prudential Securities Secured Financing Corporation, as Depositor (the
"Depositor"), Life Savings Bank, Federal Savings Bank, as Servicer (the
"Servicer") and Norwest Bank Minnesota, National Association, as Trustee (the
"Trustee") relating to the Certificates.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. In
connection with the proposed transfer, the Purchaser represents and warrants to
the Depositor and the Trustee that the Purchaser is not a pension or benefit
plan or individual retirement arrangement that is subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or to Section 4975
of the Code or an entity whose underlying assets are deemed to be assets of such
a plan or arrangement by reason of such plan's or arrangement's investment in
the entity, as determined under U.S. Department of Labor Regulations 29 C.F.R.
2510.3-101 or otherwise.
IN WITNESS WHEREOF, the undersigned has caused this ERISA
investment Representation Letter to be validly executed by its duly authorized
representative as of the date first above written.
[NAME OF PURCHASER]
By: _________________________
Name:
Title:
EXHIBIT L
CERTIFICATE RE: PREPAID LOANS OF TRUST 1A
I, ______________________________________________,
_______________________________________ of Life Savings Bank, Federal Savings
Bank, as Seller, hereby certify that between the "Cut-Off Date" (as defined in
the Pooling and Servicing Agreement dated as of February 28, 1997 among
Prudential Securities Secured Financing Corporation, the Seller and Norwest Bank
Minnesota, as trustee) and the "Startup Day" of Trust 1A the following schedule
of "Mortgage Loans" (each as defined in the Pooling and Servicing Agreement)
have been prepaid in full.
Dated:
-----------------------------
By:
EXHIBIT M
OFFICER'S CERTIFICATE
REGARDING "DISQUALIFIED ORGANIZATIONS"
The undersigned, ____________________,
________________________of [Holder], a ____________________ corporation, hereby
certifies, represents and warrants that he has no actual knowledge that [Holder]
is a "disqualified organization," as such term is defined in Section 860E of the
Internal Revenue Code of 1986, as amended.
IN WITNESS WHEREOF, the undersigned has executed this
Officer's Certificate as of ___________________, 19__.
[HOLDER]
By:_____________________________
Name:
Title: