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EXHIBIT 99.1
[EXECUTION COPY]
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NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ FUNDING CORP.,
as Sponsor,
NATIONSBANC MORTGAGE CORPORATION,
as Master Servicer,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of August 1, 1998
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Mortgage Pass-Through Certificates
Series 1998-1
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TABLE OF CONTENTS
Section Page
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PRELIMINARY STATEMENT..........................................................1
ARTICLE I DEFINITIONS.........................................................4
SECTION 1.01. Defined Terms................................................4
SECTION 1.02. Interest Calculations.......................................27
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF
CERTIFICATES......................................................27
SECTION 2.01. Conveyance of Mortgage Loans................................27
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans.............30
SECTION 2.04. Representations and Warranties of the Sponsor as
to the Mortgage Loans.......................................34
SECTION 2.05. Designation of Interests in REMIC...........................34
SECTION 2.06. Designation of Start-up Day.................................35
SECTION 2.07. REMIC Certificate Maturity Date.............................35
SECTION 2.08. Repurchases for Tax Violations..............................35
SECTION 2.09. Execution and Delivery of Certificates......................35
ARTICLE III ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...................35
SECTION 3.01. Master Servicer to Service Mortgage Loans...................35
SECTION 3.02. Subservicing; Enforcement of the Obligations of Servicers...36
SECTION 3.03. Fidelity Bond; Errors and Omissions Insurance...............37
SECTION 3.04. Access to Certain Documentation.............................38
SECTION 3.05. Maintenance of Primary Mortgage Insurance Policy; Claims....38
SECTION 3.06. Rights of the Sponsor and the Trustee in Respect
of the Master Servicer......................................39
SECTION 3.07. Trustee to Act as Master Servicer...........................39
SECTION 3.08. Collection of Mortgage Loan Payments; Collection
Account and Distribution Account............................40
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.............................................42
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SECTION 3.10. Access to Certain Documentation and Information
Regarding the Mortgage Loans................................43
SECTION 3.11. Permitted Withdrawals from the Collection Account and
Distribution Account........................................44
SECTION 3.12. Maintenance of Hazard Insurance.............................45
SECTION 3.13. Enforcement of Due-On-Sale Clauses; Assumption Agreements...46
SECTION 3.14. Realization Upon Defaulted Mortgage Loans; REO Property.....47
SECTION 3.15. Trustee to Cooperate; Release of Mortgage Files.............49
SECTION 3.16. Documents, Records and Funds in Possession of the
Master Servicer to be Held for the Trustee..................50
SECTION 3.17. Servicing Compensation......................................51
SECTION 3.18. Annual Statement as to Compliance...........................51
SECTION 3.19. Annual Independent Public Accountants' Servicing
Statement; Financial Statements.............................51
SECTION 3.20. Advances....................................................52
SECTION 3.21. Modifications, Waivers, Amendments and Consents.............52
SECTION 3.22. Reports to the Securities and Exchange Commission...........53
ARTICLE IV MASTER SERVICER'S CERTIFICATE.....................................54
SECTION 4.01. Master Servicer's Certificate...............................54
ARTICLE V PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS;
REMIC ADMINISTRATION...............................................54
SECTION 5.01. Distributions...............................................54
SECTION 5.02. Priorities of Distribution..................................55
SECTION 5.05. Tax Returns and Reports to Certificateholders...............62
SECTION 5.06. Tax Matters Person..........................................62
SECTION 5.07. Rights of the Tax Matters Person in Respect of the Trustee..62
SECTION 5.08. REMIC Related Covenants.....................................63
SECTION 5.09. Determination of Pass-Through Rates for LIBOR Certificates..64
ARTICLE VI THE CERTIFICATES..................................................65
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SECTION 6.01. The Certificates............................................65
SECTION 6.02. Registration of Transfer and Exchange of Certificates.......65
SECTION 6.03. Mutilated, Destroyed, Lost or Stolen Certificates...........70
SECTION 6.04. Persons Deemed Owners.......................................70
ARTICLE VII THE SPONSOR AND THE MASTER SERVICER..............................70
SECTION 7.01. Respective Liabilities of the Sponsor and
the Master Servicer.........................................70
SECTION 7.02. Merger or Consolidation of the Sponsor or
the Master Servicer.........................................70
SECTION 7.03. Limitation on Liability of the Sponsor, the
Master Servicer and Others..................................71
SECTION 7.04. Sponsor and Master Servicer Not to Resign...................71
ARTICLE VIII DEFAULT.........................................................72
SECTION 8.01. Events of Default...........................................72
SECTION 8.02. Remedies of Trustee.........................................73
SECTION 8.03. Directions by Certificateholders and Duties of
Trustee During Event of Default.............................74
SECTION 8.04. Action upon Certain Failures of the Master Servicer
and upon Event of Default...................................74
SECTION 8.05. Trustee to Act; Appointment of Successor....................74
SECTION 8.06. Notification to Certificateholders..........................75
ARTICLE IX THE TRUSTEE.......................................................76
SECTION 9.01. Duties of Trustee...........................................76
SECTION 9.02. Certain Matters Affecting the Trustee.......................77
SECTION 9.03. Trustee Not Liable for Certificates or Mortgage Loans.......78
SECTION 9.04. Trustee May Own Certificates................................79
SECTION 9.05. Eligibility Requirements for Trustee........................79
SECTION 9.06. Resignation and Removal of Trustee..........................79
SECTION 9.07. Successor Trustee...........................................80
SECTION 9.08. Merger or Consolidation of Trustee..........................80
SECTION 9.09. Appointment of Co-Trustee or Separate Trustee...............81
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SECTION 9.10. Authenticating Agents.......................................82
SECTION 9.11. Trustee's Fees and Expenses.................................82
SECTION 9.12. Tax Returns.................................................83
SECTION 9.13. Paying Agents...............................................83
SECTION 9.14. Limitation of Liability.....................................84
SECTION 9.15 Trustee May Enforce Claims Without Possession
of Certificates.............................................84
SECTION 9.16 Suits for Enforcement.......................................84
SECTION 9.17 Waiver of Bond Requirement..................................84
SECTION 9.18 Waiver of Inventory, Accounting and Appraisal Requirement...84
SECTION 9.19 Year 2000 Compliance........................................85
ARTICLE X TERMINATION........................................................85
SECTION 10.01. Termination upon Purchase by the Sponsor or
Liquidation of All Mortgage Loans...........................85
SECTION 10.02. Additional Termination Requirements.........................86
ARTICLE XI MISCELLANEOUS PROVISIONS..........................................87
SECTION 11.01. Amendment...................................................87
SECTION 11.02. Recordation of Agreement....................................88
SECTION 11.03. Limitation on Rights of Certificateholders..................89
SECTION 11.04. Governing Law...............................................89
SECTION 11.05. Notices.....................................................89
SECTION 11.06. Severability of Provisions..................................90
SECTION 11.07. Certificates Nonassessable and Fully Paid...................90
SECTION 11.08. Access to List of Certificateholders........................90
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EXHIBITS
Exhibit A Form of Face of Senior Certificates.............................A-1
Exhibit B Form of Face of Residual Certificates...........................B-1
Exhibit C Form of Face of Subordinate Certificate.........................C-1
Exhibit D Form of Reverse of all Certificates.............................D-1
Exhibit E Mortgage Loan Schedule..........................................E-1
Exhibit F Request for Release of Documents................................F-1
Exhibit G Form of Certification of Establishment of Account...............G-1
Exhibit H [RESERVED]
Exhibit I-1 Form of Transferor's Certificate..............................I-1-1
Exhibit I-2A Form 1 of Transferee's Certificate...........................I-2A-1
Exhibit I-2B Form 2 of Transferee's Certificate...........................I-2B-1
Exhibit J Form of Residual Certificate Affidavit..........................J-1
Exhibit K Form of Investment Letter.......................................K-1
Exhibit L Contents of Servicing File......................................L-1
Exhibit M Form of Initial Certification...................................M-1
Exhibit N Form of Final Certification.....................................N-1
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POOLING AND SERVICING AGREEMENT
THIS POOLING AND SERVICING AGREEMENT, dated as of August 1, 1998, is
hereby executed by and among NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ FUNDING CORP., as sponsor
(together with its permitted successors and assigns, the "Sponsor"), NATIONSBANC
MORTGAGE CORPORATION, as master servicer (together with its permitted successors
and assigns, the "Master Servicer") and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as trustee (together with its permitted successors and assigns, the
"Trustee").
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the
Sponsor, the Master Servicer and the Trustee agree as follows:
PRELIMINARY STATEMENT
In exchange for the Certificates, the Sponsor hereby conveys the Trust
Fund to the Trustee to create the Trust. The Trust Fund for federal income tax
purposes will be treated as two REMICs. The "Subsidiary REMIC" will consist of
all of the assets constituting the Trust Fund and will be evidenced by the
Subsidiary REMIC Regular Interests (which will be uncertificated and will
represent the "regular interests" in the Subsidiary REMIC) and the Class R-I
Certificates as the single "residual interest" in the Subsidiary REMIC. The
Trustee will hold the Subsidiary REMIC Regular Interests. The "Master REMIC"
will consist of the Subsidiary REMIC Regular Interests and will be evidenced by
the Regular Certificates (which will represent the "regular interests" in the
Master REMIC) and the Class R-II Certificate as the single "residual interest"
in the Master REMIC. The Certificates will represent the entire beneficial
ownership interest in the Trust. The "latest possible maturity date" for federal
income tax purposes of all interests created hereby will be the Latest Possible
Maturity Date.
The following table sets forth characteristics of the Certificates,
together with the minimum denominations and integral multiples in excess thereof
in which such Classes shall be issuable (except that one Certificate of each
Class of Certificates may be issued in any amount in excess of the minimum
denomination):
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Initial Integral Multiples
Class Certificate Minimum in Excess
Balance Pass-Through Rate Denomination of Minimum
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Class A-1 $164,351,856.00 6.75% $1,000 $1
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Class A-2 $25,000,000.00 6.50% $1,000 $1
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Class A-3 $60,896,001.00 6.50% $1,000 $1
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Class A-4 $25,000,000.00 7.25% $1,000 $1
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Class A-5 $5,357,143.00 (1) $25,000 $1
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Class A-6 (2) (2) $25,000(3) $1
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Class A-7 $10,000,000.00 6.75% $1,000 $1
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Class A-8 $50,000,000.00 6.75% $1,000 $1
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Class A-9 $75,000,000.00 6.75% $1,000 $1
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Class A-10 $1,604,000.00 6.50% $1,000 $1
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Class A-11 $41,794,000.00 6.75% $1,000 $1
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Class A-12 $4,381,000.00 7.00% $1,000 $1
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Class A-13 $6,981,000.00 7.00% $1,000 $1
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Class A-14 $11,362,000.00 6.50% $1,000 $1
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Class A-15 $10,000,000.00 6.75% $1,000 $1
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Class A-16 $56,700,000.00 6.75% $1,000 $1
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Class A-PO $1,544,110.41 (4) $25,000 $1
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Class R-I $100.00 6.75% $100 N/A
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Class R-II $100.00 6.75% $100 N/A
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Class B-1 $ 10,884,853.00 6.75% $25,000 $1
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Class B-2 $4,902,089.82 6.75% $25,000 $1
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Class B-3 $2,577,992.00 6.75% $25,000 $1
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Class B-4 $2,005,105.00 6.75% $25,000 $1
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Class B-5 $1,145,774.00 6.75% $25,000 $1
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Class B-6 $1,432,381.60 6.75% $25,000 $1
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(1) The Class A-5 Certificates will bear interest at 6.05625% per annum
during the first Interest Accrual Period. During each subsequent
Interest Accrual Period, the Class A-5 Certificates will bear interest
at the per annum rate equal to the sum of (a) LIBOR and (b) 0.40%,
subject to a minimum Pass-Through Rate of 0.40% per annum and a maximum
Pass-Through Rate of 8.50% per annum.
(2) The Class A-6 Certificates will be Notional Amount Certificates, will
have no Class Certificate Balance and will bear interest on the Class
A-6 Notional Amount at 2.44375% per annum during the first Interest
Accrual Period. During each subsequent Interest Accrual Period, the
Class A-6 Certificates will bear interest at the per annum rate equal
to the excess of (a) 8.10% per annum over (b) LIBOR, subject to a
minimum Pass-Through Rate of 0% and a maximum Pass-Through Rate of
8.10% per annum.
(3) The minimum denomination is based on the Notional Amount.
(4) The Class A-PO Certificates will be Principal-Only Certificates and
will not bear interest.
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Principal of and interest on the Subsidiary REMIC Regular Interests and
the Class R-I Certificates shall be allocated to the Corresponding Classes of
Certificates in the manner set forth in the following table:
Corresponding Class of Certificates (1)
Subsidiary REMIC Initial Principal Interest Allocation Allocation
Interest Balance Rate of Principal of Interest
-------- ------- -------- ------------ -----------
1 $164,351,856.00 6.75% ▇-▇ ▇-▇
2 $25,000,000.00 6.50% ▇-▇ ▇-▇
3 $60,896,001.00 6.50% ▇-▇ ▇-▇
4 $25,000,000.00 7.25% ▇-▇ ▇-▇
5 $5,357,143.00 8.50% ▇-▇ ▇-▇, ▇-▇ (2)
6 $10,000,000.00 6.75% ▇-▇ ▇-▇
7 $50,000,000.00 6.75% ▇-▇ ▇-▇
8 $75,000,000.00 6.75% ▇-▇ ▇-▇
9 $1,604,000.00 6.50% ▇-▇▇ ▇-▇▇
10 $41,794,000.00 6.75% ▇-▇▇ ▇-▇▇
11 $4,381,000.00 7.00% ▇-▇▇ ▇-▇▇
12 $6,981,000.00 7.00% ▇-▇▇ ▇-▇▇
13 $11,362,000.00 6.50% ▇-▇▇ ▇-▇▇
14 $10,000,000.00 6.75% ▇-▇▇ ▇-▇▇
15 $56,700,000.00 6.75% ▇-▇▇ ▇-▇▇
16 $1,544,110.41 (3) A-PO --
17 $10,884,853.00 6.75% B-1 B-1
18 $4,902,089.82 6.75% B-2 B-2
19 $2,577,992.00 6.75% B-3 B-3
20 $2,005,105.00 6.75% B-4 B-4
21 $1,145,774.00 6.75% B-5 B-5
22 $1,432,381.60 6.75% B-6 B-6
R-I $100.00 6.75% R-I R-I
23 $100.00 6.75% R-II R-II
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(1) The amount of principal and, except in the case of Subsidiary REMIC
Regular Interest 16, interest allocable from a Subsidiary REMIC Regular
Interest to its Corresponding Class or Classes of Certificates on any
Distribution Date shall be 100%.
(2) Interest on Subsidiary REMIC Regular Interest 5 shall be allocated to
the Class A-5 Certificates and the Class A-6 Certificates on a pro rata
basis in accordance with their respective Pass-Through Rates.
(3) Subsidiary REMIC Regular Interest 16 will be a principal-only
Subsidiary REMIC Regular Interest and will not bear interest.
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
1933 Act: As defined in Section 6.02.
Accrued Certificate Interest: For any Distribution Date and each
interest-bearing Class, one month's interest accrued during the related Interest
Accrual Period at the applicable Pass-Through Rate on the applicable Class
Certificate Balance or Notional Amount.
Advance: A Monthly Advance or a Servicing Advance.
Agreement: This Pooling and Servicing Agreement together with all
amendments hereof and supplements hereto.
Amount Available for Senior Principal: As to any Distribution Date,
Available Funds for such Distribution Date reduced by the aggregate amount
distributable on such Distribution Date in respect of interest on the Senior
Certificates (other than the Class A-PO Certificates) pursuant to Section
5.02(a)(i).
Amount Held for Future Distribution: As to any Distribution Date, the
total of the amounts held in the Collection Account at the close of business on
the preceding Determination Date on account of (i) Principal Prepayments and
Liquidation Proceeds received or made in the month of such Distribution Date and
(ii) payments which represent receipt of Monthly Payments in respect of a Due
Date or Due Dates subsequent to the related Due Date.
Appraised Value: With respect to any Mortgaged Property, the lesser of
(i) the value thereof as determined by an appraisal made for the originator of
the Mortgage Loan at the time of origination of the Mortgage Loan by an
appraiser who met the minimum requirements of FNMA or FHLMC, and (ii) the
purchase price paid for the related Mortgaged Property by the Mortgagor with the
proceeds of the Mortgage Loan; provided, however, that in the case of a
Refinanced Mortgage Loan, such value of the Mortgaged Property is based solely
upon the value determined by an appraisal made for the originator of such
Refinanced Mortgage Loan at the time of origination of such Refinanced Mortgaged
Loan by an appraiser who met the minimum requirements of FNMA or FHLMC.
Assignment of Mortgage: An individual assignment of the Mortgage,
notice of transfer or equivalent instrument in recordable form, sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to give record notice of the sale of the Mortgage.
Authenticating Agents: As defined in Section 9.10.
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Available Funds: As to any Distribution Date, the excess of (a) the sum
of (i) the aggregate of (A) the interest portion of any Monthly Payment (net of
the Master Servicing Fee) and the principal portion of any Monthly Payment due
on the Due Date in the month in which such Distribution Date occurs and which is
received prior to the related Determination Date and (B) all Monthly Advances
and payments of Compensating Interest made by the Master Servicer in respect of
such Distribution Date deposited to the Collection Account pursuant to Section
3.08(b)(vii); (ii) all Liquidation Proceeds received during the preceding
calendar month and deposited to the Collection Account pursuant to Section
3.08(b)(iii); (iii) all Principal Prepayments received during the month
preceding the month of such Distribution Date and deposited to the Collection
Account pursuant to Section 3.08(b) (i) during such period; (iv) in connection
with Defective Mortgage Loans, as applicable, the aggregate of the Purchase
Prices and Substitution Adjustment Amounts deposited on the related Distribution
Account Deposit Date pursuant to Section 3.08(b)(vi); and (v) any other amounts
in the Collection Account deposited therein pursuant to Sections 3.08(b)(iv),
(v) and (viii) in respect of such Distribution Date; over (b) any (i) amounts
permitted to be withdrawn from the Collection Account pursuant to clauses (i)
through (vii), inclusive, of Section 3.11(a) and (ii) amounts permitted to be
withdrawn from the Distribution Account pursuant to clauses (i) and (ii) of
Section 3.11(b).
Bankruptcy Loss: Any Deficient Valuation or Debt Service Reduction.
Book-Entry Certificate: All Classes of Certificates other than the
Physical Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a
day on which banking institutions in the State of North Carolina, the State of
Maryland, the state in which the principal servicing office of the Master
Servicer is located or the state in which the Corporate Trust Office is located
are required or authorized by law or executive order to be closed.
Certificate: Any of the NationsBanc ▇▇▇▇▇▇▇▇▇▇ Funding Corp. Mortgage
Pass-Through Certificates, Series 1998-1 that are issued pursuant to this
Agreement.
Certificate Balance: With respect to any Certificate (other than a
Notional Amount Certificate) at any date, the maximum dollar amount of principal
to which the Holder thereof is then entitled hereunder, such amount being equal
to the amount set forth on the face thereof minus the sum of (i) all
distributions of principal previously made with respect thereto and (ii) all
Realized Losses allocated thereto and, in the case of any Subordinate
Certificates, all other reductions in Certificate Balance previously allocated
thereto pursuant to Section 5.03.
Certificate Owner: With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of a Book-Entry Certificate.
Certificate Register: The register maintained pursuant to Section
6.02.
Certificate Registrar: The registrar appointed pursuant to Section
6.02.
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Certificateholder: The Person in whose name a Certificate is registered
in the Certificate Register, except that, solely for the purpose of giving any
consent pursuant to this Agreement, any Certificate registered in the name of
the Sponsor, the Master Servicer or any affiliate thereof shall be deemed not to
be outstanding and the Percentage Interest and Voting Rights evidenced thereby
shall not be taken into account in determining whether the requisite amount of
Percentage Interests or Voting Rights, as the case may be, necessary to effect
any such consent has been obtained, unless such entity is the registered owner
of the entire Class of Certificates, provided that the Trustee shall not be
responsible for knowing that any Certificate is registered in the name of such
an affiliate unless one of its Responsible Officers has actual knowledge.
Class: As to the Certificates, the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10,
Class A-11, Class A-12, Class A-13, Class A-14, Class A-15, Class A-16, Class
A-PO, Class R-I, Class R-II, Class B-1, Class B-2, Class B-3, Class B-4, Class
B-5 and Class B-6 Certificates, as the case may be.
Class A Certificates: The Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11,
Class A-12, Class A-13, Class A-14, Class A-15, Class A-16 and Class A-PO
Certificates.
Class A-6 Notional Amount: For any Distribution Date and the Class A-6
Certificates, the Class Certificate Balance of the Class A-5 Certificates
immediately prior to such date.
Class A-16 Percentage: As to any Distribution Date, the percentage
equivalent (carried to six places rounded up) of a fraction the numerator of
which is the Class Certificate Balance of the Class A-16 Certificates
immediately prior to such date and the denominator of which is the aggregate of
the Class Certificate Balances of all Classes of Certificates (other than the
Class A-PO Certificates) immediately prior to such date.
Class A-16 Principal Distribution Amount: As to any Distribution Date
(i) occurring in or prior to August 2003, zero and (ii) occurring in September
2003 or thereafter, the lesser of (a) the Class Certificate Balance of the Class
A-16 Certificates and (b) the sum of (1) the Class A-16 Percentage of all
amounts described in clause (i) of the definition of "Senior Principal
Distribution Amount" (but without such amounts being multiplied by the Senior
Percentage) and (2) the product of (A) the Class A-16 Shift Percentage, (B) the
Class A-16 Percentage and (C) all amounts described in clauses (ii) and (iii) of
the definition of "Senior Principal Distribution Amount" (but without such
amounts being multiplied by the Senior Percentage or the Senior Prepayment
Percentage, as the case may be).
Class A-16 Shift Percentage: For any Distribution Date, the percentage
set forth below:
Class A-16
Distribution Date Occurring In Shift Percentage
------------------------------ ----------------
September 2003 through August 2004................................... 30%
September 2004 through August 2005................................... 40%
September 2005 through August 2006................................... 60%
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September 2006 through August 2007................................... 80%
September 2007 and thereafter........................................ 100%
Class A-PO Deferred Amount: As to any Distribution Date prior to the
Senior Credit Support Depletion Date, the aggregate of the applicable PO
Percentage of each Realized Loss, other than an Excess Loss, to be allocated to
the Class A-PO Certificates on such Distribution Date or previously allocated to
the Class A-PO Certificates and not yet paid to the Holders of the Class A-PO
Certificates pursuant to Section 5.02(a)(iii).
Class B Certificates: The Class B-1, Class B-2, Class B-3, Class B-4,
Class B-5 and Class B-6 Certificates.
Class Certificate Balance: With respect to any Class and as to any date
of determination, the aggregate of the Certificate Balances of all Certificates
of such Class as of such date.
Class Interest Shortfall: For any Distribution Date and each
interest-bearing Class, the amount by which Accrued Certificate Interest for
such Class (as reduced pursuant to Section 5.02(c)) exceeds the amount of
interest actually distributed on such Class on such Distribution Date.
Class R Certificates: The Class R-I and Class R-II Certificates.
Class Subordination Percentage: With respect to any Distribution Date
and each Class of Subordinate Certificates, the quotient (expressed as a
percentage) of (a) the Class Certificate Balance of such Class immediately prior
to such Distribution Date divided by (b) the aggregate Class Certificate Balance
of all Classes of Certificates immediately prior to such Distribution Date.
Class Unpaid Interest Shortfall: As to any Distribution Date and each
interest-bearing Class, the amount by which the aggregate Class Interest
Shortfalls for such Class on prior Distribution Dates exceeds the amount of
interest actually distributed on such Class on such prior Distribution Dates
pursuant to clause (ii) of the definition of Interest Distribution Amount.
Closing Date: August 25, 1998.
Code: The Internal Revenue Code of 1986, as the same may be amended
from time to time.
Collection Account: The separate Eligible Account or Accounts created
and maintained by the Master Servicer pursuant to Section 3.08(b) in the name of
the Master Servicer for the benefit of the Certificateholders and designated
"Norwest Bank Minnesota, National Association, as trustee for the registered
holders of NationsBanc ▇▇▇▇▇▇▇▇▇▇ Funding Corp. Mortgage Pass-Through
Certificates, Series 1998-1."
Compensating Interest: As defined in Section 3.17.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its certificate transfer services are conducted, which
office at the date of the execution of this
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instrument is located at Norwest Center, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
Corresponding Class of Certificates: With respect to each Subsidiary
REMIC Interest, any Class of Certificates appearing opposite such Subsidiary
REMIC Interest in the Preliminary Statement.
Credit Support Percentage: As defined in Section 5.02(d).
Current Bankruptcy Coverage Amount: As of any Distribution Date, the
Initial Bankruptcy Coverage Amount less the aggregate amount of Bankruptcy
Losses previously incurred during the period from the Cut-Off Date through the
last day of the month preceding the month of such Distribution Date; provided,
however, that such amount may be reduced from time to time with the written
consent of the Rating Agencies without resulting in a downgrading to the current
rating of the Certificates.
Custodian: Any Custodian appointed by the Trustee in accordance with
the terms of this Agreement.
Customary Servicing Procedures: Procedures (including collection
procedures) that the Master Servicer customarily employs and exercises in
servicing and administering mortgage loans for its own account and which are in
accordance with accepted mortgage servicing practices of prudent lending
institutions servicing mortgage loans of the same type as the Mortgage Loans in
the jurisdictions in which the related Mortgaged Properties are located.
Cut-Off Date: August 1, 1998.
Cut-Off Date Pool Principal Balance: The aggregate of the Cut-Off Date
Principal Balances of the Mortgage Loans which is $572,919,505.83.
Cut-Off Date Principal Balance: As to any Mortgage Loan, the unpaid
principal balance thereof as of the close of business on the Cut-Off Date,
reduced by all installments of principal due on or prior thereto whether or not
paid.
Debt Service Reduction: As to any Mortgage Loan and any Determination
Date, the excess of (i) the Monthly Payment due on the related Due Date under
the terms of such Mortgage Loan over (ii) the amount of the monthly payment of
principal and/or interest required to be paid with respect to such Due Date by
the Mortgagor as established by a court of competent jurisdiction (pursuant to
an order which has become final and nonappealable) as a result of a proceeding
initiated by or against the related Mortgagor under the Bankruptcy Code, as
amended from time to time (11 U.S.C.); provided that no such excess shall be
considered a Debt Service Reduction so long as (a) the Master Servicer is
pursuing an appeal of the court order giving rise to any such modification and
(b)(1) such Mortgage Loan is not in default with respect to payment due
thereunder in accordance with the terms of such Mortgage Loan as in effect on
the Cut-Off Date or (2) Monthly Payments are being advanced by the Master
Servicer in accordance with the terms of such Mortgage Loan as in effect on the
Cut-Off Date.
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Debt Service Reduction Mortgage Loan: Any Mortgage Loan that became
the subject of a Debt Service Reduction.
Defective Mortgage Loan: Any Mortgage Loan which is required to be
cured, repurchased or substituted for pursuant to Sections 2.02 , 2.03 or 2.08.
Deficient Valuation: As to any Mortgage Loan and any Determination
Date, the excess of (i) the then outstanding indebtedness under such Mortgage
Loan over (ii) the secured valuation thereof established by a court of competent
jurisdiction (pursuant to an order which has become final and nonappealable) as
a result of a proceeding initiated by or against the related Mortgagor under the
Bankruptcy Code, as amended from time to time (11 U.S.C.), pursuant to which
such Mortgagor retained such Mortgaged Property; provided that no such excess
shall be considered a Deficient Valuation so long as (a) the Master Servicer is
pursuing an appeal of the court order giving rise to any such modification and
(b)(1) such Mortgage Loan is not in default with respect to payments due
thereunder in accordance with the terms of such Mortgage Loan as in effect on
the Cut-Off Date or (2) Monthly Payments are being advanced by the Master
Servicer in accordance with the terms of such Mortgage Loan as in effect on the
Cut-Off Date.
Deficient Valuation Mortgage Loan: Any Mortgage Loan that became the
subject of a Deficient Valuation.
Definitive Certificates: As defined in Section 6.02.
Depository: The Depository Trust Company, the nominee of which is Cede
& Co., as the registered Holder of the Book-Entry Certificates or any successor
thereto appointed in accordance with this Agreement. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: As to any Distribution Date, the fifth Business
Day preceding such Distribution Date.
Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate
that is less than 6.75% per annum.
Distribution Account: The separate Eligible Account created and
maintained by the Trustee pursuant to Section 3.08(c) in the name of the Trustee
for the benefit of the Certificateholders and designated "Norwest Bank
Minnesota, National Association, in trust for registered holders of NationsBanc
▇▇▇▇▇▇▇▇▇▇ Funding Corp. Mortgage Pass-Through Certificates, Series 1998-1."
Funds in the Distribution Account shall be held in trust for the
Certificateholders for the uses and purposes set forth in this Agreement.
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Distribution Account Deposit Date: As to any Distribution Date, 12:30
p.m. Eastern time on the Business Day immediately preceding such Distribution
Date.
Distribution Date: The 25th day of each month beginning in September
1998 (or, if such day is not a Business Day, the next Business Day).
Due Date: As to any Distribution Date and each Mortgage Loan, the
first day in the calendar month of such Distribution Date.
Eligible Account: Any of (i) an account or accounts maintained with (a)
NationsBank, N.A. or any successor thereto, or (b) a federal or state chartered
depository institution or trust company the short-term unsecured debt
obligations of which (or, in the case of a depository institution or trust
company that is the principal subsidiary of a holding company, the debt
obligations of such holding company) have the highest short-term ratings of each
Rating Agency at the time any amounts are held on deposit therein, or (ii) an
account or accounts in a depository institution or trust company in which such
accounts are insured by the FDIC (to the limits established by the FDIC) and the
uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to the Trustee and to each Rating
Agency, the Certificateholders have a claim with respect to the funds in such
account or a perfected first priority security interest against any collateral
(which shall be limited to Permitted Investments) securing such funds that is
superior to claims of any other depositors or creditors of the depository
institution or trust company in which such account is maintained, or (iii) a
trust account or accounts maintained with the trust department of a federal or
state chartered depository institution or trust company, acting in its fiduciary
capacity or (iv) any other account acceptable to each Rating Agency. Eligible
Accounts may bear interest and may include, if otherwise qualified under this
definition, accounts maintained with the Trustee.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA-Restricted Certificate: The Class B Certificates.
Escrow Account: As defined in Section 3.09.
Escrow Payments: The amounts constituting taxes, assessments, Primary
Insurance Policy premiums, fire and hazard insurance premiums and other payments
as may be required to be escrowed by the Mortgagor with the mortgagee pursuant
to the terms of any Mortgage Note or Mortgage.
Event of Default: As defined in Section 8.01.
Excess Losses: For any Distribution Date, the amount of any (i) Fraud
Losses in excess of the Fraud Loss Coverage Amount, (ii) Special Hazard Losses
in excess of the Special Hazard Coverage Amount or (iii) Bankruptcy Losses in
excess of the Current Bankruptcy Coverage Amount.
Excess Proceeds: With respect to any Liquidated Mortgage Loan, the
amount, if any, by which the sum of any Liquidation Proceeds of such Mortgage
Loan received in the calendar month
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in which such Mortgage Loan became a Liquidated Mortgage Loan, net of any
amounts previously reimbursed to the Master Servicer as Nonrecoverable
Advance(s) with respect to such Mortgage Loan pursuant to Section 3.11(a)(iii),
exceeds (i) the unpaid principal balance of such Liquidated Mortgage Loan as of
the Due Date in the month in which such Mortgage Loan became a Liquidated
Mortgage Loan plus (ii) accrued interest at the Mortgage Rate from the Due Date
as to which interest was last paid or for which a Monthly Advance was made (and
not reimbursed) up to the Due Date applicable to the Distribution Date
immediately following the calendar month during which such liquidation occurred.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: The Federal Home Loan Mortgage Corporation, or any successor
thereto.
Final Certification: As defined in Section 2.02.
Final Distribution Date: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
10.01.
Financial Market Service: Bloomberg Financial Service and any other
financial information provider designated by the Sponsor by written notice to
the Trustee.
FIRREA: The Financial Institutions Reform, Recovery and Enforcement
Act of 1989, as amended.
Fitch: Fitch IBCA, Inc., or any successor thereto.
FNMA: ▇▇▇▇▇▇ ▇▇▇, or any successor thereto.
Fraud Loan: Any Liquidated Mortgage Loan as to which a Fraud Loss has
been sustained.
Fraud Loss: Realized Losses on Mortgage Loans as to which a loss is
sustained by reason of a default arising from fraud, dishonesty or
misrepresentation in connection with the related Mortgage Loan, including a loss
by reason of the denial of coverage under any related Primary Insurance Policy
because of such fraud, dishonesty or misrepresentation.
Fraud Loss Coverage Amount: The Initial Fraud Loss Coverage Amount as
reduced from time to time by the amount of Fraud Losses allocated to the
Certificates. In addition, on each anniversary of the Cut-Off Date, the Fraud
Loss Coverage Amount will be reduced as follows: (a) on the first, second and
third anniversaries of the Cut-Off Date, to an amount equal to the lesser of (i)
1% of the then-current Pool Stated Principal Balance and (ii) the excess of the
Fraud Loss Coverage Amount as of the preceding anniversary of the Cut-Off Date
(or the Cut-Off Date, in the case of the first anniversary of the Cut-Off Date)
over the cumulative amount of Fraud Losses allocated to the Certificates since
such preceding anniversary; (b) on the fourth and fifth anniversaries of the
Cut-Off Date, to an amount equal to the lesser of (i) 0.5% of the then-current
Pool Stated Principal Balance and (ii) the excess of the Fraud Loss Coverage
Amount as of the preceding anniversary of the Cut-Off Date over the cumulative
amount of Fraud Losses allocated
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to the Certificates since such preceding anniversary; and (c) on the fifth
anniversary of the Cut-Off Date, to zero.
Holder: A Certificateholder.
Independent: When used with respect to any specified Person means such
a Person who (i) is in fact independent of the Sponsor or the Master Servicer,
(ii) does not have any direct financial interest or any material indirect
financial interest in the Sponsor or the Master Servicer or in an affiliate of
either, and (iii) is not connected with the Sponsor or the Master Servicer as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
Initial Bankruptcy Coverage Amount: $207,394.69.
Initial Certification: As defined in Section 2.02.
Initial Class Certificate Balance: As to each Class of Certificates
(other than the Class A-6 Certificates), the aggregate of the initial
Certificate Balances of all Certificates of such Class, which is set forth in
the Preliminary Statement. As to each Certificate of a Class of Certificates,
the portion of the Initial Class Certificate Balance set forth on the face
thereof.
Initial Fraud Loss Coverage Amount: $5,728,869.56.
Initial LIBOR Rate: 5.65625%.
Initial Special Hazard Coverage Amount: $5,730,555.80.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect, including any replacement policy or policies for any Insurance
Policies.
Insurance Proceeds: Proceeds paid by an insurer pursuant to any
Insurance Policy, in each case other than any amount included in such Insurance
Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Accrual Period: As to any Distribution Date and each Class of
Certificates (other than the Class A-PO Certificates and the Non-Delay
Certificates), the period from and including the first day of the calendar month
preceding the calendar month of such Distribution Date to but not including the
first day of the calendar month of such Distribution Date. With respect to any
Distribution Date and the Non-Delay Certificates, the period commencing on the
25th day of the calendar month preceding the calendar month in which such
Distribution Date occurs and ending on the 24th day of the calendar month in
which such Distribution Date occurs.
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Interest Distribution Amount: For any Distribution Date and each
interest-bearing Class, the sum of (i) Accrued Certificate Interest, subject to
reduction pursuant to Section 5.02(c), and (ii) any Class Unpaid Interest
Shortfall for such Class.
▇▇▇: An individual retirement account established under Section 408 of
the Code.
LIBOR: The London Interbank Offered Rate for one-month U.S. dollar
deposits, calculated as set forth in Section 5.09.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of North Carolina, the
State of Maryland, the state where the Corporate Trust Office is located or in
the City of London, England are required or authorized by law to be closed.
LIBOR Certificates: The Class A-5 and Class A-6 Certificates.
LIBOR Determination Date: As to any Distribution Date (other than the
first Distribution Date), the second LIBOR Business Day prior to the day on
which the related Interest Accrual Period commences.
Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) that was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Master Servicer has certified (in accordance with this Agreement) that it has
received all proceeds it expects to receive in connection with the liquidation
of such Mortgage Loan including the final disposition of an REO Property.
Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of defaulted Mortgage
Loans, whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property,
less the sum of related unreimbursed Master Servicing Fees and Advances.
Loan-to-Value Ratio: With respect to any Mortgage Loan and any date of
determination, the fraction, expressed as a percentage, the numerator of which
is the outstanding principal balance of the related Mortgage Loan at the date of
determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.
LTV: Loan-to-Value Ratio.
Master REMIC: As described in the Preliminary Statement.
Master Servicer: NationsBanc Mortgage Corporation, a Texas corporation,
or its successor in interest, as Master Servicer, or any successor master
servicer appointed as herein provided.
Master Servicer Advance Date: As to any Distribution Date, 11:30 a.m.,
Eastern time, on the Business Day immediately preceding such Distribution Date.
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Master Servicer's Certificate: The monthly report required by Section
4.01.
Master Servicing Fee: With respect to each Mortgage Loan and
Distribution Date, the amount of the fee payable to the Master Servicer, which
shall, for such Distribution Date, be equal to one-twelfth of the product of the
Master Servicing Fee Rate with respect to such Mortgage Loan and the Stated
Principal Balance of such Mortgage Loan, subject to reduction as provided in
Section 3.17. Such fee shall be payable monthly, computed on the basis of the
same Stated Principal Balance and period respecting which any related interest
payment on a Mortgage Loan is computed. The Master Servicer's right to receive
the Master Servicing Fee is limited to, and payable solely from, the interest
portion (including recoveries with respect to interest from Liquidation Proceeds
and other proceeds, to the extent permitted by Section 3.11) of related Monthly
Payments collected by the Master Servicer, or as otherwise provided under
Section 3.11.
Master Servicing Fee Rate: With respect to each Mortgage Loan, the per
annum rate equal to (i) the related Mortgage Rate less (ii) the sum of 6.75% and
the Trustee Fee Rate; provided, however, that the Master Servicing Fee Rate will
not be less than 0.25% per annum with respect to any Mortgage Loan.
Monthly Advance: The payment required to be made by the Master Servicer
with respect to any Distribution Date pursuant to Section 3.20, the amount of
any such payment being equal to the aggregate of Monthly Payments (net of the
Master Servicing Fee) on the Mortgage Loans (including any REO Property) that
were due on the related Due Date and not received as of the close of business on
the related Determination Date, less the aggregate amount of any such delinquent
payments that the Master Servicer has determined would constitute a
Nonrecoverable Advance if advanced.
Monthly Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan
which, unless otherwise specified herein, shall give effect to any related Debt
Service Reduction and any Deficient Valuation that affects the amount of the
monthly payment due on such Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on a Mortgaged Property securing a Mortgage Note or creating a first
lien on a leasehold interest.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Loans: Such of the mortgage loans transferred and assigned to
the Trustee pursuant to Section 2.01 as from time to time are held as a part of
the Trust Fund (including any Substitute Mortgage Loans and REO Property), the
Mortgage Loans originally so held being identified in the Mortgage Loan
Schedule.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
time amended by the Master Servicer to reflect the addition of Substitute
Mortgage Loans and the deletion of
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Defective Mortgage Loans pursuant to the provisions of this Agreement)
transferred to the Trustee as part of the Trust Fund and from time to time
subject to this Agreement, attached hereto as Exhibit E, setting forth the
following information with respect to each Mortgage Loan: (i) the Mortgage Loan
identifying number; (ii) a code indicating whether the Mortgaged Property is
owner-occupied; (iii) the property type for each Mortgaged Property; (iv) the
original months to maturity or the remaining months to maturity from the Cut-Off
Date; (v) the Loan-to-Value Ratio at origination; (vi) the Mortgage Interest
Rate; (vii) the date on which the first Monthly Payment was due on the Mortgage
Loan, and, if such date is not the Due Date currently in effect, such Due Date;
(viii) the stated maturity date; (ix) the amount of the Monthly Payment as of
the Cut-Off Date; (x) the paid-through date; (xi) the original principal amount
of the Mortgage Loan; (xii) the principal balance of the Mortgage Loan as of the
close of business on the Cut-Off Date, after application of payments of
principal due on or before the Cut-Off Date, whether or not collected, and after
deduction of any payments collected of scheduled principal due after the Cut-Off
Date; (xiii) a code indicating the purpose of the Mortgage Loan; (xiv) a code
indicating the documentation style; and (xv) the Appraised Value. With respect
to the Mortgage Loans in the aggregate, the Mortgage Loan Schedule shall set
forth the following information, as of the Cut-Off Date: (i) the number of
Mortgage Loans; (ii) the current aggregate outstanding principal balance of the
Mortgage Loans; (iii) the weighted average Mortgage Rate of the Mortgage Loans;
and (iv) the weighted average months to maturity of the Mortgage Loans.
Mortgage Note: The originally executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan,
together with all riders thereto and amendments thereof.
Mortgage Rate: As to any Mortgage Loan, the per annum rate of interest
at which interest accrues on the principal balance of such Mortgage Loan in
accordance with the terms of the related Mortgage Note.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
Net Mortgage Rate: As to any Mortgage Loan and Distribution Date, such
Mortgage Loan's Mortgage Rate thereon on the first day of the month preceding
the month of the related Distribution Date reduced by the related Master
Servicing Fee Rate and Trustee Fee Rate.
Net Prepayment Interest Shortfalls: As to any Distribution Date, the
amount, if any, by which the aggregate of Prepayment Interest Shortfalls exceeds
Compensating Interest for such Distribution Date.
Non-Delay Certificates: The Class A-5 and Class A-6 Certificates.
Non-PO Principal Amount: As to any Distribution Date, the sum of the
applicable Non-PO Percentage of (a) the principal portion of each Monthly
Payment (without giving effect, prior to the reduction of the Current Bankruptcy
Coverage Amount to zero, to any reductions thereof caused by any Debt Service
Reductions) due on each Mortgage Loan on the related Due Date, (b) the Stated
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Principal Balance of each Mortgage Loan that was repurchased by the Seller or
the Sponsor pursuant to this Agreement as of such Distribution Date, (c) any
Substitution Adjustment Amount in connection with a Defective Mortgage Loan
received with respect to such Distribution Date, (d) any Liquidation Proceeds
allocable to recoveries of principal of Mortgage Loans that are not yet
Liquidated Mortgage Loans received during the calendar month preceding the month
of such Distribution Date, (e) with respect to each Mortgage Loan that became a
Liquidated Mortgage Loan during the calendar month preceding the month of such
Distribution Date, the amount of Liquidation Proceeds allocable to principal
received during the calendar month preceding the month of such Distribution Date
with respect to such Mortgage Loan and (f) all Principal Prepayments received
during the calendar month preceding such Distribution Date.
Non-PO Percentage: As to any Discount Mortgage Loan, a fraction
(expressed as a percentage) the numerator of which is the Net Mortgage Rate of
such Discount Mortgage Loan and the denominator of which is 6.75%. As to any
Mortgage Loan that is not a Discount Mortgage Loan, 100%.
Non-U.S. Person: An individual, corporation, partnership or other
Person other than 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, an estate that is subject to
U.S. federal income tax regardless of the source of its income, or a trust if a
court within the United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. Persons have the authority to
control all substantial decisions of the trust.
Nonrecoverable Advance: Any portion of an Advance previously made or
proposed to be made in respect of a Mortgage Loan which has not been previously
reimbursed and which, in the good faith judgment of the Master Servicer, will
not or, in the case of a proposed Advance, would not be ultimately recoverable
from the related Mortgagor, related Liquidation Proceeds, or other recoveries in
respect of the related Mortgage Loan. The determination by the Master Servicer
that it has made a Nonrecoverable Advance or that any proposed Advance, if made,
would constitute a Nonrecoverable Advance, shall be evidenced by a certificate
of a Servicing Officer of the Master Servicer delivered to the Trustee and the
Sponsor and detailing the reasons for such determination.
Notional Amount: With respect to the Class A-6 Certificates
collectively, the Class A-6 Notional Amount or, with respect to a single Class
A-6 Certificate, the notional amount set forth on the face of such Certificate.
Notional Amount Certificates: Any Class of Certificates entitled to
distributions of interest, but to no distributions of principal. The Class A-6
Certificates are the sole Class of Notional Amount Certificates.
Offered Certificates: The Class A, Class B-1, Class B-2, Class B-3 and
Class R Certificates.
Officer's Certificate: A certificate signed by the Chairman of the
Board, Vice Chairman of the Board, President, a Vice President and by the
Treasurer, the Secretary or one of the Assistant Treasurers or Assistant
Secretaries, or any other duly authorized officer of the Sponsor or the Master
Servicer, as the case may be, and delivered to the Trustee.
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Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee, who may be counsel for the Sponsor or the Master Servicer, except that
any opinion of counsel relating to the qualification of the Trust Fund as a
REMIC or compliance with the REMIC Provisions must be an opinion of Independent
counsel.
Original Credit Support Percentage: With respect to each of the
following Classes of Subordinate Certificates, the corresponding percentage
described below, as of the Closing Date:
Class B-1 2.11%
Class B-2 1.25%
Class B-3 0.80%
Class B-4 0.45%
Class B-5 0.25%
Class B-6 0.00%
Original Mortgage Loans: The Mortgage Loans identified in Exhibit E
hereto, and conveyed, transferred, sold and assigned to, and deposited with, the
Trustee pursuant to Section 2.01 hereof on the Closing Date.
Original Subordinate Certificate Balance: $22,948,205.42.
OTS: The Office of Thrift Supervision.
Outstanding Mortgage Loan: As to any Due Date, a Mortgage Loan which
was not the subject of a Principal Prepayment in Full prior to such Due Date,
which did not become a Liquidated Mortgage Loan prior to such Due Date and which
was not purchased from the Trust prior to such Due Date pursuant to Sections
2.02, 2.03 or 2.08.
Ownership Interest: As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as the
Holder thereof and any other interest therein, whether direct or indirect, legal
or beneficial, as owner or as pledgee.
Pass-Through Rate: As to each Class of interest-bearing Certificates,
the per annum rate set forth or described in the Preliminary Statement.
Percentage Interest: As to any Certificate, the percentage obtained by
dividing the initial Certificate Balance or Notional Amount, as applicable, of
such Certificate by the initial Class Certificate Balance or Notional Amount, as
applicable, of all Certificates of the same Class.
Permitted Investments: One or more of the following:
(i) obligations of or guaranteed as to principal and interest
by the United States, FHLMC, FNMA or any agency or instrumentality of
the United States when such obligations are backed by the full faith
and credit of the United States; provided that such obligations of
FHLMC or FNMA shall be limited to senior debt obligations and mortgage
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participation certificates other than investments in mortgage-backed or
mortgage participation securities with yields evidencing extreme
sensitivity to the rate of principal payments on the underlying
mortgages shall not constitute Permitted Investments hereunder;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than one month from the date of acquisition
thereof with a corporation incorporated under the laws of the United
States or any state thereof rated not lower than "A-1" by S&P and "F-1"
by Fitch;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days or a remaining maturity of more than 30 days) denominated in
United States dollars of any U.S. depository institution or trust
company incorporated under the laws of the United States or any state
thereof, rated not lower than "A-1" by S&P and "F-1" by Fitch;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the
United States or any state thereof which is rated not lower than "A-1"
by S&P and "F-1" by Fitch;
(v) investments in money market funds (including funds of the
Trustee or its affiliates, or funds for which an affiliate of the
Trustee acts as advisor, as well as funds for which the Trustee and its
affiliates may receive compensation) rated either "AAAm" or "AAAm G" by
S&P, and "AAA" by Fitch or otherwise approved in writing by the Rating
Agency; and
(vi) other obligations or securities that are acceptable to
each Rating Agency and, as evidenced by an Opinion of Counsel obtained
by the Master Servicer, will not affect the qualification of either of
the REMICs as a REMIC;
provided, however, that no instrument shall be a Permitted Investment if it
represents, either (a) the right to receive only interest payments with respect
to the underlying debt instrument or (b) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest with respect to such instrument provide a yield to
maturity greater than 120% of the yield to maturity at par of such underlying
obligations.
Permitted Transferee: Any Person other than (i) the United States, or
any State or any political subdivision thereof, or any agency or instrumentality
of any of the foregoing, (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing, (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by Section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives described in Code Section
521), (iv) rural electric and telephone cooperatives described in Code Section
1381(a)(2)(C), (v) any Non-U.S. Person and (vi) any other Person so designated
by the Master Servicer based on an Opinion of Counsel to the effect that any
transfer to such Person may cause the Trust or any other Holder of a Residual
Certificate to incur tax liability
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that would not be imposed other than on account of such transfer. The terms
"United States," "State" and "international organization" shall have the
meanings set forth in Code Section 7701 or successor provisions.
Person: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
Physical Certificates: The Class A-PO, Class B and Class R
Certificates.
PO Percentage: As to any Discount Mortgage Loan, 100% minus the Non-PO
Percentage for such Mortgage Loan. As to any Mortgage Loan that is not a
Discount Mortgage Loan, 0%.
PO Principal Amount: As to any Distribution Date, the sum of the
applicable PO Percentage of (a) the principal portion of each Monthly Payment
(without giving effect, prior to the reduction of the Current Bankruptcy
Coverage Amount to zero, to any reductions thereof caused by any Debt Service
Reductions) due on each Mortgage Loan on the related Due Date, (b) the Stated
Principal Balance of each Mortgage Loan that was repurchased by the Seller or
the Sponsor pursuant to this Agreement as of such Distribution Date, (c) any
Substitution Adjustment Amount in connection with any Defective Mortgage Loan
received with respect to such Distribution Date, (d) any Liquidation Proceeds
allocable to recoveries of principal of Mortgage Loans that are not yet
Liquidated Mortgage Loans received during the calendar month preceding the month
of such Distribution Date, (e) with respect to each Mortgage Loan that became a
Liquidated Mortgage Loan during the calendar month preceding the month of such
Distribution Date, the amount of Liquidation Proceeds allocable to principal
received with respect to such Mortgage Loan during the calendar month preceding
the month of such Distribution Date with respect to such Mortgage Loan and (f)
all Principal Prepayments received during the calendar month preceding such
Distribution Date.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate Stated Principal Balances of all Mortgage Loans that were Outstanding
Mortgage Loans immediately following the Due Date in the month of such
Distribution Date.
Prepayment Interest Shortfall: As to any Distribution Date and each
Mortgage Loan subject to Principal Prepayment received during the calendar month
preceding such Distribution Date, the amount, if any, by which one month's
interest at the related Mortgage Rate (net of the Master Servicing Fee) on such
Principal Prepayment exceeds the amount of interest paid in connection with such
Principal Prepayment.
Primary Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy therefor with respect to any Mortgage Loan,
in each case issued by an insurer acceptable to FNMA or FHLMC.
Principal-Only Certificates: Any Class of Certificates entitled to
distributions of principal, but to no distributions of interest. The Class A-PO
Certificates are the sole Class of Principal-Only Certificates.
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Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan (other than Liquidation Proceeds) which is received in advance of
its scheduled Due Date and is not accompanied by an amount of interest
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
Principal Prepayment in Full: Any Principal Prepayment of the entire
principal balance of a Mortgage Loan.
Private Certificates: The Class B-4, Class B-5 and Class B-6
Certificates.
Pro Rata Share: As to any Distribution Date and any Class of
Subordinate Certificates, the portion of the Subordinate Principal Distribution
Amount allocable to such Class, equal to the product of the Subordinate
Principal Distribution Amount for such Distribution Date and a fraction, the
numerator of which is the related Class Certificate Balance thereof and the
denominator of which is the aggregate Class Certificate Balance of the
Subordinate Certificates.
Purchase Price: As to any Defective Mortgage Loan repurchased on any
date pursuant to Sections 2.02, 2.03 or 2.08, an amount equal to the sum of (i)
the unpaid principal balance thereof and (ii) the unpaid accrued interest
thereon at the applicable Mortgage Rate from the Due Date to which interest was
last paid by the Mortgagor to the first day of the month following the month in
which such Mortgage Loan became eligible to be repurchased; provided, however,
that if at the time of repurchase the Seller is the Master Servicer, the amount
described in clause (ii) shall be computed at the Mortgage Rate net of the
Master Servicing Fee Rate.
Rating Agency: Each of Fitch and S&P. If either such organization or a
successor is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating organization, or other comparable Person, as is
designated by the Sponsor, notice of which designation shall be given to the
Trustee. References herein to a given rating or rating category of a Rating
Agency shall mean such rating category without giving effect to any modifiers.
Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the unpaid principal
balance of the Liquidated Mortgage Loan as of the date of such liquidation, plus
(ii) interest at the Net Mortgage Rate from the Due Date as to which interest
was last paid or advanced (and not reimbursed) to Certificateholders up to the
Due Date in the month in which Liquidation Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) the Liquidation Proceeds, if any, received during
the month in which such liquidation occurred, to the extent applied as
recoveries of interest at the Net Mortgage Rate and to principal of the
Liquidated Mortgage Loan. With respect to each Mortgage Loan that has become the
subject of a Deficient Valuation, if the principal amount due under the related
Mortgage Note has been reduced, the difference between the principal balance of
the Mortgage Loan outstanding immediately prior to such Deficient Valuation and
the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation. With respect to each Mortgage Loan that has become the subject of a
Debt Service Reduction and any
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Distribution Date, the amount, if any, by which the principal portion of the
related Monthly Payment has been reduced.
Record Date: The last day of the month (or, if such day is not a
Business Day, the preceding Business Day) preceding the month of the related
Distribution Date.
Refinanced Mortgage Loan: Any Mortgage Loan the proceeds of which were
not used to purchase the related Mortgaged Property.
Regular Certificates: The Class A and Class B Certificates.
Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Relief Act Reduction: 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 calendar month as a result of
the application of the Relief Act, the amount, if any, by which (i) interest
collectible on such Mortgage Loan for the most recently ended calendar month is
less than (ii) interest accrued pursuant to the terms of the Mortgage Note on
the same principal amount and for the same period as the interest collectible on
such Mortgage Loan for the most recently ended calendar month.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC Certificate Maturity Date: The "latest possible maturity date" of
the Regular Certificates as that term is defined in Section 2.07.
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 Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time as well as provisions of applicable state laws.
REO Disposition Period: As defined in Section 3.14.
REO Proceeds: Proceeds, net of any related expenses of the Master
Servicer, received in respect of any REO Property (including, without
limitation, proceeds from the rental of the related Mortgaged Property) which
are received prior to the final liquidation of such Mortgaged Property.
REO Property: A Mortgaged Property acquired by the Master Servicer on
behalf of the Trust through foreclosure or deed-in-lieu of foreclosure in
connection with a defaulted Mortgage Loan.
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Request for Release: The Request for Release submitted by the Master
Servicer to the Trustee or the Custodian on behalf of the Trustee, substantially
in the form of Exhibit F.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement in respect of such Mortgage Loan.
Reserve Interest Rate: As defined in Section 5.09(c).
Residual Certificates: The Class R Certificates.
Responsible Officer: When used with respect to the Trustee, any
officer in its corporate trust department or successor group.
Restricted Classes: As defined in Section 5.02(d).
S&P: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.,
or any successor thereto.
Sale Agreement: The Mortgage Loan Sale Agreement, dated August 25,
1998, between the Seller and the Sponsor, as purchaser.
Seller: NationsBanc Mortgage Corporation, as seller of the Mortgage
Loans under the Sale Agreement.
Senior Certificates: The Class A and Class R Certificates.
Senior Credit Support Depletion Date: The date on which the aggregate
Class Certificate Balance of the Subordinate Certificates is reduced to zero.
Senior Percentage: With respect to any Distribution Date, the
percentage carried six places rounded up, obtained by dividing the aggregate
Class Certificate Balance of the Senior Certificates (other than the Class A-PO
Certificates), immediately prior to such Distribution Date by the aggregate
Class Certificate Balance of all Classes of Certificates (other than the Class
A-PO Certificates) immediately prior to such Distribution Date.
Senior Prepayment Percentage: For any Distribution Date during the five
years beginning on the first Distribution Date, 100%. The Senior Prepayment
Percentage for any Distribution Date occurring on or after the fifth anniversary
of the first Distribution Date will, except as provided herein, be as follows:
for any Distribution Date in the first year thereafter, the Senior Percentage
plus 70% of the Subordinate Percentage for such Distribution Date; for any
Distribution Date in the second year thereafter, the Senior Percentage plus 60%
of the Subordinate Percentage for such Distribution Date; for any Distribution
Date in the third year thereafter, the Senior Percentage plus 40% of the
Subordinate Percentage for such Distribution Date; for any Distribution Date in
the fourth year thereafter, the Senior Percentage plus 20% of the Subordinate
Percentage for such Distribution Date; and for any Distribution Date in the
fifth or later years thereafter, the Senior
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Percentage for such Distribution Date (unless on any of the foregoing
Distribution Dates the Senior Percentage exceeds the initial Senior Percentage,
in which case the Senior Prepayment Percentage for such Distribution Date will
once again equal 100%). Notwithstanding the foregoing, no decrease in the Senior
Prepayment Percentage will occur unless both of the Senior Step Down Conditions
are satisfied.
Senior Principal Distribution Amount: As to any Distribution Date, the
sum of (i) the Senior Percentage of the applicable Non-PO Percentage of all
amounts described in clauses (a) through (d) of the definition of "Non-PO
Principal Amount" for such Distribution Date, (ii) with respect to each Mortgage
Loan that became a Liquidated Mortgage Loan during the calendar month preceding
the month of such Distribution Date, the lesser of (A) the Senior Percentage of
the applicable Non-PO Percentage of the Stated Principal Balance of such
Mortgage Loan and (B) either (1) the Senior Prepayment Percentage of the
applicable Non-PO Percentage of the portion of the Liquidation Proceeds that are
allocable to principal of such Mortgage Loan, or (2) if an Excess Loss was
sustained with respect to such Liquidated Mortgage Loan during such preceding
calendar month, the Senior Percentage of the applicable Non-PO Percentage of the
portion of Liquidation Proceeds that are allocable to principal of such Mortgage
Loan, and (iii) the Senior Prepayment Percentage of the applicable Non-PO
Percentage of the amounts described in clause (f) of the definition of "Non-PO
Principal Amount" for such Distribution Date; provided, however, that if a Debt
Service Reduction that is an Excess Loss is sustained with respect to a Mortgage
Loan that is not a Liquidated Mortgage Loan, the Senior Principal Distribution
Amount will be reduced on the related Distribution Date by the Senior Percentage
of the application Non-PO Percentage of the principal portion of such Debt
Service Reduction.
Senior Step Down Conditions: As of any Distribution Date as to which
any decrease in the Senior Prepayment Percentage applies, (i) the outstanding
principal balance of all Mortgage Loans (including, for this purpose, any
Mortgage Loans in foreclosure or any REO Property) delinquent 60 days or more
(averaged over the preceding six month period), as a percentage of the aggregate
Class Certificate Balance of the Subordinate Certificates (averaged over the
preceding six-month period), is not equal to or greater than 50% or (ii)
cumulative Realized Losses with respect to the Mortgage Loans as of the
applicable Distribution Date do not exceed the percentages of the Original
Subordinate Certificate Balance set forth below:
Percentage of
Original Subordinate
Distribution Date Occurring Certificate Balance
--------------------------- --------------------
September 2003 to August 2004................................. 30%
September 2004 through August 2005............................ 35%
September 2005 through August 2006............................ 40%
September 2006 through August 2007............................ 45%
September 2007 and thereafter................................. 50%
Servicer: Any Person with which the Master Servicer has entered into a
Servicing Agreement and which satisfies the requirements set forth therein.
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Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Master Servicer of
its servicing obligations, including, but not limited to (i) the preservation,
restoration and protection of a Mortgaged Property, (ii) expenses reimbursable
to the Master Servicer pursuant to Section 3.14 and any enforcement or judicial
proceedings, including foreclosures, (iii) the management and liquidation of any
REO Property and (iv) compliance with the obligations under Section 3.12.
Servicing Agreement: Any servicing agreement between the Master
Servicer and any Servicer relating to servicing and/or administration of certain
Mortgage Loans as provided in Section 3.02.
Servicing File: The items pertaining to a particular Mortgage Loan
referred to in Exhibit L hereto, and any additional documents required to be
added to the Servicing File pursuant to the Agreement.
Servicing Officer: Any officer of the Master Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name appears on a list of servicing officers furnished to the Trustee by the
Master Servicer, as such list may from time to time be amended.
Special Hazard Loss: As to a Mortgaged Property, any Realized Loss on
account of direct physical loss, exclusive of (i) any loss covered by a hazard
policy or a flood insurance policy maintained in respect of such Mortgaged
Property pursuant to Section 3.12 and (ii) any loss caused by or resulting from:
(a) (i) wear and tear, deterioration, rust or corrosion, mold,
wet or dry rot; inherent vice or latent defect; animals,
birds, vermin or insects; or
(ii) settling, subsidence, cracking, shrinkage,
building or expansion of pavements, foundations, walls,
floors, roofs or ceilings;
(b) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues and then
only for the ensuing loss;
(c) nuclear or chemical reaction or nuclear radiation or
radioactive or chemical contamination, all whether controlled or
uncontrolled, and whether such loss is direct or indirect, proximate or
remote; or
(d) (i) hostile or warlike action in time of peace or war,
including action in hindering, combating or defending against
an actual, impending or expected attack (A) by any government
or sovereign power (de jure or de facto), or by any authority
maintaining or using military, naval or air forces; or (B) by
military, naval or air forces; or (C) by an agent of any such
government, power, authority or forces;
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(ii) any weapon of war or facility for producing same
employing atomic fission, radioactive force or chemical or
biological contaminants, whether in time of peace or war; or
(iii) insurrection, rebellion, revolution, civil war,
usurped power or action taken by governmental authority in
hindering, combating or defending against such an occurrence,
seizure or destruction under quarantine or customs
regulations, confiscation by order of any government or public
authority, or risks of contraband or illegal transportation or
trade.
Special Hazard Loss Coverage Amount: As to any Distribution Date, the
lesser of (a) the greatest of (i) 1% of the Pool Stated Principal Balance of the
Mortgage Loans, (ii) twice the principal balance of the largest Mortgage Loan,
and (iii) the aggregate principal balance of all Mortgage Loans secured by
Mortgaged Properties located in the single California five-digit postal zip code
having the highest aggregate principal balance of any zip code area (all
principal balances to be calculated as of the first day of the month preceding
such Distribution Date after giving effect to Monthly Payments then due, whether
or not paid) and (b) the Initial Special Hazard Coverage Amount, reduced (but
not below zero) by the amount of Realized Losses in respect of Special Hazard
Mortgage Loans previously incurred during the period from the Cut-Off Date
through the last day of the month preceding the month of such Distribution Date.
The Special Hazard Loss Coverage Amount may be further reduced from time to time
below the amounts specified above with the written consent of the Rating
Agencies and without resulting in a downgrading to the then-current rating of
the Certificates.
Special Hazard Mortgage Loan: Any Liquidated Mortgage Loan as to which
the ability to recover thereon was substantially impaired by reason of a Special
Hazard Event.
Sponsor: NationsBanc ▇▇▇▇▇▇▇▇▇▇ Funding Corp., a Delaware corporation,
or its successor in interest, as sponsor of the Trust Fund.
Stated Principal Balance: As to any Mortgage Loan and date, the unpaid
principal balance of such Mortgage Loan as of the Due Date immediately preceding
such date as specified in the amortization schedule at the time relating thereto
(before any adjustment to such amortization schedule by reason of any moratorium
or similar waiver or grace period) after giving effect to any previous partial
Principal Prepayments and Liquidation Proceeds allocable to principal (other
than with respect to any Liquidated Mortgage Loan) and to the payment of
principal due on such Due Date and irrespective of any delinquency in payment by
the related Mortgagor, and after giving effect to any Deficient Valuation.
Subordinate Certificates: The Class B Certificates.
Subordinate Percentage: As of any Distribution Date, 100% minus the
Senior Percentage for such Distribution Date.
Subordinate Prepayment Percentage: As to any Distribution Date, 100%
minus the Senior Prepayment Percentage for such Distribution Date.
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Subordinate Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to the sum of (i) the Subordinate Percentage
of the applicable Non-PO Percentage of all amounts described in clauses (a)
through (d) of the definition of "Non-PO Principal Amount" for such Distribution
Date, (ii) with respect to each Mortgage Loan that became a Liquidated Mortgage
Loan during the calendar month preceding the month of such Distribution Date,
the applicable Non-PO Percentage of the portion of Liquidation Proceeds
allocable to principal received with respect to such Mortgage Loan during such
preceding calendar month and remaining after application of amounts pursuant to
clause (ii) of the definition of "Senior Principal Distribution Amount", up to
the Subordinate Percentage of the applicable Non-PO Percentage of the Stated
Principal Balance of such Mortgage Loan and (iii) the Subordinate Prepayment
Percentage of the applicable Non-PO Percentage of the amounts described in
clause (f) of the definition of "Non-PO Principal Amount" for such Distribution
Date; provided, however, that if a Debt Service Reduction that is an Excess Loss
is sustained with respect to a Mortgage Loan that is not a Liquidated Mortgage
Loan, the Subordinate Principal Distribution Amount will be reduced on the
related Distribution Date by the Subordinate Percentage of the applicable Non-PO
Percentage of the principal portion of such Debt Service Reduction.
Subsidiary REMIC: As described in the Preliminary Statement.
Subsidiary REMIC Interest: Any one of the Subsidiary REMIC Regular
Interests or the Class R-I Certificates.
Subsidiary REMIC Regular Interest: Any one of the uncertificated
"regular interests" in the Subsidiary REMIC described in the Preliminary
Statement.
Substitute Mortgage Loan: A Mortgage Loan substituted by the Seller for
a Defective Mortgage Loan which must, on the date of such substitution, be
approved by the Sponsor and (i) have a Stated Principal Balance, after deduction
of the principal portion of the Monthly Payment due in the month of
substitution, not in excess of, and not more than 10% less than, the Stated
Principal Balance of the Defective Mortgage Loan; (ii) have a Net Mortgage Rate
equal to that of the Defective Mortgage Loan; (iii) have a Loan-to-Value Ratio
not higher than that of the Defective Mortgage Loan; (iv) have a remaining term
to maturity not greater than (and not more than one year less than) that of the
Defective Mortgage Loan; and (v) comply with each Mortgage Loan representation
and warranty set forth in the Sale Agreement. More than one Substitute Mortgage
Loan may be substituted for a Defective Mortgage Loan if such Substitute
Mortgage Loans meet the foregoing attributes in the aggregate.
Substitution Adjustment Amount: As defined in Section 2.03(c).
Tax Matters Person: The person designated as "tax matters person" in
accordance with Section 5.06 and the manner provided under Treasury Regulations
ss. 1.860F-4(d) and temporary Treasury Regulation ss. 301.6231(a)(7)-1.
Trust: The trust created by this Agreement.
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Trust Fund: The corpus of the Trust created to the extent described
herein, consisting of the Mortgage Loans, such assets as shall from time to time
be identified as deposited in the Collection Account or the Distribution Account
in accordance with this Agreement, REO Property, the Primary Insurance Policies
and any other Required Insurance Policy.
Trustee: Norwest Bank Minnesota, National Association, and its
successors and, if a successor trustee is appointed hereunder, such successor,
as trustee.
Trustee Fee: As to any Distribution Date, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the aggregate Stated Principal
Balance of the Mortgage Loans immediately following the Due Date in the month
preceding the month in which such Distribution Date occurs.
Trustee Fee Rate: With respect to each Mortgage Loan, 0.005% per annum.
U.S. Person: A citizen or resident of the United States, a corporation,
partnership (except to the extent provided in applicable Treasury regulations)
or other entity created or organized in or under the laws of the United States
or any political subdivision thereof, an estate that is subject to United States
federal income tax, regardless of the source of its income, or a trust, if a
court within the United States is able to exercise primary supervision over the
administration of such trust, and one or more such U.S. Persons have the
authority to control all substantial decisions of such trust (or, to the extent
provided in applicable Treasury regulations, certain trusts in existence on
August 20, 1996 which are eligible to elect to be treated as U.S. Persons).
Voting Rights: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. As of any date of
determination, (a) 1% of all Voting Rights shall be allocated to each Class of
Notional Amount Certificates and each Class of Residual Certificates (such
Voting Rights to be allocated among the Holders of Certificates of each such
Class in accordance with their respective Percentage Interests), and (b) the
remaining Voting Rights shall be allocated among Holders of the remaining
Classes of Certificates in proportion to the Certificate Balances of their
respective Certificates on such date.
SECTION 1.02. Interest Calculations. All calculations of interest
will be made on a 360-day year consisting of twelve 30-day months. All dollar
amounts calculated hereunder shall be rounded to the nearest ▇▇▇▇▇ with one-half
of one ▇▇▇▇▇ being rounded down.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) The Sponsor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee
for the benefit of the Certificateholders, without recourse, all the right,
title and interest of the Sponsor in and to the Mortgage Loans, including all
interest and principal received on or with respect to the Mortgage
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Loans (other than payments of principal and interest due and payable on the
Mortgage Loans on or before the Cut-Off Date), together with the Sponsor's
rights under the Sale Agreement and the representations and warranties of the
Seller thereunder, together with all rights of the Sponsor to require the Seller
to cure any breach of a representation or warranty made in the Sale Agreement by
the Seller or to repurchase or substitute for any affected Mortgage Loan in
accordance herewith and the Sale Agreement.
(b) In connection with such transfer and assignment, the Sponsor has
delivered or caused to be delivered to the Trustee, for the benefit of the
Certificateholders, the following documents or instruments with respect to each
Mortgage Loan so assigned:
(i) the original Mortgage Note, endorsed by manual or
facsimile signature in the following form: "Pay to the order of Norwest
Bank Minnesota, National Association, as Trustee", without recourse,
with all necessary intervening endorsements showing a complete chain of
endorsement from the originator to the Trustee (each such endorsement
being sufficient to transfer all right, title and interest of the party
so endorsing, as noteholder or assignee thereof, in and to that
Mortgage Note);
(ii) except as provided below, the original recorded Mortgage
with evidence of a recording thereon, or if any such Mortgage has not
been returned from the applicable recording office or has been lost, or
if such public recording office retains the original recorded Mortgage,
a copy of such Mortgage certified by the Seller as being a true and
correct copy of the Mortgage;
(iii) subject to the proviso at the end of this paragraph, a
duly executed Assignment of Mortgage to "Norwest Bank Minnesota, as
trustee for the holders of the NationsBanc ▇▇▇▇▇▇▇▇▇▇ Funding Corp.
Mortgage-Pass Through Certificates, Series 1998-1" (which may be
included in a blanket assignment or assignments), together with, except
as provided below, originals of all interim recorded assignments of
such mortgage or a copy of such interim assignment certified by the
Seller as being a true and complete copy of the original recorded
intervening assignments of Mortgage (each such assignment, when duly
and validly completed, to be in recordable form and sufficient to
effect the assignment of and transfer to the assignee thereof, under
the Mortgage to which the assignment relates); provided that, if the
related Mortgage has not been returned from the applicable public
recording office, such Assignment of Mortgage may exclude the
information to be provided by the recording office;
(iv) the originals of all assumption, modification,
consolidation or extension agreements, if any, with evidence of
recording thereon, if any;
(v) the original or duplicate original mortgagee title
insurance policy and all riders thereto;
(vi) the original of any guarantee executed in connection with
the Mortgage Note; and
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(vii) the original of any security agreement, chattel mortgage
or equivalent document executed in connection with the Mortgage;
provided, however, that on the Closing Date, with respect to item (iii), the
Sponsor has delivered to the Trustee a copy of such Assignment of Mortgage in
blank and has caused the Master Servicer to retain the completed Assignment of
Mortgage for recording as described below. In addition, if the Sponsor is unable
to deliver or cause the delivery of any original Mortgage Note due to the loss
of such original Mortgage Note, the Sponsor may deliver a copy of such Mortgage
Note, together with a lost note affidavit, and shall thereby be deemed to have
satisfied the document delivery requirements of this 2.01(b).
If in connection with any Mortgage Loans, the Sponsor cannot deliver
(A) the Mortgage, (B) all interim recorded assignments, (C) all assumption,
modification, consolidation or extension agreements, if any, or (D) the lender's
title policy (together with all riders thereto) satisfying the requirements of
clause (ii), (iii), (iv) or (v) above, respectively, concurrently with the
execution and delivery hereof because such document or documents have not been
returned from the applicable public recording office in the case of clause (ii),
(iii) or (iv) above, or because the title policy has not been delivered to
either the Master Servicer or the Sponsor by the applicable title insurer in the
case of clause (v) above, the Sponsor shall promptly deliver or cause to be
delivered to the Trustee or the Custodian on behalf of the Trustee, in the case
of clause (ii), (iii) or (iv) above, such Mortgage, such interim assignment or
such assumption, modification, consolidation or extension agreement, as the case
may be, with evidence of recording indicated thereon upon receipt thereof from
the public recording office, but in no event shall any such delivery of any such
documents or instruments be made later than one year following the Closing Date,
unless, in the case of clause (ii), (iii) or (iv) above, there has been a
continuing delay at the applicable recording office or, in the case of clause
(v), there has been a continuing delay at the applicable insurer and the Sponsor
has delivered the Officer's Certificate to such effect to the Trustee. The
Sponsor shall forward or cause to be forwarded to the Trustee (1) from time to
time additional original documents evidencing an assumption or modification of a
Mortgage Loan and (2) any other documents required to be delivered by the
Sponsor or the Master Servicer to the Trustee or the Custodian on the Trustee's
behalf. In the event that the original Mortgage is not delivered and in
connection with the payment in full of the related Mortgage Loan the public
recording office requires the presentation of a "lost instruments affidavit and
indemnity" or any equivalent document, because only a copy of the Mortgage can
be delivered with the instrument of satisfaction or reconveyance, the Master
Servicer shall prepare, execute and deliver or cause to be prepared, executed
and delivered, on behalf of the Trust, such a document to the public recording
office.
As promptly as practicable subsequent to such transfer and assignment,
and in any event, within 30 days thereafter, the Master Servicer shall (I) cause
each Assignment of Mortgage to be in proper form for recording in the
appropriate public office for real property records within 30 days of the
Closing Date and (II) at the Sponsor's expense, cause to be delivered for
recording in the appropriate public office for real property records the
Assignments of the Mortgages to the Trustee, except that, with respect to any
Assignment of a Mortgage as to which the Master Servicer has not received the
information required to prepare such assignment in recordable form, the Master
Servicer's obligation to do so and to deliver the same for such recording shall
be as soon as
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practicable after receipt of such information and in any event within 30 days
after the receipt thereof.
In the case of Mortgage Loans that have been prepaid in full as of the
Closing Date, the Sponsor, in lieu of delivering the above documents to the
Trustee, or the Custodian on the Trustee's behalf, will cause the Master
Servicer to deposit in the Collection Account the portion of such payment that
is required to be deposited in the Collection Account pursuant to Section 3.08.
SECTION 2.02. Acceptance by the Trustee of the Mortgage Loans.
Subject to the provisions of the following paragraph, the Trustee declares that
it, or the Custodian as its agent, will hold the documents referred to in
Section 2.01 and the other documents delivered to it constituting the Mortgage
Files, and that it will hold such other assets as are included in the Trust
Fund, in trust for the exclusive use and benefit of all present and future
Certificateholders.
Upon execution and delivery of this document, the Trustee shall deliver
to the Sponsor and the Master Servicer a certification in the form of Exhibit M
hereto (the "Initial Certification") to the effect that, except as may be
specified in a list of exceptions attached thereto: (a) it, or the Custodian as
its agent, has received the original Mortgage Note relating to each of the
Mortgage Loans listed on the Mortgage Loan Schedule, and (b) each Mortgage Note
purports to be that of the Mortgagor.
Within 90 days after the execution and delivery of this Agreement, the
Trustee shall review, or cause the Custodian to review, the Mortgage Files in
its possession, and shall deliver to the Sponsor and the Master Servicer a
certification in the form of Exhibit N hereto (the "Final Certification") to the
effect that, as to each Mortgage Loan listed in the Mortgage Loan Schedule,
except as may be specified in a list of exceptions attached to such Final
Certification, such Mortgage File contains all of the items required to be
delivered pursuant to Section 2.01(b).
If, in the course of such review, the Trustee or the Custodian finds
any document constituting a part of a Mortgage File which does not meet the
requirements of Section 2.01 or is omitted from such Mortgage File, the Trustee
shall promptly so notify the Master Servicer, the Seller and the Sponsor, or
shall cause the Custodian to promptly so notify the Master Servicer, the Seller
and the Sponsor. In performing any such review, the Trustee or the Custodian may
conclusively rely on the purported genuineness of any such document and any
signature thereon. It is understood that the scope of the Trustee's or the
Custodian's review of the Mortgage Files is limited solely to confirming that
the documents listed in Section 2.01 have been received and further confirming
that any and all documents delivered pursuant to Section 2.01 have been executed
and relate to the Mortgage Loans identified in the Mortgage Loan Schedule.
Neither the Trustee nor the Custodian shall have any responsibility for
determining whether any document is valid and binding, whether the text of any
assignment or endorsement is in proper or recordable form, whether any document
has been recorded in accordance with the requirements of any applicable
jurisdiction, or whether a blanket assignment is permitted in any applicable
jurisdiction. The Master Servicer shall cause the Seller, in accordance with the
terms and provisions of Subsection 7.03 of the Sale Agreement, to promptly
correct or cure such defect within 90 days from the date it was so notified of
such defect and, if the Seller does not correct or cure such defect within such
period, the Master Servicer shall cause the Seller to either (a) substitute for
the related
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Mortgage Loan a Substitute Mortgage Loan, which substitution shall be
accomplished in the manner and subject to the conditions set forth in Section
2.03(c), or (b) purchase such Mortgage Loan from the Trustee at the Purchase
Price for such Mortgage Loan, in either case within 90 days from the date the
Seller was notified of such defect in writing; provided, however, that in no
event shall such a substitution occur more than two years from the Closing Date,
unless the Seller shall have provided to the Trustee an Opinion of Counsel to
the effect that such later substitution will not affect the REMIC status of
either REMIC.
The Trustee shall retain or shall cause the Custodian to retain
possession and custody of each Mortgage File in accordance with and subject to
the terms and conditions set forth herein. The Master Servicer shall promptly
deliver to the Trustee, upon the execution or, in the case of documents
requiring recording, receipt thereof, the originals of such other documents or
instruments constituting the Mortgage File as come into the possession of the
Master Servicer from time to time.
It is understood and agreed that the obligation of the Seller, pursuant
to Subsection 7.03 of the Sale Agreement, to substitute for or to purchase any
Mortgage Loan which does not meet the requirements of Section 2.01 shall
constitute the sole remedy respecting such defect available to the Trustee, the
Sponsor and any Certificateholder against the Seller.
The Trustee or the Custodian, on behalf of the Trustee, shall be under
no duty or obligation (i) 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 or (ii) to determine whether any
Mortgage File should include any of the documents specified in Section
2.01(b)(iv), (vi) and (vii).
SECTION 2.03. Representations, Warranties and Covenants of the
Seller and the Master Servicer.
(a) The Master Servicer hereby makes the following representations and
warranties to the Sponsor and the Trustee, as of the Closing Date:
(i) The Master Servicer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
Texas and has all licenses necessary to carry on its business as now
being conducted and is licensed, qualified and in good standing in each
of the states where a Mortgaged Property is located if the laws of such
state require licensing or qualification in order to conduct business
of the type conducted by the Master Servicer. The Master Servicer has
corporate power and authority to execute and deliver this Agreement and
to perform in accordance herewith; the execution, delivery and
performance of this Agreement (including all instruments of transfer to
be delivered pursuant to this Agreement) by the Master Servicer and the
consummation of the transactions contemplated hereby have been duly and
validly authorized. This Agreement, assuming due authorization,
execution and delivery by the other parties hereto, evidences the
valid, binding and enforceable obligation of the Master Servicer,
subject to applicable law except as enforceability may be limited by
(A) bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the enforcement of the
rights of creditors and (B) general principles
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of equity, whether enforcement is sought in a proceeding in equity or
at law. All requisite corporate action has been taken by the Master
Servicer to make this Agreement valid and binding upon the Master
Servicer in accordance with its terms.
(ii) No consent, approval, authorization or order is required
for the transactions contemplated by this Agreement from any court,
governmental agency or body, or federal or state regulatory authority
having jurisdiction over the Master Servicer is required or, if
required, such consent, approval, authorization or order has been or
will, prior to the Closing Date, be obtained.
(iii) The consummation of the transactions contemplated by
this Agreement are in the ordinary course of business of the Master
Servicer and will not result in the breach of any term or provision of
the charter or by-laws of the Master Servicer or result in the breach
of any term or provision of, or conflict with or constitute a default
under or result in the acceleration of any obligation under, any
agreement, indenture or loan or credit agreement or other instrument to
which the Master Servicer or its property is subject, or result in the
violation of any law, rule, regulation, order, judgment or decree to
which the Master Servicer or its property is subject.
(iv) There is no action, suit, proceeding or investigation
pending or, to the best knowledge of the Master Servicer, threatened
against the Master Servicer which, either individually or in the
aggregate, would result in any material adverse change in the business,
operations, financial condition, properties or assets of the Master
Servicer, or in any material impairment of the right or ability of the
Master Servicer to carry on its business substantially as now conducted
or which would draw into question the validity of this Agreement or the
Mortgage Loans or of any action taken or to be taken in connection with
the obligations of the Master Servicer contemplated herein, or which
would materially impair the ability of the Master Servicer to perform
under the terms of this Agreement.
(v) The Master Servicer is working to modify its computer and
other systems used in servicing the Mortgage Loans to operate in a
manner such that, on and after January 1, 2000, the Master Servicer can
service the Mortgage Loans in accordance with the terms of this
Agreement.
(b) The Seller has made certain representations and warranties with
respect to the Mortgage Loans in Subsection 7.01 of the Sale Agreement. The
Sponsor hereby assigns such representations and warranties (together with any
rights to cure breaches with respect thereto) to the Trustee for the benefit of
the Certificateholders.
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty made pursuant to Subsection 7.01 of the Sale
Agreement that materially and adversely affects the value of any Mortgage Loan
or the interests of the Certificateholders in any Mortgage Loan, the party
discovering such breach shall give prompt notice thereof to the other parties
hereto and to the Seller. In accordance with the terms and provisions of
Subsection 7.03 of the Sale Agreement, the Master Servicer shall cause the
Seller to, within 90 days of the earlier of its
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discovery or its receipt of written notice from any party of a breach of any
representation or warranty made pursuant to Subsection 7.01 of the Sale
Agreement which materially and adversely affects the value of any Mortgage Loan
or interests of the Certificateholders in any Mortgage Loan, cure such breach in
all material respects, and if such breach is not so cured, shall, (i) if such
action is taken within the two-year period following the Closing Date, remove
such Mortgage Loan from the Trust Fund and substitute in its place a Substitute
Mortgage Loan, in the manner and subject to the conditions set forth in this
Section 2.03(c); or (ii) purchase the affected Mortgage Loan or Mortgage Loans
from the Trustee at the Purchase Price in the manner set forth below.
With respect to each Substitute Mortgage Loan, the Master Servicer
shall cause the Seller to deliver to the Trustee, for the benefit of the
Certificateholders, the Mortgage Note, the Mortgage, the related Assignment of
Mortgage, and such other documents and agreements as are otherwise required by
Section 2.01, with the Mortgage Note endorsed and the Mortgage assigned as
required by Section 2.01. No substitution is permitted to be made in any
calendar month after the Determination Date for such month. Monthly Payments due
with respect to any Substitute Mortgage Loan in the month of substitution shall
not be part of the Trust Fund and will be retained by the Seller. For the month
of substitution, distributions to Certificateholders will include the Monthly
Payment due on any Defective Mortgage Loan for such month and thereafter the
Seller shall be entitled to retain all amounts received in respect of such
Defective Mortgage Loan.
The Master Servicer shall amend the Mortgage Loan Schedule for the
benefit of the Certificateholders to reflect the removal of a Defective Mortgage
Loan and the substitution of the Substitute Mortgage Loan or Loans and the
Master Servicer shall deliver the amended Mortgage Loan Schedule to the Trustee
and the Custodian. Upon such substitution, each Substitute Mortgage Loan shall
be subject to the terms of this Agreement in all respects, and the Seller shall
be deemed to have made to the Trustee with respect to such Substitute Mortgage
Loan, as of the date of substitution, the representations and warranties made
pursuant to Subsection 7.01 of the Sale Agreement. Upon any such substitution
and the deposit to the Collection Account of any required Substitution
Adjustment Amount (as described in the next paragraph) and receipt of a Request
for Release, the Trustee shall release, or shall direct the Custodian to
release, the Mortgage File relating to such Defective Mortgage Loan to the
Seller and shall execute and deliver at the Seller's direction such instruments
of transfer or assignment prepared by the Seller, in each case without recourse,
as shall be necessary to vest title in the Seller, or its designee, the
Trustee's interest in any Defective Mortgage Loan substituted for pursuant to
this Section 2.03(c).
For any month in which the Seller substitutes one or more Substitute
Mortgage Loans for one or more Defective Mortgage Loans, the Master Servicer
will determine the amount (if any) by which the aggregate principal balance of
all such Substitute Mortgage Loans as of the date of substitution is less than
the aggregate Stated Principal Balance of all such Defective Mortgage Loans
(after application of the principal portion of the Monthly Payments due in the
month of substitution). The amount of such shortage (the "Substitution
Adjustment Amount") plus an amount equal to the aggregate of any unreimbursed
Advances with respect to such Defective Mortgage Loans shall be deposited into
the Collection Account by the Seller on or before the Distribution Account
Deposit Date for the Distribution Date in the month succeeding the calendar
month during which the related Mortgage Loan is required to be purchased or
replaced hereunder.
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If the Seller repurchases a Defective Mortgage Loan, the Purchase Price
therefor shall be deposited in the Collection Account pursuant to Section
3.08(b)(vi) on or before the Distribution Account Deposit Date for the
Distribution Date in the month following the month during which the Seller
became obligated to repurchase or substitute for such Mortgage Loan and upon
such deposit of the Purchase Price, and receipt of a Request for Release, the
Trustee, or the Custodian on behalf of the Trustee, shall release the related
Mortgage File held for the benefit of the Certificateholders to the Seller, and
the Trustee shall execute and deliver at the Seller's direction such instruments
of transfer or assignment prepared by the Seller, in each case without recourse,
as shall be necessary to transfer title from the Trustee. It is understood and
agreed that the obligation of the Seller, pursuant to Subsection 7.03 of the
Sale Agreement, to cure, repurchase or substitute for any Mortgage Loan as to
which a breach has occurred and is continuing shall constitute the sole remedy
against the Seller respecting such breach available to Certificateholders, the
Sponsor or the Trustee on their behalf.
The representations and warranties made or assigned pursuant to this
Section 2.03 shall survive delivery of the respective Mortgage Files to the
Trustee for the benefit of the Certificateholders.
SECTION 2.04. Representations and Warranties of the Sponsor as to
the Mortgage Loans. The Sponsor hereby represents and warrants to the Trustee
with respect to each Mortgage Loan as of the date hereof or such other date set
forth herein that as of the Closing Date, and following the transfer of the
Mortgage Loans to it by the Seller, the Sponsor had good title to the Mortgage
Loans and the Mortgage Notes were subject to no offsets, defenses or
counterclaims.
The Sponsor hereby assigns, transfers and conveys to the Trustee all of
its rights with respect to the Mortgage Loans including, without limitation, the
representations and warranties of the Seller made pursuant to Subsection 7.01 of
the Sale Agreement, together with all rights of the Sponsor to require the
Seller to cure any breach thereof or to repurchase or substitute for any
affected Mortgage Loan in accordance with the Sale Agreement.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the Mortgage Files to the
Trustee. Upon discovery by the Sponsor or the Trustee of a breach of any of the
foregoing representations and warranties set forth in this Section 2.04, which
breach materially and adversely affects the interest of the Certificateholders,
the party discovering such breach shall give prompt written notice to the other
parties hereto and to each Rating Agency.
SECTION 2.05. Designation of Interests in REMIC. The Preliminary
Statement sets forth the designations for federal income tax purposes of all
interests created hereby. The "tax matters person" with respect to each REMIC
hereunder shall be the Holder of the applicable Residual Certificate. The Tax
Matters Person of each REMIC hereby appoints the Trustee as its agent to perform
all acts required to be performed by the Tax Matters Person and to prepare and
file all necessary tax forms and reports. Each REMIC's fiscal year shall be the
calendar year.
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SECTION 2.06. Designation of Start-up Day. The Closing Date is
hereby designated as the "start-up day" of the Master and Subsidiary REMICs
within the meaning of Section 860G(a)(9) of the Code.
SECTION 2.07. REMIC Certificate Maturity Date. Solely for purposes
of satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the
"latest possible maturity date" of each Class of uncertificated interests (other
than the Class R-I Certificates) in the Subsidiary REMIC and the Regular
Certificates is the Distribution Date in September 2031.
SECTION 2.08. Repurchases for Tax Violations. Upon discovery by the
Sponsor, the Seller, the Master Servicer, or the Trustee that any Mortgage Loan
does not constitute a "qualified mortgage" within the meaning of Section
860G(a)(3) of the Code, the party discovering such fact shall promptly (and in
any event within five Business Days of discovery) give written notice thereof to
the other parties. In connection therewith, the Trustee shall require the Seller
pursuant to the terms of the Sale Agreement, at the Seller's option, to either
(a) substitute, if the conditions in Section 2.03(c) with respect to
substitutions are satisfied, a Substitute Mortgage Loan for the affected
Mortgage Loan, or (b) purchase the affected Mortgage Loan within 90 days of such
discovery in the same manner as it would a Mortgage Loan for a breach of
representation or warranty made pursuant to Subsection 7.01 of the Sale
Agreement and in accordance with Section 2.03. The Trustee shall reconvey to the
Seller the Mortgage Loan to be released pursuant hereto in the same manner, and
on the same terms and conditions, as it would a Mortgage Loan purchased for
breach of a representation or warranty pursuant to Subsection 7.01 the Sale
Agreement and in accordance with Section 2.03.
SECTION 2.09. Execution and Delivery of Certificates. The Trustee
acknowledges the transfer and assignment to it of the Trust Fund and the
creation of the Trust, and, concurrently with such transfer and assignment, the
Trustee has executed and delivered to or upon the order of the Sponsor, the
Certificates in authorized denominations evidencing directly or indirectly the
entire ownership of the Trust. The Trustee agrees to hold the Trust Fund and
exercise the rights referred to above for the benefit of all present and future
Holders of the Certificates and to perform the duties set forth in this
Agreement to the end that the interests of the Holders of the Certificates may
be adequately and effectively protected.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Master Servicer to Service Mortgage Loans. For and on
behalf of the Certificateholders, the Master Servicer shall service and
administer the Mortgage Loans in accordance with the terms of this Agreement,
Customary Servicing Procedures, applicable law and the terms of the Mortgage
Notes and Mortgages. In connection with such servicing and administration, the
Master Servicer shall have full power and authority, acting alone and/or through
Servicers as provided in Section 3.02, to do or cause to be done any and all
things that it may deem necessary or desirable in connection with such servicing
and administration including, but not
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limited to, the power and authority, subject to the terms hereof, (a) to execute
and deliver, on behalf of the Certificateholders and the Trustee, customary
consents or waivers and other instruments and documents, (b) to consent to
transfers of any Mortgaged Property and assumptions of the Mortgage Notes and
related Mortgages (but only in the manner provided in this Agreement), (c) to
collect any Insurance Proceeds and other Liquidation Proceeds, and (d) to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan. The Master Servicer shall represent and
protect the interests of the Trust in the same manner as it protects its own
interests in mortgage loans in its own portfolio in any claim, proceeding or
litigation regarding a Mortgage Loan and shall not make or permit any
modification, waiver or amendment of any term of any Mortgage Loan, except as
provided pursuant to Section 3.21. Without limiting the generality of the
foregoing, the Master Servicer, in its own name or in the name of any Servicer
or the Sponsor and the Trustee, is hereby authorized and empowered by the
Sponsor and the Trustee, when the Master Servicer or the Servicer, as the case
may be, believes it appropriate in its reasonable judgment, to execute and
deliver, on behalf of the Trustee, the Sponsor, the Certificateholders or any of
them, any and all instruments of satisfaction or cancellation, or of partial or
full release or discharge, and all other comparable instruments, with respect to
the Mortgage Loans, and with respect to the Mortgaged Properties held for the
benefit of the Certificateholders. The Master Servicer shall prepare and deliver
to the Sponsor and/or the Trustee such documents requiring execution and
delivery by either or both of them as are necessary or appropriate to enable the
Master Servicer to service and administer the Mortgage Loans to the extent that
the Master Servicer is not permitted to execute and deliver such documents
pursuant to the preceding sentence. Upon receipt of such documents, the Sponsor
and/or the Trustee shall promptly execute such documents and deliver them to the
Master Servicer.
In accordance with the standards of the preceding paragraph, the Master
Servicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which Servicing Advances shall be reimbursable in the first instance
from related collections from the Mortgagors pursuant to Section 3.09, and
further as provided in Section 3.11. The costs incurred by the Master Servicer,
if any, in effecting the timely payments of taxes and assessments on the
Mortgaged Properties and related insurance premiums shall not, for the purpose
of calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balances of the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.
The relationship of the Master Servicer (and of any successor to the
Master Servicer as master servicer under this Agreement) to the Trustee under
this Agreement is intended by the parties to be that of an independent
contractor and not that of a joint venturer, partner or agent.
SECTION 3.02. Subservicing; Enforcement of the Obligations of
Servicers.
(a) The Master Servicer may arrange for the subservicing of any
Mortgage Loan by a Servicer pursuant to a Servicing Agreement; provided,
however, that such subservicing arrangement and the terms of the related
Servicing Agreement must provide for the servicing of such Mortgage Loan in a
manner consistent with the servicing arrangements contemplated hereunder.
Notwithstanding the provisions of any Servicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Master
Servicer and a Servicer or
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reference to actions taken through a Servicer or otherwise, the Master Servicer
shall remain obligated and liable to the Sponsor, the Trustee and the
Certificateholders for the servicing and administration of the Mortgage Loans in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such Servicing Agreements or arrangements
or by virtue of indemnification from the Servicer and to the same extent and
under the same terms and conditions as if the Master Servicer alone were
servicing and administering the Mortgage Loans. All actions of each Servicer
performed pursuant to the related Servicing Agreement shall be performed as
agent of the Master Servicer with the same force and effect as if performed
directly by the Master Servicer.
(b) For purposes of this Agreement, the Master Servicer shall be deemed
to have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by a Servicer regardless of whether such
payments are remitted by the Servicer to the Master Servicer.
(c) As part of its servicing activities hereunder, the Master Servicer,
for the benefit of the Trustee and the Certificateholders, shall use its best
reasonable efforts to enforce the obligations of each Servicer under the related
Servicing Agreement, to the extent that the non-performance of any such
obligation would have a material and adverse effect on a Mortgage Loan. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Servicing Agreements and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer, in its good faith business judgment, would require
were it the owner of the related Mortgage Loans. The Master Servicer shall pay
the costs of such enforcement at its own expense, and shall be reimbursed
therefor only (i) from a general recovery resulting from such enforcement to the
extent, if any, that such recovery exceeds all amounts due in respect of the
related Mortgage Loan or (ii) from a specific recovery of costs, expenses or
attorneys fees against the party against whom such enforcement is directed.
(d) Any Servicing Agreement entered into by the Master Servicer shall
provide that it may be assumed or terminated by the Trustee, if the Trustee has
assumed the duties of the Master Servicer, or any successor Master Servicer, at
the Trustee's or successor Master Servicer's option, as applicable, without cost
or obligation to the assuming or terminating party or the Trust Fund, upon the
assumption by such party of the obligations of the Master Servicer pursuant to
Section 8.05.
Any Servicing Agreement, and any other transactions or services
relating to the Mortgage Loans involving a Servicer, shall be deemed to be
between the Master Servicer and such Servicer alone, and the Trustee and the
Certificateholders shall not be deemed parties thereto and shall have no claims
or rights of action against, rights, obligations, duties or liabilities to or
with respect to the Servicer or its officers, directors or employees, except as
set forth in Section 3.01.
SECTION 3.03. Fidelity Bond; Errors and Omissions Insurance. The
Master Servicer shall maintain, at its own expense, a blanket fidelity bond and
an errors and omissions insurance policy, with broad coverage on all officers,
employees or other persons acting in any capacity requiring such persons to
handle funds, money, documents or papers relating to the Mortgage Loans. These
policies must insure the Master Servicer against losses resulting from
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dishonest or fraudulent acts committed by the Master Servicer's personnel, any
employees of outside firms that provide data processing services for the Master
Servicer, and temporary contract employees or student interns. Such fidelity
bond shall also protect and insure the Master Servicer against losses in
connection with the release or satisfaction of a Mortgage Loan without having
obtained payment in full of the indebtedness secured thereby. No provision of
this Section 3.03 requiring such fidelity bond and errors and omissions
insurance shall diminish or relieve the Master Servicer from its duties and
obligations as set forth in this Agreement. The minimum coverage under any such
bond and insurance policy shall be at least equal to the corresponding amounts
required by FNMA in the FNMA Servicing Guide or by FHLMC in the FHLMC Sellers' &
Servicers' Guide, as amended or restated from time to time, or in an amount as
may be permitted to the Master Servicer by express waiver of FNMA or FHLMC.
SECTION 3.04. Access to Certain Documentation. The Master Servicer
shall provide to the OTS and the FDIC and to comparable regulatory authorities
supervising Holders of Subordinate Certificates and the examiners and
supervisory agents of the OTS, the FDIC and such other authorities, access to
the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS and the FDIC. Such access shall be afforded without
charge, but only upon reasonable and prior written request and during normal
business hours at the offices designated by the Master Servicer. Nothing in this
Section 3.04 shall limit the obligation of the Master Servicer to observe any
applicable law and the failure of the Master Servicer to provide access as
provided in this Section 3.04 as a result of such obligation shall not
constitute a breach of this Section 3.04.
SECTION 3.05. Maintenance of Primary Mortgage Insurance Policy;
Claims. With respect to each Mortgage Loan (except with respect to loan numbers
22009815 and 26310847) with an LTV in excess of 80% or such other LTV as may be
required by law, the Master Servicer shall, without any cost to the Trust Fund,
maintain or cause the Mortgagor to maintain in full force and effect a Primary
Insurance Policy insuring that portion of the Mortgage Loan in excess of a
percentage in conformity with FNMA requirements. The Master Servicer shall pay
or shall cause the Mortgagor to pay the premium thereon on a timely basis, at
least until the LTV of such Mortgage Loan is reduced to 80% or such other LTV as
may be required by law. If such Primary Insurance Policy is terminated, the
Master Servicer shall obtain from another insurer a comparable replacement
policy, with a total coverage equal to the remaining coverage of such terminated
Primary Insurance Policy. If the insurer shall cease to be an insurer acceptable
to FNMA, the Master Servicer shall notify the Trustee in writing, it being
understood that the Master Servicer shall not have any responsibility or
liability for any failure to recover under the Primary Insurance Policy for such
reason. If the Master Servicer determines that recoveries under the Primary
Insurance Policy are jeopardized by the financial condition of the insurer, the
Master Servicer shall obtain from another insurer which meets the requirements
of this Section 3.05 a replacement insurance policy. The Master Servicer shall
not take any action that would result in noncoverage under any applicable
Primary Insurance Policy of any loss that, but for the actions of the Master
Servicer, would have been covered thereunder. In connection with any assumption
or substitution agreement entered into or to be entered into pursuant to Section
3.13, the Master Servicer shall promptly notify the insurer under the related
Primary Insurance Policy, if any, of such assumption or substitution of
liability in accordance with the terms of such Primary Insurance Policy and
shall take all actions which may be required by such insurer as a condition to
the continuation of coverage under such Primary Insurance Policy. If such
Primary Insurance Policy is terminated as a result of such
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assumption or substitution of liability, the Master Servicer shall obtain a
replacement Primary Insurance Policy as provided above.
In connection with its activities as master servicer, the Master
Servicer agrees to prepare and present, on behalf of itself, the Trustee and the
Certificateholders, claims to the insurer under any Primary Insurance Policy in
a timely fashion in accordance with the terms of such Primary Insurance Policy
and, in this regard, to take such action as shall be necessary to permit
recovery under any Primary Insurance Policy respecting a defaulted Mortgage
Loan. Pursuant to Section 3.09(a), any amounts collected by the Master Servicer
under any Primary Insurance Policy shall be deposited in the Escrow Account,
subject to withdrawal pursuant to Section 3.09(b).
SECTION 3.06. Rights of the Sponsor and the Trustee in Respect of
the Master Servicer. The Sponsor may, but is not obligated to, enforce the
obligations of the Master Servicer hereunder and may, but is not obligated to,
perform, or cause a designee to perform, any defaulted obligation of the Master
Servicer hereunder and in connection with any such defaulted obligation to
exercise the related rights of the Master Servicer hereunder; provided that the
Master Servicer shall not be relieved of any of its obligations hereunder by
virtue of such performance by the Sponsor or its designee. Neither the Trustee
nor the Sponsor shall have any responsibility or liability for any action or
failure to act by the Master Servicer nor shall the Trustee or the Sponsor be
obligated to supervise the performance of the Master Servicer hereunder or
otherwise.
SECTION 3.07. Trustee to Act as Master Servicer. If the Master
Servicer shall for any reason no longer be the Master Servicer hereunder
(including by reason of an Event of Default), the Trustee shall thereupon
assume, if it so elects, or shall appoint a successor Master Servicer to assume,
all of the rights and obligations of the Master Servicer hereunder arising
thereafter (except that the Trustee shall not be (a) liable for losses of the
Master Servicer pursuant to Section 3.12 or any acts or omissions of the
predecessor Master Servicer hereunder, (b) obligated to make Advances if it is
prohibited from doing so by applicable law or (c) deemed to have made any
representations and warranties of the Master Servicer hereunder). Any such
assumption shall be subject to Section 7.02. If the Master Servicer shall for
any reason no longer be the Master Servicer (including by reason of any Event of
Default), the Trustee or the successor Master Servicer may elect to succeed to
any rights and obligations of the Master Servicer under each Servicing Agreement
or may terminate each Servicing Agreement. If it has elected to assume the
Servicing Agreement, the Trustee or the successor Master Servicer shall be
deemed to have assumed all of the Master Servicer's interest therein and to have
replaced the Master Servicer as a party to any Servicing Agreement entered into
by the Master Servicer as contemplated by Section 3.02 to the same extent as if
the Servicing Agreement had been assigned to the assuming party except that the
Master Servicer shall not be relieved of any liability or obligations under any
such Servicing Agreement.
The Master Servicer shall, upon request of the Trustee, but at the
expense of the Master Servicer, deliver to the assuming party all documents and
records relating to each Servicing Agreement or substitute servicing agreement
and the Mortgage Loans then being serviced thereunder and an accounting of
amounts collected or held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of such substitute Servicing Agreement to the
assuming party.
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SECTION 3.08. Collection of Mortgage Loan Payments; Collection
Account and Distribution Account.
(a) Continuously from the date hereof until the principal and interest
on all Mortgage Loans are paid in full, the Master Servicer will proceed
diligently, in accordance with this Agreement, to collect all payments due under
each of the Mortgage Loans when the same shall become due and payable. Further,
the Master Servicer will in accordance with all applicable law and Customary
Servicing Procedures ascertain and estimate taxes, assessments, fire and hazard
insurance premiums, mortgage insurance premiums and all other charges that, as
provided in any Mortgage, will become due and payable to the end that the
installments payable by the Mortgagors will be sufficient to pay such charges as
and when they become due and payable. Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive any late payment charge or any
prepayment charge or penalty interest in connection with the prepayment of a
Mortgage Loan and (ii) extend the due dates for payments due on a Mortgage Note
for a period not greater than 120 days; provided, however, that the Master
Servicer cannot extend the maturity of any such Mortgage Loan past the date on
which the final payment is due on the latest maturing Mortgage Loan as of the
Cut-Off Date. In the event of any such arrangement, the Master Servicer shall
make Monthly Advances on the related Mortgage Loan in accordance with the
provisions of Section 3.20 during the scheduled period in accordance with the
amortization schedule of such Mortgage Loan without modification thereof by
reason of such arrangements. The Master Servicer shall not be required to
institute or join in litigation with respect to collection of any payment
(whether under a Mortgage, Mortgage Note or otherwise or against any public or
governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law.
(b) The Master Servicer shall establish and maintain the Collection
Account. The Master Servicer shall deposit or cause to be deposited into the
Collection Account on a daily basis within one Business Day of receipt, except
as otherwise specifically provided herein, the following payments and
collections remitted by Servicers or received by it in respect of Mortgage Loans
subsequent to the Cut-Off Date (other than in respect of principal and interest
due on the Mortgage Loans on or before the Cut-Off Date) and the following
amounts required to be deposited hereunder:
(i) all payments on account of principal of the Mortgage
Loans, including Principal Prepayments;
(ii) all payments on account of interest on the Mortgage
Loans, net of the Master Servicing Fee;
(iii) (A) all Insurance Proceeds and Liquidation Proceeds,
other than Insurance Proceeds to be (1) applied to the restoration or
repair of the Mortgaged Property, (2) released to the Mortgagor in
accordance with Customary Servicing Procedures or (3) required to be
deposited to an Escrow Account pursuant to Section 3.09(a) and (B) any
Insurance Proceeds released from an Escrow Account pursuant to Section
3.09(b)(iv);
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(iv) any amount required to be deposited by the Master
Servicer pursuant to Section 3.08(d) in connection with any losses on
Permitted Investments with respect to the Collection Account;
(v) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.14;
(vi) all Purchase Prices and all Substitution Adjustment
Amounts received by the Master Servicer;
(vii) all Monthly Advances made by the Master Servicer
pursuant to Section 3.20 and any payments of Compensating Interest; and
(viii) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Master Servicer shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of prepayment penalties,
late payment charges or assumption fees, if collected, need not be remitted by
the Master Servicer. In the event that the Master Servicer shall remit any
amount not required to be remitted, it may at any time withdraw or direct the
institution maintaining the Collection Account to withdraw such amount from the
Collection Account, any provision herein to the contrary notwithstanding. The
Master Servicer shall maintain adequate records with respect to all withdrawals
made pursuant to this Section 3.08. All funds required to be deposited in the
Collection Account shall be held in trust for the Certificateholders until
withdrawn in accordance with Section 3.11.
(c) The Trustee shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Trustee shall, promptly upon
receipt, deposit in the Distribution Account and retain therein the following:
(i) the aggregate amount remitted by the Master Servicer to
the Trustee pursuant to Section 3.11(a)(viii);
(ii) any amount paid by the Master Servicer pursuant to
Section 3.08(d) in connection with any losses on Permitted Investments
with respect to the Distribution Account; and
(iii) any other amounts deposited hereunder which are required
to be deposited in the Distribution Account.
If the Master Servicer shall remit any amount not required to be
remitted, it may at any time direct the Trustee to withdraw such amount from the
Distribution Account, any provision herein to the contrary notwithstanding. Such
direction may be accomplished by delivering an Officer's Certificate to the
Trustee which describes the amounts deposited in error in the Distribution
Account. All funds required to be deposited in the Distribution Account shall be
held by the Trustee in trust for the Certificateholders until disbursed in
accordance with this Agreement or
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withdrawn in accordance with Section 3.11. In no event shall the Trustee incur
liability for withdrawals from the Distribution Account at the direction of the
Master Servicer.
(d) Each institution at which the Collection Account or the
Distribution Account is maintained shall invest the funds therein as directed in
writing by the Master Servicer (with respect to the Collection Account) or the
Trustee (with respect to the Distribution Account) in Permitted Investments,
which shall mature not later than (i) in the case of the Collection Account, the
Business Day next preceding the related Distribution Account Deposit Date
(except that if such Permitted Investment is an obligation of the institution
that maintains such account, then such Permitted Investment shall mature not
later than such Distribution Account Deposit Date) and (ii) in the case of the
Distribution Account, the Business Day next preceding the Distribution Date
(except that if such Permitted Investment is an obligation of the institution
that maintains such account, then such Permitted Investment shall mature not
later than such Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity. All such Permitted Investments shall be made
in the name of the Trustee, for the benefit of the Certificateholders. All
income and gain (net of any losses) realized from any such investment of funds
on deposit in the Collection Account shall be for the benefit of the Master
Servicer as servicing compensation and shall be retained by it monthly as
provided herein. All income or gain (net of any losses) realized from any such
investment of funds on deposit in the Distribution Account shall be for the
benefit of the Trustee as additional compensation and shall be retained by it
monthly as provided herein. The amount of any losses realized in the Collection
Account or the Distribution Account incurred in any such account in respect of
any such investments shall promptly be deposited by the Master Servicer in the
Collection Account or by the Trustee in the Distribution Account, as applicable.
(e) The Master Servicer shall give notice to the Trustee of any
proposed change of the location of the Collection Account not later than 30 days
and not more than 45 days prior to any change thereof. The Trustee shall give
notice to the Master Servicer, the Seller, each Rating Agency and the Sponsor of
any proposed change of the location of the Distribution Account not later than
30 days and not more than 45 days prior to any change thereof. The creation of
any Collection Account shall be evidenced by a certification substantially in
the form of Exhibit G hereto. A copy of such certification or letter agreement
shall be furnished to the Trustee.
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
(a) To the extent required by the related Mortgage Note and not
violative of current law, the Master Servicer shall segregate and hold all funds
collected and received pursuant to each Mortgage Loan which constitute Escrow
Payments in trust separate and apart from any of its own funds and general
assets and for such purpose shall establish and maintain one or more escrow
accounts (collectively, the "Escrow Account"), titled "NationsBanc Mortgage
Corporation, in trust for registered holders of NationsBanc ▇▇▇▇▇▇▇▇▇▇ Funding
Corp. Mortgage Pass-Through Certificates, Series 1998-1 and various Mortgagors".
The Escrow Account shall be established with a commercial bank, a savings bank
or a savings and loan association that meets the guidelines set forth by FNMA or
FHLMC as an eligible institution for escrow accounts and which is a member of
the Automated Clearing House. In any case, the Escrow Account shall be insured
by the FDIC to the fullest extent permitted by law. The Master Servicer shall
deposit in the Escrow Account on a
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daily basis, and retain therein: (i) all Escrow Payments collected on account of
the Mortgage Loans, for the purpose of effecting timely payment of any such
taxes as required under the terms of this Agreement, (ii) all amounts
representing proceeds of any hazard insurance policy which are to be applied to
the restoration or repair of any Mortgaged Property and (iii) all amounts
representing proceeds of any Primary Insurance Policy. Nothing herein shall
require the Master Servicer to compel a Mortgagor to establish an Escrow Account
in violation of applicable law.
(b) Withdrawals of amounts so collected from the Escrow Accounts may be
made by the Master Servicer only (i) to effect timely payment of taxes,
assessments, mortgage insurance premiums, fire and hazard insurance premiums,
condominium or PUD association dues, or comparable items constituting Escrow
Payments for the related Mortgage, (ii) to reimburse the Master Servicer out of
related Escrow Payments made with respect to a Mortgage Loan for any Servicing
Advance made by the Master Servicer pursuant to Section 3.09(c) with respect to
such Mortgage Loan, (iii) to refund to any Mortgagor any sums determined to be
overages, (iv) for transfer to the Collection Account upon default of a
Mortgagor or in accordance with the terms of the related Mortgage Loan and if
permitted by applicable law, (v) for application to restore or repair the
Mortgaged Property, (vi) to pay to the Mortgagor, to the extent required by law,
any interest paid on the funds deposited in the Escrow Account, (vii) to pay to
itself any interest earned on funds deposited in the Escrow Account (and not
required to be paid to the Mortgagor), (viii) to the extent permitted under the
terms of the related Mortgage Note and applicable law, to pay late fees with
respect to any Monthly Payment which is received after the applicable grace
period, (ix) to withdraw suspense payments that are deposited into the Escrow
Account, (x) to withdraw any amounts inadvertently deposited in the Escrow
Account or (xi) to clear and terminate the Escrow Account upon the termination
of this Agreement in accordance with Section 10.01. Any Escrow Account shall not
be a part of the Trust Fund.
(c) With respect to each Mortgage Loan, the Master Servicer shall
maintain accurate records reflecting the status of taxes, assessments and other
charges which are or may become a lien upon the Mortgaged Property and the
status of Primary Insurance Policy premiums and fire and hazard insurance
coverage. The Master Servicer shall obtain, from time to time, all bills for the
payment of such charges (including renewal premiums) and shall effect payment
thereof prior to the applicable penalty or termination date and at a time
appropriate for securing maximum discounts allowable, employing for such purpose
deposits of the Mortgagor in the Escrow Account, if any, which shall have been
estimated and accumulated by the Master Servicer in amounts sufficient for such
purposes, as allowed under the terms of the Mortgage. To the extent that a
Mortgage does not provide for Escrow Payments, the Master Servicer shall
determine that any such payments are made by the Mortgagor. The Master Servicer
assumes full responsibility for the timely payment of all such bills and shall
effect timely payments of all such bills irrespective of each Mortgagor's
faithful performance in the payment of same or the making of the Escrow
Payments. The Master Servicer shall advance any such payments that are not
timely paid, but the Master Servicer shall be required so to advance only to the
extent that such Servicing Advances, in the good faith judgment of the Master
Servicer, will be recoverable by the Master Servicer out of Insurance Proceeds,
Liquidation Proceeds or otherwise.
SECTION 3.10. Access to Certain Documentation and Information
Regarding the Mortgage Loans. The Master Servicer shall afford the Trustee
reasonable access to all records and
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documentation regarding the Mortgage Loans and all accounts, insurance
information and other matters relating to this Agreement, such access being
afforded without charge, but only upon reasonable request and during normal
business hours at the office designated by the Master Servicer.
Upon reasonable advance notice in writing, the Master Servicer will
provide to each Certificateholder which is a savings and loan association, bank
or insurance company certain reports and reasonable access to information and
documentation regarding the Mortgage Loans sufficient to permit such
Certificateholder to comply with applicable regulations of the OTS or other
regulatory authorities with respect to investment in the Certificates; provided
that the Master Servicer shall be entitled to be reimbursed by each such
Certificateholder for actual expenses incurred by the Master Servicer in
providing such reports and access.
SECTION 3.11. Permitted Withdrawals from the Collection Account and
Distribution Account.
(a) The Master Servicer may from time to time make withdrawals from the
Collection Account for the following purposes:
(i) to pay to the Master Servicer (to the extent not
previously retained), the servicing compensation to which it is
entitled pursuant to Section 3.17, and to pay to the Master Servicer,
as additional master servicing compensation, earnings on or investment
income with respect to funds in or credited to the Collection Account;
(ii) to reimburse the Master Servicer for unreimbursed
Advances made by it, such right of reimbursement pursuant to this
clause (ii) being limited to amounts received on the Mortgage Loan(s)
in respect of which any such Advance was made;
(iii) to reimburse the Master Servicer for any Nonrecoverable
Advance previously made, it being understood that, in the case of any
such reimbursement, the Master Servicer's right thereto shall be prior
to the rights of the Trust unless the Master Servicer is also the
Seller and the Seller is required to purchase a Mortgage Loan pursuant
to Section 2.02, 2.03 or 2.08, in which case the Master Servicer's
right to such reimbursement shall be subsequent to the payment to the
Trust of the Purchase Price and all other amounts required to be paid
to the Trust with respect to such Mortgage Loan;
(iv) to reimburse the Master Servicer for Insured Expenses
from the related Insurance Proceeds;
(v) to pay to the purchaser, with respect to each Mortgage
Loan or REO Property that has been purchased pursuant to Section 2.02,
2.03 or 2.08, all amounts received thereon after the date of such
purchase;
(vi) to reimburse the Master Servicer or the Sponsor for
expenses incurred by any of them and reimbursable pursuant to Section
7.03;
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(vii) to withdraw any amount deposited in the Collection
Account and not required to be deposited therein;
(viii) on or prior to the Distribution Account Deposit Date,
to withdraw an amount equal to the related Available Funds, the related
Trustee Fee and any other amounts due to the Trustee under this
Agreement for such Distribution Date, to the extent on deposit, and
remit such amount to the Trustee for deposit in the Distribution
Account; and
(ix) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 10.01.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to clauses (i), (ii), (iv) and
(v). Prior to making any withdrawal from the Collection Account pursuant to
clause (iii), the Master Servicer shall deliver to the Trustee an Officer's
Certificate of a Servicing Officer indicating the amount of any previous Advance
determined by the Master Servicer to be a Nonrecoverable Advance and identifying
the related Mortgage Loan(s) and their respective portions of such
Nonrecoverable Advance.
(b) The Trustee shall withdraw funds from the Distribution Account for
distributions to Certificateholders in the manner specified in this Agreement.
In addition, the Trustee may from time to time make withdrawals from the
Distribution Account for the following purposes:
(i) to pay to itself the Trustee Fee and any other amounts due
to the Trustee under this Agreement for the related Distribution Date;
(ii) to pay to itself as additional compensation earnings on
or investment income with respect to funds in the Distribution Account;
(iii) to withdraw and return to the Master Servicer any amount
deposited in the Distribution Account and not required to be deposited
therein; and
(iv) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 10.01.
SECTION 3.12. Maintenance of Hazard Insurance. The Master Servicer
shall cause to be maintained for each Mortgage Loan fire and hazard insurance
with extended coverage customary in the area where the Mortgaged Property is
located in an amount which is at least equal to the lesser of (a) the full
insurable value of the Mortgaged Property or (b) the greater of (i) the
outstanding principal balance owing on the Mortgage Loan and (ii) an amount such
that the proceeds of such insurance shall be sufficient to avoid the application
to the Mortgagor or loss payee of any coinsurance clause under the policy. If
the Mortgaged Property is in an area identified in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) the Master Servicer will cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration and the requirements of FNMA
or FHLMC. The Master Servicer
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shall also maintain on REO Property, fire and hazard insurance with extended
coverage in an amount which is at least equal to the maximum insurable value of
the improvements which are a part of such property, liability insurance and, to
the extent required, flood insurance in an amount required above. Any amounts
collected by the Master Servicer under any such policies (other than amounts to
be deposited in the Escrow Account and applied to the restoration or repair of
the property subject to the related Mortgage or property acquired in liquidation
of the Mortgage Loan, or to be released to the Mortgagor in accordance with
Customary Servicing Procedures) shall be deposited in the Collection Account,
subject to withdrawal pursuant to Section 3.11(a). It is understood and agreed
that no earthquake or other additional insurance need be required by the Master
Servicer of any Mortgagor or maintained on REO Property, other than pursuant to
such applicable laws and regulations as shall at any time be in force and as
shall require such additional insurance. All policies required hereunder shall
be endorsed with standard mortgagee clauses with loss payable to the Master
Servicer, and shall provide for at least 30 days prior written notice of any
cancellation, reduction in amount or material change in coverage to the Master
Servicer.
The hazard insurance policies for each Mortgage Loan secured by a unit
in a condominium development or planned unit development shall be maintained
with respect to such Mortgage Loan and the related development in a manner which
is consistent with FNMA requirements.
SECTION 3.13. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.13, when any
Mortgaged Property subject to a Mortgage has been conveyed by the Mortgagor, the
Master Servicer shall use reasonable efforts, to the extent that it has actual
knowledge of such conveyance, to enforce any due-on-sale clause contained in any
Mortgage Note or Mortgage, to the extent permitted under applicable law and
governmental regulations, but only to the extent that such enforcement will not
adversely affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Master Servicer is not required to exercise
such rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise required under such Mortgage Note or Mortgage as a condition to such
transfer. If (i) the Master Servicer is prohibited by law from enforcing any
such due-on-sale clause, (ii) coverage under any Required Insurance Policy would
be adversely affected, (iii) the Mortgage Note does not include a due-on-sale
clause or (iv) nonenforcement is otherwise permitted hereunder, the Master
Servicer is authorized, subject to Section 3.13(b), to take or enter into an
assumption and modification agreement from or with the Person to whom such
Mortgaged Property has been or is about to be conveyed, pursuant to which such
Person becomes liable under the Mortgage Note and, unless prohibited by
applicable state law, the Mortgagor remains liable thereon; provided that the
Mortgage Loan shall continue to be covered (if so covered before the Master
Servicer enters such agreement) by the applicable Required Insurance Policies.
The Master Servicer, subject to Section 3.13(b), is also authorized with the
prior approval of the insurers under any Required Insurance Policies to enter
into a substitution of liability agreement with such Person, pursuant to which
the original Mortgagor is released from liability and such Person is substituted
as Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Master Servicer shall not be deemed to be in default under this
Section 3.13 by reason of any transfer or assumption
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which the Master Servicer reasonably believes it is restricted by law from
preventing, for any reason whatsoever.
(b) Subject to the Master Servicer's duty to enforce any due-on-sale
clause to the extent set forth in Section 3.13(a), in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption agreement or modification agreement or supplement
to the Mortgage Note or Mortgage that requires the signature of the Trustee, or
if an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Mortgage Loan, the Master Servicer shall prepare
and deliver or cause to be prepared and delivered to the Trustee for signature
and shall direct, in writing, the Trustee to execute the assumption agreement
with the Person to whom the Mortgaged Property is to be conveyed and such
modification agreement or supplement to the Mortgage Note or Mortgage or other
instruments as are reasonable or necessary to carry out the terms of the
Mortgage Note or Mortgage or otherwise to comply with any applicable laws
regarding assumptions or the transfer of the Mortgaged Property to such Person.
In no event shall the Trustee incur liability for executing any document under
this Section 3.13 at the direction of the Master Servicer. In connection with
any such assumption, no material term of the Mortgage Note may be changed. In
addition, the substitute Mortgagor and the Mortgaged Property must be acceptable
to the Master Servicer in accordance with its underwriting standards as then in
effect. Together with each such substitution, assumption or other agreement or
instrument delivered to the Trustee for execution by it, the Master Servicer
shall deliver an Officer's Certificate signed by a Servicing Officer stating
that the requirements of this subsection have been met. The Master Servicer
shall notify the Trustee that any such substitution or assumption agreement has
been completed by forwarding to the Trustee (or at the direction of the Trustee,
the Custodian) the original of such substitution or assumption agreement, which
in the case of the original shall be added to the related Mortgage File and
shall, for all purposes, be considered a part of such Mortgage File to the same
extent as all other documents and instruments constituting a part thereof. Any
fee collected by the Master Servicer for entering into an assumption or
substitution of liability agreement may be retained by the Master Servicer as
additional master servicing compensation. Notwithstanding the foregoing, to the
extent permissible under applicable law and at the request of the Master
Servicer, the Trustee shall execute and deliver to the Master Servicer any
powers of attorney and other documents prepared by the Master Servicer that are
reasonably necessary or appropriate to enable the Master Servicer to execute any
assumption agreement or modification agreement required to be executed by the
Trustee under this Section 3.13.
SECTION 3.14. Realization Upon Defaulted Mortgage Loans; REO
Property. The Master Servicer shall use reasonable efforts to foreclose upon or
otherwise comparably convert the ownership of 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. In
connection with such foreclosure or other conversion, the Master Servicer shall
follow Customary Servicing Procedures and shall meet the requirements of the
insurer under any Required Insurance Policy. Notwithstanding the foregoing, the
Master Servicer shall not be required to expend its own funds in connection with
any foreclosure or towards the restoration of any Mortgaged Property unless it
shall determine (a) that such restoration and/or foreclosure will increase the
proceeds of liquidation of the Mortgage Loan after reimbursement to itself of
such expenses and (b) that such expenses will be recoverable to it through
proceeds of the liquidation of
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the Mortgage Loan (respecting which it shall have priority for purposes of
withdrawals from the Collection Account). Any such expenditures shall constitute
Servicing Advances for purposes of this Agreement.
The decision of the Master Servicer to foreclose on a defaulted
Mortgage Loan shall be subject to a determination by the Master Servicer that
the proceeds of such foreclosure would exceed the costs and expenses of bringing
such a proceeding.
With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee for the benefit of the Certificateholders,
or its nominee, on behalf of the Certificateholders. The Trustee's name shall be
placed on the title to such REO Property solely as the Trustee hereunder and not
in its individual capacity. The Master Servicer shall ensure that the title to
such REO Property references the Agreement and the Trustee's capacity hereunder.
Pursuant to its efforts to sell such REO Property, the Master Servicer shall
either itself or through an agent selected by the Master Servicer manage,
conserve, protect and operate such REO Property in the same manner that it
manages, conserves, protects and operates other foreclosed property for its own
account and in the same manner that similar property in the same locality as the
REO Property is managed. Incident to its conservation and protection of the
interests of the Certificateholders, the Master Servicer may rent the same, or
any part thereof, as the Master Servicer deems to be in the best interest of the
Certificateholders for the period prior to the sale of such REO Property. The
Master Servicer shall prepare for and deliver to the Trustee a statement with
respect to each REO Property that has been rented, if any, showing the aggregate
rental income received and all expenses incurred in connection with the
management and maintenance of such REO Property at such times as is necessary to
enable the Trustee to comply with the reporting requirements of the REMIC
Provisions; provided, however, that the Master Servicer shall have no duty to
rent any REO Property on behalf of the Trust. The net monthly rental income, if
any, from such REO Property shall be deposited in the Collection Account no
later than the close of business on each Determination Date. The Master Servicer
shall perform the tax reporting and withholding required by Sections 1445 and
6050J of the Code with respect to foreclosures and abandonments, the tax
reporting required by Section 6050H of the Code with respect to the receipt of
mortgage interest from individuals and, if required by Section 6050P of the Code
with respect to the cancellation of indebtedness by certain financial entities,
by preparing such tax and information returns as may be required, in the form
required. The Master Servicer shall deliver copies of such reports to the
Trustee.
If the Trust acquires any Mortgaged Property as described above or
otherwise in connection with a default or a default which is reasonably
foreseeable on a Mortgage Loan, the Master Servicer shall dispose of such
Mortgaged Property prior to three calendar years following the year of its
acquisition by the Trust (the "REO Disposition Period") unless (a) the Trustee
shall have been supplied by the Master Servicer with an Opinion of Counsel to
the effect that the holding by the Trust of such Mortgaged Property subsequent
to the REO Disposition Period will not result in the imposition of taxes on
"prohibited transactions" on the Subsidiary REMIC (as defined in Section 860F of
the Code) or cause the Subsidiary REMIC to fail to qualify as a REMIC at any
time that any Certificates are outstanding, or (b) the Trustee (at the Master
Servicer's expense) or the Master Servicer shall have applied for, prior to the
expiration of the REO Disposition Period, an extension of the REO Disposition
Period in the manner contemplated by Section 856(e)(3) of the Code. If
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such an Opinion of Counsel is provided or such an exemption is obtained, the
Trust may continue to hold such Mortgaged Property (subject to any conditions
contained in such Opinion of Counsel) for the applicable period. Notwithstanding
any other provision of this Agreement, no Mortgaged Property acquired by the
Trust shall be rented (or allowed to continue to be rented) or otherwise used
for the production of income by or on behalf of the Trust in such a manner or
pursuant to any terms that would (i) cause such Mortgaged Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or (ii) subject the REMIC to the imposition of any federal, state or
local income taxes on the income earned from such Mortgaged Property under
Section 860G(c) of the Code or otherwise, unless the Master Servicer has agreed
to indemnify and hold harmless the Trust with respect to the imposition of any
such taxes. The Master Servicer shall identify to the Trustee any Mortgaged
Property held by the Trust for 30 months for which no plans to dispose of such
Mortgaged Property by the Master Servicer have been made. After delivery of such
identification, the Master Servicer shall proceed to dispose of any such
Mortgaged Property by holding a commercially reasonable auction for such
property.
The income earned from the management of any REO Properties, net of
reimbursement to the Master Servicer for expenses incurred (including any
property or other taxes) in connection with such management and net of
unreimbursed Master Servicing Fees, Monthly Advances and Servicing Advances,
shall be applied to the payment of principal of and interest on the related
defaulted Mortgage Loans (solely for the purposes of allocating principal and
interest, interest shall be treated as accruing as though such Mortgage Loans
were still current) and all such income shall be deemed, for all purposes in
this Agreement, to be payments on account of principal and interest on the
related Mortgage Notes and shall be deposited into the Collection Account. To
the extent the net income received during any calendar month is in excess of the
amount attributable to amortizing principal and accrued interest at the related
Mortgage Rate on the related Mortgage Loan for such calendar month, such excess
shall be considered to be a partial prepayment of principal of the related
Mortgage Loan.
The proceeds from any liquidation of a Mortgage Loan, as well as any
income from an REO Property, will be applied in the following order of priority:
first, to reimburse the Master Servicer for any related unreimbursed Servicing
Advances and Master Servicing Fees; second, to reimburse the Master Servicer for
any unreimbursed Monthly Advances and to reimburse the Collection Account for
any Nonrecoverable Advances (or portions thereof) that were previously withdrawn
by the Master Servicer pursuant to Section 3.11(a)(iii) that related to such
Mortgage Loan; third, to accrued and unpaid interest (to the extent no Monthly
Advance has been made for such amount or any such Monthly Advance has been
reimbursed) on the Mortgage Loan or related REO Property, at the Mortgage Rate
to the Due Date occurring in the month in which such amounts are required to be
distributed; and fourth, as a recovery of principal of the Mortgage Loan. Excess
Proceeds, if any, from the liquidation of a Liquidated Mortgage Loan will be
retained by the Master Servicer as additional servicing compensation pursuant to
Section 3.17.
SECTION 3.15. Trustee to Cooperate; Release of Mortgage Files. Upon
the payment in full of any Mortgage Loan, or the receipt by the Master Servicer
of a notification that payment in full will be escrowed in a manner customary
for such purposes, the Master Servicer will immediately notify the Trustee (or,
at the direction of the Trustee, the Custodian) by delivering, or causing to be
delivered, two copies (one of which will be returned to the Master Servicer with
the
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Mortgage File) of a Request for Release (which may be delivered in an electronic
format acceptable to the Trustee and the Master Servicer). Upon receipt of such
request, the Trustee or the Custodian, as applicable, shall within seven
Business Days release the related Mortgage File to the Master Servicer. The
Trustee shall at the Master Servicer's direction execute and deliver to the
Master Servicer the request for reconveyance, deed of reconveyance or release or
satisfaction of mortgage or such instrument releasing the lien of the Mortgage,
in each case provided by the Master Servicer, together with the Mortgage Note
with written evidence of cancellation thereon. Expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be chargeable
to the related Mortgagor. From time to time and as shall be appropriate for the
servicing or foreclosure of any Mortgage Loan, including for such purpose
collection under any policy of flood insurance, any fidelity bond or errors or
omissions policy, or for the purposes of effecting a partial release of any
Mortgaged Property from the lien of the Mortgage or the making of any
corrections to the Mortgage Note or the Mortgage or any of the other documents
included in the Mortgage File, the Trustee or the Custodian, as applicable,
shall, upon delivery to the Trustee (or, at the direction of the Trustee, the
Custodian) of a Request for Release signed by a Servicing Officer, release the
Mortgage File within seven Business Days to the Master Servicer. Subject to the
further limitations set forth below, the Master Servicer shall cause the
Mortgage File so released to be returned to the Trustee or the Custodian, as
applicable, when the need therefor by the Master Servicer no longer exists,
unless the Mortgage Loan is liquidated and the proceeds thereof are deposited in
the Collection Account, in which case the Master Servicer shall deliver to the
Trustee or the Custodian, as applicable a Request for Release, signed by a
Servicing Officer.
The Trustee shall execute and deliver to the Master Servicer any powers
of attorney and other documents prepared by the Master Servicer that are
reasonably necessary or appropriate to enable the Master Servicer to carry out
its servicing and administrative duties under this Agreement, upon the request
of the Master Servicer. In addition, upon prepayment in full of any Mortgage
Loan or the receipt of notice that funds for such purpose have been placed in
escrow, the Master Servicer is authorized to give, as attorney-in-fact for the
Trustee and the mortgagee under the Mortgage, an instrument of satisfaction (or
Assignment of Mortgage without recourse) regarding the Mortgaged Property
relating to such Mortgage Loan, which instrument of satisfaction or Assignment
of Mortgage, as the case may be, shall be delivered to the Person entitled
thereto against receipt of the prepayment in full. In lieu of executing such
satisfaction or Assignment of Mortgage, or if another document is required to be
executed by the Trustee, the Master Servicer may deliver or cause to be
delivered to the Trustee, for signature, as appropriate, any court pleadings,
requests for trustee's sale or other documents necessary to effectuate such
foreclosure or any legal action brought to obtain judgment against the Mortgagor
on the Mortgage Note or the Mortgage or to obtain a deficiency judgment or to
enforce any other remedies or rights provided by the Mortgage Note or the
Mortgage or otherwise available at law or in equity.
SECTION 3.16. Documents, Records and Funds in Possession of the
Master Servicer to be Held for the Trustee. The Master Servicer shall transmit
to the Trustee or, at the direction of the Trustee, the Custodian as required by
this Agreement all documents and instruments in respect of a Mortgage Loan
coming into the possession of the Master Servicer from time to time and shall
account fully to the Trustee for any funds received by the Master Servicer or
which otherwise are collected by the Master Servicer as Liquidation Proceeds or
Insurance Proceeds in respect of any Mortgage Loan. The documents constituting
the Servicing File shall be held by the
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Master Servicer as custodian and bailee for the Trustee. All Mortgage Files and
funds collected or held by, or under the control of, the Master Servicer in
respect of any Mortgage Loans, whether from the collection of principal and
interest payments or from Liquidation Proceeds, including but not limited to,
any funds on deposit in the Collection Account, shall be held by the Master
Servicer for and on behalf of the Trustee and shall be and remain the sole and
exclusive property of the Trustee, subject to the applicable provisions of this
Agreement. The Master Servicer also agrees that it shall not knowingly create,
incur or subject any Mortgage File or any funds that are deposited in the
Collection Account, Distribution Account or any Escrow Account, or any funds
that otherwise are or may become due or payable to the Trustee for the benefit
of the Certificateholders, to any claim, lien, security interest, judgment,
levy, writ of attachment or other encumbrance created by the Master Servicer, or
assert by legal action or otherwise any claim or right of setoff against any
Mortgage File or any funds collected on, or in connection with, a Mortgage Loan,
except, however, that the Master Servicer shall be entitled to set off against
and deduct from any such funds any amounts that are properly due and payable to
the Master Servicer under this Agreement.
SECTION 3.17. Servicing Compensation. The Master Servicer shall be
entitled out of each payment of interest on a Mortgage Loan (or portion thereof)
included in the Trust Fund to retain or withdraw from the Collection Account an
amount equal to the Master Servicing Fee for such Distribution Date.
Additional master servicing compensation in the form of Excess
Proceeds, prepayment penalties, assumption fees, late payment charges and all
income and gain net of any losses realized from Permitted Investments and all
other customary and ancillary income and fees shall be retained by the Master
Servicer to the extent not required to be deposited in the Collection Account
pursuant to Section 3.08(b). The Master Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
and shall not be entitled to reimbursement therefor except as specifically
provided in this Agreement.
Notwithstanding the foregoing, with respect to the payment of the
Master Servicing Fee on any Distribution Date, the aggregate Master Servicing
Fee for such Distribution Date shall be reduced (but not below zero) by an
amount equal to the lesser of (a) such Prepayment Interest Shortfall for such
Distribution Date and (b) one-twelfth of 0.25% of the Pool Stated Principal
Balance for such Distribution Date (any such reduction, "Compensating
Interest").
SECTION 3.18. Annual Statement as to Compliance. The Master
Servicer shall deliver to the Trustee and each Rating Agency on or before 75
days after the end of the Master Servicer's fiscal year, commencing with its
1998 fiscal year, an Officer's Certificate stating, as to the signer thereof,
that (a) a review of the activities of the Master Servicer during the preceding
calendar year and of the performance of the Master Servicer 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 Master Servicer has fulfilled all
its obligations under this Agreement throughout such year, or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof.
SECTION 3.19. Annual Independent Public Accountants' Servicing
Statement; Financial Statements. On or before 75 days after the end of the
Master Servicer's fiscal year,
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commencing with its 1998 fiscal year, the Master Servicer, at its expense, shall
cause a firm of independent public accountants (who may also render other
services to the Master Servicer, the Seller or any affiliate thereof) which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Trustee to the effect that such firm has with respect to the
Master Servicer's overall servicing operations, examined such operations in
accordance with the requirements of the Uniform Single Attestation Program for
Mortgage Bankers, stating such firm's conclusions relating thereto.
SECTION 3.20. Advances. The Master Servicer shall determine on or
before each Master Servicer Advance Date whether it is required to make a
Monthly Advance pursuant to the definition thereof. If the Master Servicer
determines it is required to make a Monthly Advance, it shall, on or before the
Master Servicer Advance Date, either (a) deposit into the Collection Account an
amount equal to the Advance and/or (b) make an appropriate entry in its records
relating to the Collection Account that any Amount Held for Future Distribution
has been used by the Master Servicer in discharge of its obligation to make any
such Monthly Advance. Any funds so applied shall be replaced by the Master
Servicer by deposit in the Collection Account no later than the close of
business on the Business Day preceding the next Master Servicer Advance Date.
The Master Servicer shall be entitled to be reimbursed from the Collection
Account for all Advances of its own funds made pursuant to this Section 3.20 as
provided in Section 3.11(a). The obligation to make Monthly Advances with
respect to any Mortgage Loan shall continue until the ultimate disposition of
the REO Property or Mortgaged Property relating to such Mortgage Loan. The
Master Servicer shall inform the Trustee of the amount of the Monthly Advance to
be made on each Master Servicer Advance Date no later than the related
Distribution Account Deposit Date.
The Master Servicer shall deliver to the Trustee on the related Master
Servicer Advance Date an Officer's Certificate of a Servicing Officer indicating
the amount of any proposed Monthly Advance determined by the Master Servicer to
be a Nonrecoverable Advance. Notwithstanding anything to the contrary, the
Master Servicer shall not be required to make any Monthly Advance or Servicing
Advance that would be a Nonrecoverable Advance.
SECTION 3.21. Modifications, Waivers, Amendments and Consents.
(a) Subject to this Section 3.21, the Master Servicer may agree to any
modification, waiver, forbearance, or amendment of any term of any Mortgage Loan
without the consent of the Trustee or any Certificateholder. All modifications,
waivers, forbearances or amendments of any Mortgage Loan shall be in writing and
shall be consistent with Customary Servicing Procedures.
(b) The Master Servicer shall not agree to enter into, and shall not
enter into, any modification, waiver (other than a waiver referred to in Section
3.13, which waiver, if any, shall be governed by Section 3.13), forbearance or
amendment of any term of any Mortgage Loan if such modification, waiver,
forbearance, or amendment would:
(i) affect the amount or timing of any related payment of
principal, interest or other amount payable thereunder; or
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(ii) in the Master Servicer's judgment, materially impair the
security for such Mortgage Loan or reduce the likelihood of timely
payment of amounts due thereon;
unless, in either case, (A) such Mortgage Loan is 90 days or more past due or
(B) the Master Servicer delivers to the Trustee an Opinion of Counsel to the
effect that such modification, waiver, forbearance or amendment would not affect
the Trust Fund's REMIC status and, in either case, such modification, waiver,
forbearance or amendment is reasonably likely to produce a greater recovery with
respect to such Mortgage Loan than would liquidation. Subject to Customary
Servicing Procedures, the Master Servicer may permit a forbearance for a
Mortgage Loan which in the Master Servicer's judgment is subject to imminent
default.
(c) Any payment of interest, which is deferred pursuant to any
modification, waiver, forbearance or amendment permitted hereunder, shall not,
for purposes hereof, including, without limitation, calculating monthly
distributions to Certificateholders, be added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
or such modification, waiver or amendment so permit.
(d) The Master Servicer may, as a condition to granting any request by
a Mortgagor for consent, modification, waiver, forbearance or amendment, the
granting of which is within the Master Servicer's discretion pursuant to the
Mortgage Loan and is permitted by the terms of this Agreement, require that such
Mortgagor pay to the Master Servicer, as additional servicing compensation, a
reasonable or customary fee for the additional services performed in connection
with such request, together with any related costs and expenses incurred by the
Master Servicer, which amount shall be retained by the Master Servicer as
additional servicing compensation.
(e) The Master Servicer shall notify the Trustee, in writing, of any
modification, waiver, forbearance or amendment of any term of any Mortgage Loan
and the date thereof, and shall deliver to the Trustee (or, at the direction of
the Trustee, the Custodian) for deposit in the related Mortgage File, an
original counterpart of the agreement relating to such modification, waiver,
forbearance or amendment, promptly (and in any event within ten Business Days)
following the execution thereof; provided, however, that if any such
modification, waiver, forbearance or amendment is required by applicable law to
be recorded, the Master Servicer (i) shall deliver to the Trustee a copy thereof
and (ii) shall deliver to the Trustee such document, with evidence of
notification upon receipt thereof from the public recording office.
SECTION 3.22. Reports to the Securities and Exchange Commission.
The Trustee shall, on behalf of the Trust, cause to be filed with the Securities
and Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder, for so long as
any Certificates registered under the 1933 Act are outstanding. Upon the request
of the Trustee, each of the Master Servicer and the Sponsor shall cooperate with
the Trustee in the preparation of any such report and shall provide to the
Trustee in a timely manner all such information or documentation as the Trustee
may reasonably request in connection with the performance of its duties and
obligations under this Section.
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ARTICLE IV
MASTER SERVICER'S CERTIFICATE
SECTION 4.01. Master Servicer's Certificate. Each month, not later
than 12:00 noon Eastern time on the Business Day following each Determination
Date, the Master Servicer shall deliver to the Trustee, a Master Servicer's
Certificate (in substance and format mutually acceptable to the Master Servicer
and the Trustee) certified by a Servicing Officer. The Trustee may conclusively
rely upon the information contained in a Master Servicer's Certificate for all
purposes hereunder and shall have no duty to verify or re-compute any of the
information contained therein.
Such statement shall be provided by the Trustee to any Holder of a
Certificate upon request and shall also, to the extent available, include
information regarding delinquencies on Mortgage Loans, indicating the number and
aggregate principal amount of Mortgage Loans which are either one, two, three or
more than three months delinquent and the book value of any REO Property.
ARTICLE V
PAYMENTS AND STATEMENTS TO
CERTIFICATEHOLDERS; REMIC ADMINISTRATION
SECTION 5.01. Distributions. On each Distribution Date, the Trustee
shall distribute out of the Distribution Account to each Certificateholder of
record on the related Record Date (other than as provided in Section 10.01
respecting the final distribution) (a) by check mailed to such Certificateholder
entitled to receive a distribution on such Distribution Date at the address
appearing in the Certificate Register, or (b) upon written request by the Holder
of a Regular Certificate (in the event such Certificateholder owns of record
100% of a Class of Certificates or holds Certificates of any Class having
denominations aggregating $1,000,000 or more), by wire transfer or by such other
means of payment as such Certificateholder and the Trustee shall agree upon,
such Certificateholder's Percentage Interest in, the amount to which the related
Class of Certificates is entitled in accordance with the priorities set forth
below in Section 5.02.
None of the Holders of any Class of Certificates, the Sponsor, the
Master Servicer or the Trustee shall in any way be responsible or liable to
Holders of any Class of Certificates in respect of amounts properly previously
distributed on any such Class.
Amounts distributed with respect to any Class of Certificates shall be
applied first to the distribution of interest thereon and then to principal
thereon.
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SECTION 5.02. Priorities of Distribution.
(a) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account (1) the amounts payable to the Trustee pursuant to Sections
3.11(b)(i) and 3.11(b)(ii) and shall pay such funds to itself, and (2) the
Available Funds, in an amount as specified in written notice received by the
Trustee from the Master Servicer no later than the related Determination Date,
and shall apply such funds to distributions on the Certificates in the following
order of priority and to the extent of Available Funds:
(i) to each Class of Senior Certificates (other than the Class
A-PO Certificates), an amount allocable to interest equal to the
Interest Distribution Amount for such Class, any shortfall being
allocated among such Classes in proportion to the amount of the
Interest Distribution Amount that would have been distributed in the
absence of such shortfall;
(ii) to each Class of Senior Certificates, concurrently as
follows:
(A) to the Class A-PO Certificates, up to the amount
of the PO Principal Amount, until the outstanding Class
Certificate Balance thereof has been reduced to zero; and
(B) on each Distribution Date prior to the Senior
Credit Support Depletion Date, the Non-PO Principal Amount, up
to the amount of the Senior Principal Distribution Amount for
such Distribution Date, will be distributed in the following
order of priority:
(1) first, to the Residual Certificates pro
rata, until the Class Certificate Balances thereof
have been reduced to zero;
(2) second, to the Class A-16 Certificates,
up to the Class A-16 Principal Distribution Amount
for such Distribution Date, until the Class
Certificate Balance thereof has been reduced to zero;
(3) third, concurrently:
(I) 42.21774710% to the Class A-1
Certificates;
(II) 6.83388050% to the Class A-2
Certificates, until the Class Certificate
Balance thereof has been reduced to zero,
and then to the Class A-10 Certificates;
(III) 15.64260990% to the Class A-3
Certificates;
(IV) 6.42185433% to the Class A-4
Certificates;
(V) 1.37611168% to the Class A-5
Certificates;
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(VI) 2.35373805% to the Class A-7
Certificates;
(VII) 10.89317499% to the Class A-8
Certificates; and
(VIII) 14.26088346% to the Class A-9
Certificates;
until the Class Certificate Balances of the Class
A-1, Class A-3, Class A-4, Class A-5 and Class A-10
Certificates have been reduced to zero;
(4) fourth, concurrently:
(I) 1.20073434% to the Class A-7
Certificates;
(II) 10.89317499% to the Class A-8
Certificates;
(III) 27.94970975% to the Class A-9
Certificates; and
(IV) 59.95638092% to the Class A-11
Certificates;
until the Class Certificate Balances thereof have
been reduced to zero;
(5) fifth, concurrently:
(I) 34.72069429% to the Class A-12
Certificates, until the Class Certificate
Balance thereof has been reduced to zero,
and then to the Class A-13 Certificates;
(II) 34.72069429% to the Class A-14
Certificates; and
(III) 30.55861142% to the Class A-15
Certificates;
until the Class Certificate Balances thereof have
been reduced to zero; and
(6) sixth, to the Class A-16 Certificates,
until the Class Certificate Balance thereof has been
reduced to zero;
(iii) to the Class A-PO Certificates, any Class A-PO Deferred
Amount, up to the Subordinate Principal Distribution Amount actually
received or advanced for such Distribution Date;
(iv) to each Class of Subordinate Certificates, subject to
paragraph (d) below, in the following order of priority:
(A) to the Class B-1 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
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(B) to the Class B-1 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
is reduced to zero;
(C) to the Class B-2 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(D) to the Class B-2 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
is reduced to zero;
(E) to the Class B-3 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(F) to the Class B-3 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
is reduced to zero;
(G) to the Class B-4 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(H) to the Class B-4 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
is reduced to zero;
(I) to the Class B-5 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date;
(J) to the Class B-5 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
is reduced to zero;
(K) to the Class B-6 Certificates, an amount
allocable to interest equal to the Interest Distribution
Amount for such Class for such Distribution Date; and
(L) to the Class B-6 Certificates, an amount
allocable to principal equal to its Pro Rata Share for such
Distribution Date until the Class Certificate Balance thereof
is reduced to zero; and
(v) to the Class R-I Certificates, any remaining funds in the
Subsidiary REMIC and to the Class R-II Certificates, any remaining
funds in the Master REMIC.
On any Distribution Date, amounts distributed in respect of Class A-PO Deferred
Amounts will not reduce the Class Certificate Balance of the Class A-PO
Certificates.
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(b) On each Distribution Date on or after the Senior Credit Support
Depletion Date, notwithstanding the allocation and priority set forth in Section
5.02(a)(ii)(B), the portion of Available Funds available to be distributed as
principal of the Senior Certificates (other than the Class A-PO Certificates)
shall be distributed concurrently, as principal, on such Classes, pro rata, on
the basis of their respective Class Certificate Balances, until the Class
Certificate Balances thereof are reduced to zero.
(c) On each Distribution Date, Accrued Certificate Interest for each
Class of Certificates for such Distribution Date shall be reduced by such
Class's pro rata share, based on such Class's Interest Distribution Amount for
such Distribution Date without taking into account the allocation made by this
Section 5.02(c), of (A) Net Prepayment Interest Shortfalls, (B) any Excess
Losses allocable to interest, (C) on and after the Senior Credit Support
Depletion Date, any other Realized Loss allocable to interest and (D) each
Relief Act Reduction incurred during the calendar month preceding the month of
such Distribution Date.
(d) Notwithstanding the priority and allocation contained in Section
5.02(a)(iv), if with respect to any Class of Subordinate Certificates on any
Distribution Date the sum of the Class Subordination Percentages of all Classes
of Subordinate Certificates which have a higher numerical Class designation than
such Class (the "Credit Support Percentage") is less than the Original Credit
Support Percentage for such Class, no distribution of principal will be made to
any Classes junior to such Class (the "Restricted Classes") and the amount
otherwise distributable to the Restricted Classes in respect to principal shall
be distributed to the Classes of Subordinate Certificates that are not
Restricted Classes, pro rata, based on their respective Class Certificate
Balances immediately prior to such Distribution Date, and shall be distributed
in the order provided in Section 5.02(a)(iv).
(e) On each Distribution Date, Available Funds shall be applied to
distributions on the Subsidiary REMIC Regular Interests, in each case in an
amount sufficient to make the distributions on the respective Corresponding
Classes of Certificates on such Distribution Date in accordance with the
provisions of Section 5.02(a).
SECTION 5.03. Allocation of Losses.
(a) On or prior to each Determination Date, the Master Servicer shall
inform the Trustee in writing: (1) whether any Realized Loss is a Deficient
Valuation, a Debt Service Reduction, a Fraud Loss or a Special Hazard Loss, (2)
of the amount of such loss or Deficient Valuation, or of the terms of such Debt
Service Reduction and (3) of the total amount of Realized Losses. Based on such
information, the Trustee shall determine the total amount of Realized Losses,
including Excess Losses, with respect to the related Distribution Date.
Realized Losses with respect to any Distribution Date shall be
allocated as follows:
(i) the applicable PO Percentage of any Realized Loss with
respect to a Discount Mortgage Loan, including any Excess Loss, shall
be allocated to the Class A-PO Certificates until the Class Certificate
Balance thereof is reduced to zero; and
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(ii) (1) the applicable Non-PO Percentage of any Realized Loss
(other than an Excess Loss) shall be allocated first to the
Subordinate Certificates in reverse order of their respective
numerical Class designations (beginning with the Class of
Subordinate Certificates then outstanding with the highest
numerical Class designation) until the respective Class
Certificate Balance of each such Class is reduced to zero, and
second to the Senior Certificates (other than the Notional
Amount Certificates and the Class A-PO Certificates), pro
rata, on the basis of their respective Class Certificate
Balances immediately prior to the related Distribution Date
until the Class Certificate Balances thereof have been reduced
to zero; and
(2) the applicable Non-PO Percentage of any Excess
Losses shall be allocated to the Senior Certificates (other
than the Notional Amount Certificates and the Class A-PO
Certificates) and the Subordinate Certificates then
outstanding, pro rata, on the basis of their respective Class
Certificate Balances.
(b) The Class Certificate Balance of the Class of Subordinate
Certificates then outstanding with the highest numerical Class designation shall
be reduced on each Distribution Date by the amount, if any, by which the
aggregate of the Class Certificate Balances of all outstanding Classes of
Certificates (after giving effect to the distribution of principal and the
allocation of Realized Losses and Class A-PO Deferred Amounts on such
Distribution Date) exceeds the Pool Stated Principal Balance for the following
Distribution Date.
(c) Any Realized Loss allocated to a Class of Certificates or any
reduction in the Class Certificate Balance of a Class of Certificates pursuant
to Section 5.03(b) above shall be allocated among the Certificates of such Class
in proportion to their respective Percentage Interests.
(d) Any allocation of Realized Losses to a Certificate or any reduction
in the Certificate Balance of a Certificate, pursuant to Section 5.03(b) above
shall be accomplished by reducing the Certificate Balance thereof prior to the
distributions made on the related Distribution Date in accordance with the
definition of "Certificate Balance."
SECTION 5.04. Statements to Certificateholders.
(a) Prior to the Distribution Date in each month, based upon the
information provided to the Trustee on the Master Servicer's Certificate
delivered to the Trustee pursuant to Section 4.01, the Trustee shall determine
the following information with respect to such Distribution Date:
(i) the amount allocable to principal, separately identifying
the aggregate amount of any Principal Prepayments and Liquidation
Proceeds included therein;
(ii) the amount allocable to interest, any Class Unpaid
Interest Shortfall included in such distribution and any remaining
Class Unpaid Interest Shortfall after giving effect to such
distribution;
(iii) if the distribution to the Holders of such Class of
Certificates is less than the full amount that would be distributable
to such Holders if there were sufficient funds
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available therefor, the amount of the shortfall and the allocation
thereof as between principal and interest;
(iv) the Class Certificate Balance of each Class of
Certificates after giving effect to the distribution of principal on
such Distribution Date;
(v) the Pool Stated Principal Balance for the following
Distribution Date;
(vi) the Senior Percentage, Class A-16 Percentage and
Subordinate Percentage for the following Distribution Date;
(vii) the amount of the Master Servicing Fees paid to or
retained by the Master Servicer with respect to such Distribution Date;
(viii) the Pass-Through Rate for each such Class of
Certificates with respect to such Distribution Date;
(ix) the amount of Monthly Advances included in the
distribution on such Distribution Date and the aggregate amount of
Monthly Advances outstanding as of the close of business on such
Distribution Date;
(x) the number and aggregate principal amounts of Mortgage
Loans (A) delinquent (exclusive of Mortgage Loans in foreclosure) (1) 1
to 30 days (2) 31 to 60 days (3) 61 to 90 days and (4) 91 or more days
and (B) in foreclosure, as of the close of business on the last day of
the calendar month preceding such Distribution Date;
(xi) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month, the loan number and
Stated Principal Balance of such Mortgage Loan as of the close of
business on the Determination Date preceding such Distribution Date and
the date of acquisition thereof;
(xii) the total number and principal balance of any REO
Properties (and market value, if available) as of the close of business
on the Determination Date preceding such Distribution Date;
(xiii) the Senior Prepayment Percentage and the Subordinate
Prepayment Percentage for the following Distribution Date;
(xiv) the aggregate amount of Realized Losses incurred during
the preceding calendar month and any Class A-PO Deferred Amounts for
such Distribution Date; and
(xv) the Special Hazard Loss Coverage Amount, the Fraud Loss
Coverage Amount and the Current Bankruptcy Coverage Amount, in each
case as of the related Determination Date.
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(b) No later than each Distribution Date, the Trustee, based upon
information supplied to it on the Master Servicer's Certificate, shall prepare
and deliver (by mail, fax or electronically) to each Holder of a Certificate,
each Rating Agency and the Master Servicer a statement setting forth the
information set forth in Section 5.04(a).
In the case of information furnished pursuant to clauses (i), (ii) and
(ix) of Section 5.04(a), the amounts shall be expressed as a dollar amount or
Notional Amount, as the case may be, per Certificate with a $1,000 denomination.
On each Distribution Date, the Trustee shall prepare and furnish to
each Financial Market Publisher, in electronic or such other format and media
mutually agreed upon by the Trustee, the Financial Market Publisher and the
Sponsor, the information contained in the statement described in Section 5.04(a)
for such Distribution Date.
Within a reasonable period of time after the end of each calendar year,
the Trustee shall furnish to each Person who at any time during the calendar
year was the Holder of a Certificate, if requested in writing by such Person, a
statement containing the information set forth in clauses (i), (ii) and (vii) of
Section 5.04(a), in each case aggregated for such calendar year or applicable
portion thereof during which such Person was a Certificateholder. Such
obligation of the Trustee shall be deemed to have been satisfied to the extent
that substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Code as from time to time in force.
The Trustee shall deliver to the Holders of Certificates any reports or
information the Trustee is required by this Agreement or the Code, Treasury
Regulations or REMIC Provisions to deliver to the Holders of Certificates, and
the Trustee shall prepare and provide to the Certificateholders (by mail,
telephone, or publication as may be permitted by applicable Treasury
Regulations) such other reasonable information as the Trustee deems necessary or
appropriate or is required by the Code, Treasury Regulations, and the REMIC
Provisions including, but not limited to, (i) information to be reported to the
Holders of the Residual Certificates for quarterly notices on Schedule Q (Form
1066) (which information shall be forwarded to the Holders of the Residual
Certificates by the Trustee), (ii) information to be provided to the Holders of
Certificates with respect to amounts which should be included as interest and
original issue discount in such Holders' gross income and (iii) information to
be provided to all Holders of Certificates setting forth the percentage of each
REMIC's assets, determined in accordance with Treasury Regulations using a
convention, not inconsistent with Treasury Regulations, selected by the Trustee
in its absolute discretion, that constitute real estate assets under Section 856
of the Code, and assets described in Section 7701(a)(19)(C) of the Code;
provided, however, that in setting forth the percentage of such assets of each
REMIC, nothing contained in this Agreement, including without limitation Section
7.03 hereof, shall be interpreted to require the Trustee periodically to
appraise the fair market values of the assets of the Trust Fund or to indemnify
the Trust Fund or any Certificateholders from any adverse federal, state or
local tax consequences associated with a change subsequently required to be made
in the Sponsor's initial good faith determinations of such fair market values
(if subsequent determinations are required pursuant to the REMIC Provisions)
made from time to time.
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SECTION 5.05. Tax Returns and Reports to Certificateholders.
(a) For federal income tax purposes, the Master and Subsidiary REMICs
shall each have a calendar year taxable year and shall maintain their books on
the accrual method of accounting.
(b) The Trustee shall prepare or cause to be prepared and shall file or
cause to be filed with the Internal Revenue Service and applicable state or
local tax authorities income tax information returns for each taxable year with
respect to each REMIC containing such information at the times and in the manner
as may be required by the Code or state or local tax laws, regulations, or
rules, and shall furnish or cause to be furnished to each REMIC and the
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby. Within 30 days of the Closing Date, the
Trustee shall furnish or cause to be furnished to the Internal Revenue Service,
on Form 8811 or as otherwise required by the Code, the name, title, address and
telephone number of the person that Holders of the Certificates may contact for
tax information relating thereto, together with such additional information at
the time or times and in the manner required by the Code. Such federal, state,
or local income tax or information returns shall be signed by the Trustee, or
such other Person as may be required to sign such returns by the Code or state
or local tax laws, regulations, or rules.
(c) In the first federal income tax return of each REMIC for its short
taxable year ending December 31, 1998, REMIC status shall be elected for such
taxable year and all succeeding taxable years.
(d) The Trustee will maintain or cause to be maintained such records
relating to each REMIC, including but not limited to the income, expenses,
assets and liabilities of the Trust Fund, and the initial fair market value and
adjusted basis of the Trust Fund property and assets determined at such
intervals as may be required by the Code, as may be necessary to prepare the
foregoing returns, schedules, statements or information.
SECTION 5.06. Tax Matters Person. The Tax Matters Person shall have
the same duties with respect to each REMIC as those of a "tax matters partner"
under Subchapter C of Chapter 63 of Subtitle F of the Code. The Holder of the
Class R-I Certificate is hereby designated as the Tax Matters Person for the
Subsidiary REMIC. The Holder of the Class R-II Certificate is hereby designated
as the Tax Matters Person for the Master REMIC. By their acceptance of the Class
R-I or Class R-II Certificate, as applicable, each such Holder agrees to
irrevocably appoint the Trustee as their agent to perform all of the duties of
the Tax Matters Person for the Subsidiary REMIC and the Master REMIC.
SECTION 5.07. Rights of the Tax Matters Person in Respect of the
Trustee. The Trustee shall afford the Tax Matters Person, upon reasonable notice
during normal business hours, access to all records maintained by the Trustee in
respect of its duties hereunder and access to officers of the Trustee
responsible for performing such duties. Upon request, the Trustee shall furnish
the Tax Matters Person with its most recent statement of condition publicly
available. The Trustee shall make available to the Tax Matters Person such
books, documents or records relating to the Trustee's services hereunder as the
Tax Matters Person shall reasonably request. The Tax
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Matters Person shall not have any responsibility or liability for any action or
failure to act by the Trustee and is not obligated to supervise the performance
of the Trustee under this Agreement or otherwise.
SECTION 5.08. REMIC Related Covenants. For as long as the Trust
shall exist, the Trustee shall act in accordance herewith to assure continuing
treatment of the Master REMIC and the Subsidiary REMIC as REMICs and avoid the
imposition of tax on such REMICs. In particular:
(a) The Trustee shall not create, or permit the creation of,
any "interests" in either REMIC within the meaning of Code Section
860D(a)(2) other than the interests represented by the Trust Fund, the
Regular Certificates, the Subsidiary REMIC Interests and the Residual
Certificates, respectively.
(b) Except as otherwise provided in the Code, the Sponsor and
the Master Servicer shall not grant and the Trustee shall not accept
property unless (i) substantially all of the property held in each
REMIC constitutes either "qualified mortgages" or "permitted
investments" as defined in Code Sections 860G(a)(3) and (5),
respectively, and (ii) no property shall be contributed to either REMIC
after the start-up day unless such grant would not subject the Trust
Fund to the 100% tax on contributions to a REMIC after the start-up day
of the REMIC imposed by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of either REMIC any
fee or other compensation for services and the Trustee shall not
knowingly accept, and the Master Servicer shall not knowingly accept,
on behalf of the Trust Fund any income from assets other than those
permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or
any portion of the Mortgage Loans (other than in accordance with
Sections 2.02, 2.03 or 2.08), unless such sale is pursuant to a
"qualified liquidation" as defined in Code Section 860F(a)(4)(A) and in
accordance with Article X.
(e) The Trustee shall maintain books with respect to the Trust
on a calendar year taxable year and on an accrual basis.
Neither the Master Servicer nor the Trustee shall engage in a
"prohibited transaction" (as defined in Code Section 860F(a)(2)), except that,
with the prior written consent of the Master Servicer and the Sponsor, the
Trustee may engage in the activities otherwise prohibited by the foregoing
paragraphs (b), (c) and (d); provided that the Master Servicer shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a tax on the Master REMIC or
Subsidiary REMIC and will not disqualify either the Master REMIC or Subsidiary
REMIC from treatment as a REMIC; and, provided further, that the Master Servicer
shall have demonstrated to the satisfaction of the Trustee that such action will
not adversely affect the rights of the Holders of the Certificates and the
Trustee and that such action will not adversely impact the rating of the
Certificates.
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SECTION 5.09. Determination of Pass-Through Rates for LIBOR
Certificates. On each LIBOR Determination Date so long as the LIBOR Certificates
are outstanding, the Trustee shall determine LIBOR for the next Interest Accrual
Period as follows:
(a) The Trustee will determine LIBOR on the basis of the
British Bankers' Association Interest Settlement Rate for one-month
deposits in U.S. dollars as found on page 3750 on the Dow ▇▇▇▇▇
Telerate Service as of 11:00 a.m. (London Time) on such LIBOR
Determination Date.
(b) If on any LIBOR Determination Date, the Trustee is unable
to determine LIBOR on the basis of the method set froth in paragraph
(a) above, LIBOR for the next Interest Accrual Period shall be the
higher of (i) LIBOR as determined on the previous LIBOR Determination
Date or (ii) the Reserve Interest Rate. The "Reserve Interest Rate"
shall be the rate per annum which the Trustee determines to be either
(i) the arithmetic mean (rounded upwards if necessary to the nearest
whole multiple of 1/16%) of the one-month Eurodollar lending rate that
New York City banks selected by the Trustee are quoting, on the
relevant LIBOR Determination Date, to the principal London offices of
at least two leading banks in the London interbank market or (ii) in
the event that the Trustee can determine no such arithmetic mean, the
lowest one-month Eurodollar lending rate that the New York City banks
selected by the Trustee are quoting on such LIBOR Determination Date to
leading European banks.
(c) If on any LIBOR Determination Date, the Trustee is
required but is unable to determine the Reserve Interest Rate in the
manner provided in paragraph (b) above, LIBOR for the next Interest
Accrual Period shall be LIBOR as determined on the preceding LIBOR
Determination Date, or, in the case of the first LIBOR Determination
Date, the Initial LIBOR Rate.
The Pass-Through Rate for each Class of LIBOR Certificates for each
Interest Accrual Period shall be determined by the Trustee on each LIBOR
Determination Date so long as the LIBOR Certificates are outstanding on the
basis of LIBOR and the respective formulae appearing in footnotes corresponding
to the LIBOR Certificates in the table relating to the Certificates in the
Preliminary Statement.
In determining LIBOR, any Pass-Through Rate for the LIBOR Certificates
or any Reserve Interest Rate, the Trustee may conclusively rely and shall be
protected in relying upon the offered quotations (whether written, oral or on
the Telerate Screen) from the Dow ▇▇▇▇▇ Telerate Service or the New York City
banks as to LIBOR or the Reserve Interest Rate, as appropriate, in effect from
time to time. The Trustee shall not have any liability or responsibility to any
Person for (A) the Trustee's selection of New York City banks for purposes of
determining any Reserve Interest Rate or (B) its inability, following a
good-faith reasonable effort, to obtain such quotations from the New York City
banks or to determine such arithmetic mean, all as provided for in this Section
5.09.
The establishment of LIBOR and each Pass-Through Rate for the LIBOR
Certificates by the Trustee shall (in the absence of manifest error) be final,
conclusive and binding upon each Holder of a Certificate and the Trustee.
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ARTICLE VI
THE CERTIFICATES
SECTION 6.01. The Certificates. The Classes of Senior Certificates
and the Subordinate Certificates shall be substantially in the forms set forth
in Exhibits A, B, C and D (reverse of all Certificates) and shall, on original
issue, be executed by the Trustee and shall be countersigned and delivered by
the Trustee to or upon the order of the Sponsor upon receipt by the Trustee of
the documents specified in Section 2.01. The Senior Certificates (other than the
Class A-5, Class A-6, Class A-PO, Class R-I and Class R-II Certificates) shall
be available to investors in interests representing minimum dollar Certificate
Balances of $1,000 and integral multiples of $1 in excess thereof. The
Subordinate Certificates and the Class A-5, Class A-6 and Class A-PO
Certificates shall be available to investors in interests representing minimum
dollar Certificate Balances or Notional Amounts, as the case may be, of $25,000
and integral dollar multiples of $1 in excess thereof (except one Certificate of
such Class may be issued with a different Certificate Balance). The Residual
Certificates shall be in minimum denominations of $100. The Senior Certificates
(other than the Class A-PO and Class R Certificates) shall initially be issued
in book-entry form through the Depository and all other Classes of Certificates
shall initially be issued as in definitive, fully-registered form.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer or signatory. Certificates
bearing the manual or facsimile signatures of individuals who were, at the time
when such signatures were affixed, authorized to sign on behalf of the Trustee
shall bind the Trustee, notwithstanding that such individuals or any of them
have ceased to be so authorized prior to the execution and delivery of such
Certificates or did not hold such offices or positions at the date of such
Certificate. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless such Certificate shall have been
manually countersigned by the Trustee substantially in the form provided for
herein, and such countersignature upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their countersignature.
SECTION 6.02. Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at an office or agency in the
city in which the Corporate Trust Office of the Trustee is located a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided. The Trustee shall initially
serve as Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided.
(b) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of authorized denominations of a like Class,
tenor and aggregate Percentage Interest, upon surrender of the Certificates to
be exchanged at any such office or agency. Whenever any
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Certificates are so surrendered for exchange, the Sponsor shall execute and the
Trustee shall authenticate, countersign and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Trustee or the Certificate Registrar) be duly endorsed by, or be accompanied by
a written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by, the Holder thereof or its attorney duly
authorized in writing.
(c) (i) Except as provided in paragraph (c)(iii) below, the Book-Entry
Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (A) registration of the
Certificates may not be transferred by the Trustee except to another
Depository; (B) the Depository shall maintain book-entry records with
respect to the Certificate Owners and with respect to ownership and
transfers of such Book-Entry Certificates; (C) ownership and transfers
of registration of the Book-Entry Certificates on the books of the
Depository shall be governed by applicable rules established by the
Depository; (D) the Depository may collect its usual and customary
fees, charges and expenses from its Depository Participants; (E) the
Trustee shall deal with the Depository as the representative of the
Certificate Owners of the Book-Entry Certificates for purposes of
exercising the rights of Holders under this Agreement, and requests and
directions for and votes of the Depository shall not be deemed to be
inconsistent if they are made with respect to different Certificate
Owners; and (F) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to
its Depository Participants and furnished by the Depository
Participants with respect to indirect participating firms and persons
shown on the books of such indirect participating firms as direct or
indirect Certificate Owners.
(ii) All transfers by Certificate Owners of Book-Entry
Certificates shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall
only transfer Book-Entry Certificates of Certificate Owners it
represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures.
(iii) If (A) (1) the Depository or the Sponsor advises the
Trustee in writing that the Depository is no longer willing or able to
properly discharge its responsibilities as Depository, and (2) the
Trustee or the Sponsor is unable to locate a qualified successor, (B)
the Sponsor at its option advises the Trustee in writing that it elects
to terminate the book-entry system through the Depository or (C) after
the occurrence of an Event of Default, Certificate Owners representing
at least 51% of the aggregate Class Certificate Balances of the
Book-Entry Certificates together advise the Trustee and the Depository
through the Depository Participants in writing that the continuation of
a book-entry system through the Depository is no longer in the best
interests of the Certificate Owners, the Trustee shall notify all
Certificate Owners, through the Depository, of the occurrence of any
such event and of the availability of definitive, fully registered
Certificates (the "Definitive Certificates") to Certificate Owners
requesting the same. Upon surrender to the Trustee of the related Class
of Certificates by the Depository, accompanied by the instructions from
the Depository for registration, the Trustee shall issue the Definitive
Certificates. Neither the Master Servicer, the Sponsor nor the Trustee
shall be liable for any delay in delivery of such
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instruction and may conclusively rely on, and shall be protected in
relying on, such instructions. The Master Servicer shall provide the
Trustee with an adequate inventory of certificates to facilitate the
issuance and transfer of Definitive Certificates. Upon the issuance of
Definitive Certificates, the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
(d) No transfer of a Private Certificate shall be made unless such
transfer is exempt from the registration requirements of the 1933 Act, and any
applicable state securities laws or is made in accordance with the 1933 Act and
such laws. In the event of any such transfer, (i) unless such transfer is made
in reliance on Rule 144A under the 1933 Act, the Trustee or the Sponsor may
require a written Opinion of Counsel (which may be in-house counsel) acceptable
to and in form and substance reasonably satisfactory to the Trustee and the
Sponsor that such transfer may be made pursuant to an exemption, describing the
applicable exemption and the basis therefor, from the 1933 Act and such laws or
is being made pursuant to the 1933 Act and such laws, which Opinion of Counsel
shall not be an expense of the Trustee or the Sponsor and (ii) the Trustee shall
require a certificate from the Certificateholder desiring to effect such
transfer substantially in the form attached hereto as Exhibit I-1 and a
certificate from such Certificateholder's prospective transferee substantially
in the form attached hereto either as Exhibit I-2A or as Exhibit I-2B, which
certificates shall not be an expense of the Trustee or the Sponsor; provided
that the foregoing requirements under clauses (i) and (ii) shall not apply to a
transfer of a Private Certificate between or among the Sponsor, the Seller,
their affiliates or both. The Sponsor shall provide to any Holder of a Private
Certificate and any prospective transferees designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and such
other information as shall be necessary to satisfy the condition to eligibility
set forth in Rule 144A(d)(4) for transfer of any such certificate without
registration thereof under the 1933 Act pursuant to the registration exemption
provided by Rule 144A. The Holder of a Private Certificate desiring to effect
such transfer shall, and does hereby agree to, indemnify the Trustee and the
Sponsor against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
(e) No transfer of an ERISA-Restricted Certificate shall be made unless
the Trustee shall have received either (i) a representation letter in the form
of Exhibit J from the transferee of such Certificate, which representation
letter shall not be an expense of the Sponsor, the Trustee or the Master
Servicer, or (ii) in the case of any ERISA-Restricted Certificate presented for
registration in the name of an employee benefit plan subject to ERISA and
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or an ▇▇▇, or a trustee or custodian of any such plan or ▇▇▇, an
Opinion of Counsel satisfactory to the Trustee and the Master Servicer to the
effect that the purchase or holding of such ERISA-Restricted Certificate will
not result in the assets of the Trust Fund being deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA and the Code and will
not subject the Trustee, the Sponsor, the Seller or the Master Servicer to any
obligation in addition to those undertaken in this Agreement, which Opinion of
Counsel shall not be an expense of the Trustee or the Master Servicer.
Notwithstanding anything else to the contrary herein, any purported transfer of
an ERISA-Restricted Certificate to or on behalf of an employee benefit plan
subject to ERISA or to the Code, or an ▇▇▇ without the delivery to the Trustee
and the Master Servicer of an Opinion of Counsel satisfactory to the Trustee and
the Master Servicer as described above shall be void and of no effect.
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To the extent permitted under applicable law (including, but not
limited to, ERISA), the Trustee shall be under no liability to any Person for
any registration of transfer of any ERISA-Restricted Certificate that is in fact
not permitted by this Section 6.02 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 by the Trustee in accordance with the foregoing requirements.
(f) Each Person who has or who acquires any Ownership Interest in a
Residual 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 Trustee or its designee as its attorney-in-fact
to negotiate the terms of any mandatory sale under clause (vi) 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 Residual Certificate are expressly subject to the
following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(ii) No Person shall acquire an Ownership Interest in a
Residual Certificate unless such Ownership Interest is a pro rata
undivided interest.
(iii) In connection with any proposed transfer of any
Ownership Interest in a Residual Certificate, the Trustee shall require
delivery to it, in form and substance satisfactory to it, of an
affidavit in the form of Exhibit K hereto from the proposed transferee
to the effect that (A) such transferee is a Permitted Transferee and
that it is not acquiring its Ownership Interest in the Residual
Certificate that is the subject of the proposed transfer as a nominee,
trustee or agent for any Person who is not a Permitted Transferee; and
(B) such transferee is not an employee benefit plan subject to ERISA or
a plan that is subject to Section 4975 of the Code and is not acting on
behalf of such a plan.
(iv) Notwithstanding the delivery of an affidavit by a
proposed transferee under clause (iii) above, if a Responsible Officer
of the Trustee has actual knowledge that the proposed transferee is not
a Permitted Transferee, no Transfer of any Ownership Interest in a
Residual Certificate to such proposed transferee shall be effected.
(v) Any attempted or purported transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section 6.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall,
in violation of the provisions of this Section 6.02, become a Holder of
a Residual Certificate, then the prior Holder of such Residual
Certificate that is a Permitted Transferee shall, upon discovery that
the registration of transfer of such Residual Certificate was not in
fact permitted by this Section 6.02, be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Residual Certificate. The Trustee shall be under no liability to
any Person for any registration of transfer of a Residual Certificate
that is in fact not permitted by this Section 6.02 or for making any
distributions due on such Residual Certificate to the Holder thereof or
taking any other action with respect to such Holder under
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the provisions of the Agreement so long as the transfer was registered
in accordance with this Section 6.02. The Trustee shall be entitled to
recover from any Holder of a Residual Certificate that was in fact not
a Permitted Transferee at the time such distributions were made all
distributions made on such Residual Certificate. Any such distributions
so recovered by the Trustee shall be distributed and delivered by the
Trustee to the prior Holder of such Residual Certificate that is a
Permitted Transferee.
(vi) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the
right but not the obligation, without notice to the Holder of such
Residual Certificate or any other Person having an Ownership Interest
therein, to arrange for the sale of such Residual Certificate. The
proceeds of such sale, net of commissions (which may include
commissions payable to the Trustee or its affiliates), expenses and
taxes due, if any, will be remitted by the Trustee to the previous
Holder of such Residual Certificate that is a Permitted Transferee,
except that in the event that the Trustee determines that the Holder of
such Residual Certificate may be liable for any amount due under this
Section 6.02 or any other provisions of this Agreement, the Trustee may
withhold a corresponding amount from such remittance as security for
such claim. The terms and conditions of any sale under this clause (vi)
shall be determined in the sole discretion of the Trustee, and it shall
not be liable to any Person having an Ownership Interest in a Residual
Certificate as a result of its exercise of such discretion.
(vii) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Master Servicer, will
provide to the Internal Revenue Service, and to the Persons specified
in Section 860E(e)(3) and (6) of the Code, information needed to
compute the tax imposed under Section 860E(e) of the Code on transfers
of residual interests to disqualified organizations. The expenses of
the Trustee under this clause (vii) shall be reimbursable by the Trust.
(g) The foregoing provisions of Section 6.02 (other than the provisions
of Sections 6.02(e) and 6.02(f)(iii)(B)) shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Trustee, in form and substance satisfactory to the Trustee, (i) written
notification from each Rating Agency that the removal of the restrictions on
Transfer set forth in this Section 6.02 will not cause such Rating Agency to
downgrade its rating of the Certificates and (ii) an Opinion of Counsel to the
effect that such removal will not cause the Trust Fund to fail to qualify as a
REMIC.
(h) No service charge shall be imposed for any transfer or exchange of
Certificates of any Class, 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.
(i) All Certificates surrendered for transfer and exchange shall be
destroyed by the Certificate Registrar.
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SECTION 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (b) there is delivered to the Trustee, the
Sponsor and the Certificate Registrar such security or indemnity reasonably
satisfactory to each, to save each of them harmless, then, in the absence of
actual notice to the Trustee or the Certificate Registrar that such Certificate
has been acquired by a bona fide purchaser, the Trustee shall countersign and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor, Class and Percentage
Interest but bearing a number not contemporaneously outstanding. Upon the
issuance of any new Certificate under this Section, the Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee and the Certificate Registrar) connected therewith.
Any duplicate Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
SECTION 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Sponsor, the Master Servicer, the
Trustee, the Certificate Registrar and any agent of the Sponsor, the Master
Servicer, the Trustee or the Certificate Registrar may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 5.01 and for all other
purposes whatsoever, and none of the Sponsor, the Master Servicer, the Trustee,
the Certificate Registrar or any agent of the Master Servicer, the Trustee or
the Certificate Registrar shall be affected by notice to the contrary.
ARTICLE VII
THE SPONSOR AND THE MASTER SERVICER
SECTION 7.01. Respective Liabilities of the Sponsor and the Master
Servicer. The Sponsor and the Master Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by the Sponsor and the Master Servicer herein. By
way of illustration and not limitation, the Sponsor is not liable for the
servicing and administration of the Mortgage Loans, nor is it obligated by
Section 8.01 to assume any obligations of the Master Servicer or to appoint a
designee to assume such obligations, nor is it liable for any other obligation
hereunder that it may, but is not obligated to, assume unless it elects to
assume such obligation in accordance herewith.
SECTION 7.02. Merger or Consolidation of the Sponsor or the Master
Servicer. The Sponsor and the Master Servicer will each keep in full effect its
existence, rights and franchises as a corporation under the laws of the state of
its incorporation, and will each obtain and preserve its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
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Any Person into which the Sponsor or the Master Servicer may be merged
or consolidated, or any corporation resulting from any merger or consolidation
to which the Sponsor or the Master Servicer shall be a party, or any Person
succeeding to the business of the Sponsor or the Master Servicer, shall be the
successor of the Sponsor or the Master Servicer, as the case may be, hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to the Master Servicer
shall be qualified to service mortgage loans on behalf of FNMA or FHLMC.
SECTION 7.03. Limitation on Liability of the Sponsor, the Master
Servicer and Others. None of the Sponsor, the Master Servicer or any of the
directors, officers, employees or agents of the Sponsor or of the Master
Servicer shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Sponsor, the Master
Servicer or any such person against any breach of warranties or representations
made herein or any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of duties
or by reason of reckless disregard of obligations and duties hereunder. The
Sponsor, the Master Servicer and any director, officer, employee or agent of the
Sponsor or the Master Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Sponsor, the Master Servicer and any director,
officer, employee or agent of the Sponsor or the Master Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except as any such loss, liability or
expense shall be otherwise reimbursable pursuant to this Agreement) and any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or gross negligence in the performance of duties hereunder or by reason of
reckless disregard of obligations and duties hereunder. Neither the Sponsor nor
the Master Servicer shall be under any obligation to appear in, prosecute or
defend any legal action which is not incidental to its respective duties under
this Agreement and which in its opinion may involve it in any expense or
liability; provided, however, that the Sponsor or the Master Servicer may in its
discretion undertake any such action which it may deem necessary or desirable in
respect to this Agreement and the rights and duties of the parties hereto and
the interests of the Certificateholders hereunder. In such event, the legal
expenses and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Sponsor and the
Master Servicer shall be entitled to be reimbursed therefor out of amounts
attributable to the Mortgage Loans on deposit in the Collection Account as
provided by Section 3.11.
SECTION 7.04. Sponsor and Master Servicer Not to Resign. Subject to
the provisions of Section 7.02, neither the Sponsor nor the Master Servicer
shall resign from its respective obligations and duties hereby imposed on it
except upon determination that its duties hereunder are no longer permissible
under applicable law. Any such determination permitting the resignation of the
Sponsor or the Master Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Trustee. No such resignation by the Master Servicer
shall become
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effective until the Trustee or a successor servicer shall have assumed the
Master Servicer's responsibilities and obligations in accordance with Section
8.05 hereof.
ARTICLE VIII
DEFAULT
SECTION 8.01. Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(a) any failure by the Master Servicer to deposit amounts in
the Collection Account in the amount and manner provided herein so as
to enable the Trustee to distribute to Holders of Certificates any
payment required to be made under the terms of such Certificates and
this Agreement (other than the payments required to be made under
Section 3.20) which continues unremedied for a period of five days; or
(b) failure on the part of the Master Servicer duly to observe
or perform in any material respect any other covenants or agreements of
the Master Servicer set forth in the Certificates or in this Agreement,
which covenants and agreements continue unremedied for a period of 30
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Master Servicer
by the Trustee or the Sponsor, or to the Master Servicer, the Sponsor
and the Trustee by the Holders of Certificates evidencing, Voting
Rights aggregating not less than 25% of all Certificates affected
thereby; or
(c) the entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings against the Master Servicer, or for the winding up or
liquidation of the Master Servicer's affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60
consecutive days; or
(d) the consent by the Master Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings
of or relating to the Master Servicer or of or relating to
substantially all of its property; or the Master Servicer shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(e) the failure of the Master Servicer to remit any Monthly
Advance required to be remitted pursuant to Section 3.20 which failure
continues unremedied at 3:00 p.m. on the related Distribution Date;
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then, and in each and every such case, so long as an Event of Default shall not
have been remedied by the Master Servicer, either the Trustee or the Sponsor
may, and at the direction of the Holders of Certificates evidencing Voting
Rights aggregating not less than 51% of all Certificates affected thereby shall,
by notice then given in writing to the Master Servicer (and to the Trustee, if
given by the Sponsor, and to the Sponsor, if given by the Trustee), terminate
all of the rights and obligations of the Master Servicer under this Agreement.
If an Event of Default described in clause (e) hereof shall occur, the Trustee
shall, by notice to the Master Servicer, terminate all of the rights and
obligations of the Master Servicer under this Agreement and in and to the
Mortgage Loans and proceeds thereof and the Trustee or a successor Master
Servicer appointed pursuant to Section 8.05 shall make the Advance which the
Master Servicer failed to make. On or after the receipt by the Master Servicer
of such written notice, all authority and power of the Master Servicer under
this Agreement, whether with respect to the Certificates or the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section 8.01, unless and until such time as the Trustee shall appoint a
successor Master Servicer pursuant to Section 8.05, and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
the Master Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Mortgage Loans and related
documents, or otherwise, including, without limitation, the recordation of the
assignments of the Mortgage Loans to it. The Master Servicer agrees to cooperate
with the Trustee in effecting the termination of the responsibilities and rights
of the Master Servicer hereunder, including, without limitation, the transfer to
the Trustee for the administration by it of all cash amounts that have been
deposited by the Master Servicer in the Collection Account or thereafter
received by the Master Servicer with respect to the Mortgage Loans. Upon
obtaining notice or knowledge of the occurrence of any Event of Default, the
Person obtaining such notice or knowledge shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register and to each Rating Agency. All costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Mortgage Files to the successor Master Servicer and amending this Agreement to
reflect such succession as Master Servicer pursuant to this Section 8.01 shall
be paid by the predecessor Master Servicer. Notwithstanding the termination of
the Master Servicer pursuant hereto, the Master Servicer shall remain liable for
any causes of action arising out of any Event of Default occurring prior to such
termination.
SECTION 8.02. Remedies of Trustee. During the continuance of any
Event of Default, so long as such Event of Default shall not have been remedied,
the Trustee, in addition to the rights specified in Section 8.01, shall have the
right, in its own name as trustee of an express trust, to take all actions now
or hereafter existing at law, in equity or by statute to enforce its rights and
remedies and to protect the interests, and enforce its rights and remedies, of
the Certificateholders (including the institution and prosecution of all
judicial, administrative and other proceedings and the filing of proofs of claim
and debt in connection therewith). Except as otherwise expressly provided in
this Agreement, no remedy provided for by this Agreement shall be exclusive of
any other remedy, and each and every remedy shall be cumulative and in addition
to any other remedy and no delay or omission to exercise any right or remedy
shall impair any such right or remedy or shall be deemed to be a waiver of any
Event of Default.
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SECTION 8.03. Directions by Certificateholders and Duties of
Trustee During Event of Default. During the continuance of any Event of Default,
Holders of Certificates evidencing Voting Rights aggregating not less than 25%
of each Class of Certificates affected thereby may direct 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;
provided, however, that the Trustee shall be under no obligation to pursue any
such remedy, or to exercise any of the trusts or powers vested in it by this
Agreement (including, without limitation, (a) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto, and (b) the
terminating of the Master Servicer or any successor Master Servicer from its
rights and duties as master servicer hereunder) at the request, order or
direction of any of the Certificateholders, unless such Certificateholders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby and, provided
further, that, subject to the provisions of Section 9.01, the Trustee shall have
the right to decline to follow any such direction if the Trustee, based upon an
Opinion of Counsel, determines that the action or proceeding so directed may not
lawfully be taken or if the Trustee in good faith determines that the action or
proceeding so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Certificateholders.
SECTION 8.04. Action upon Certain Failures of the Master Servicer
and upon Event of Default. In the event that the Trustee shall have knowledge of
any failure of the Master Servicer specified in Section 8.01(a) or (b) which
would become an Event of Default upon the Master Servicer's failure to remedy
the same after notice, the Trustee may, but need not if the Trustee deems it not
in the Certificateholder's best interest, give notice thereof to the Master
Servicer. If the Trustee shall have knowledge of an Event of Default, the
Trustee shall give prompt written notice thereof to the Certificateholders.
SECTION 8.05. Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a notice of
termination pursuant to Section 8.01, the Trustee shall be the successor in all
respects to the Master Servicer in its capacity as master servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Master Servicer by the terms and provisions hereof.
Notwithstanding anything provided herein to the contrary, under no circumstances
shall any provision of this Agreement, be construed to require the Trustee,
acting in its capacity as successor to the Master Servicer in its obligation to
make Advances, to advance, expend or risk its own funds or otherwise incur any
financial liability in the performance of its duties hereunder if it shall have
reasonable grounds for believing that such funds are non-recoverable. Subject to
Section 8.05(b), as compensation therefor, the Trustee shall be entitled to such
compensation as the Master Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the above, the
Trustee may, if it shall be unwilling so to act, or shall, if it is legally
unable so to act, appoint, or petition a court of competent jurisdiction to
appoint, any established housing and home finance institution having a net worth
of not less than $10,000,000 as the successor to the Master Servicer hereunder
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Master Servicer hereunder; provided, however, that any such
institution appointed as successor Master Servicer shall not as evidenced in
writing by each Rating Agency adversely affect the then current rating of any
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Class of Certificates immediately prior to the termination of the Master
Servicer. The appointment of a successor Master Servicer shall not affect any
liability of the predecessor Master Servicer which may have arisen under this
Agreement prior to its termination as Master Servicer, nor shall any successor
Master Servicer be liable for any acts or omissions of the predecessor Master
Servicer or for any breach by such Master Servicer of any of its representations
or warranties contained herein or in any related document or agreement. Pending
appointment of a successor to the Master Servicer hereunder, unless the Trustee
is prohibited by law from so acting, the Trustee shall act in such capacity as
provided above. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
(b) In connection with the appointment of a successor Master Servicer
or the assumption of the duties of the Master Servicer, as specified in Section
8.05(a), 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 any Person assuming the duties of Master Servicer
as successor to NationsBanc Mortgage Corporation shall pay to NationsBanc
Mortgage Corporation an amount equal to the market value of the portion of the
Master Servicing Fee that will accrue in the future due to the Master Servicing
Fee Rate exceeding 0.25% per annum with respect to any Mortgage Loan. The
"market value" of such portion of the Master Servicing Fee shall be determined
by NationsBanc Mortgage Corporation on the basis of at least two quotations from
third parties actively engaged in the servicing of single-family mortgage loans.
If the successor Master Servicer does not agree that such market value is a fair
price, such successor shall obtain two quotations of market value from third
parties actively engaged in the servicing of single-family mortgage loans. The
market value of the excess portion of the Master Servicing Fee will then be
equal to the average of (i) the lowest figure obtained by NationsBanc Mortgage
Corporation and (ii) the highest figure obtained by the successor Master
Servicer. Payment of the amount calculated above shall be made to NationsBanc
Mortgage Corporation by the successor Master Servicer no later than the last
Business Day of the month in which such successor Master Servicer becomes
entitled to receive the Master Servicing Fee under this Agreement. In no event
will any portion of the Trust Fund be used to pay amounts due to NationsBanc
Mortgage Corporation under this Section 8.05(b).
(c) Any successor, including the Trustee, to the Master Servicer as
master servicer shall during the term of its service as master servicer maintain
in force (i) a policy or policies of insurance covering errors and omissions in
the performance of its obligations as servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees and agents to the same extent as the
Master Servicer is so required pursuant to Section 3.03.
SECTION 8.06. Notification to Certificateholders. Upon any
termination or appointment of a successor to the Master Servicer pursuant to
this Article VIII, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to each Rating Agency.
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ARTICLE IX
THE TRUSTEE
SECTION 9.01. Duties of Trustee.
(a) The Trustee, except during the continuance of an Event of Default,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. In case of an Event of Default (which has not been
cured), the Trustee shall exercise such of the rights and powers vested in it by
this Agreement and use the same degree of care and skill in their exercise as a
prudent investor would exercise or use under the circumstances in the conduct of
such investor's own affairs.
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 are in
the form required by this Agreement; provided, however, that the Trustee shall
not be responsible for the accuracy or content of any such certificate,
statement, opinion, report, or other order or instrument.
(b) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligent action, its own gross
negligent failure to act or its own willful misconduct; provided, however, that:
(i) this paragraph shall not be construed to limit the effect
of Section 9.01(a);
(ii) the Trustee and co-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 Certificateholders as
provided in Section 8.03;
(iii) for all purposes under this Agreement, the Trustee shall
not be deemed to have notice of any matter, including without
limitation those matters described in Section 8.01(b) through (e),
unless a Responsible Officer assigned to and working in the Trustee's
corporate trust division has actual knowledge thereof or unless written
notice of any event is received at the Corporate Trust Office, and such
notice references the Certificates and this Agreement;
(iv) no provision of this Agreement shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that 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 Sponsor or the Master
Servicer under this Agreement, except during such time, if any, as the
Trustee shall be the successor
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to the Master Servicer in accordance with the terms of this Agreement
or as otherwise specifically set forth in this Agreement; and
(v) prior to the occurrence of an Event of Default as
described in the first paragraph of this Section 9.01 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.
SECTION 9.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 9.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of auditor or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, 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;
(b) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(c) the Trustee and any co-trustee shall not be personally
liable for any action taken, suffered or omitted by it in good faith
and reasonably believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Agreement;
(d) unless an Event of Default shall have occurred and be
continuing and, in each case is known to a Responsible Officer of the
Trustee, 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 Holders of Certificates evidencing not less than 50% of the
Percentage Interests of each Class of Certificates; 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 or payment of such estimated expenses
as a condition to proceeding; and
(e) the Trustee and any co-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 and any
co-trustee shall not be responsible for any willful
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misconduct or gross negligence on the part of any agent or attorney
appointed with due care by it hereunder.
SECTION 9.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein (other than those relating to the due
organization, power and authority of the Trustee) and in the Certificates (other
than the execution of, and the counter-signature on the Certificates) shall be
taken as the statements of the Sponsor or Master Servicer, as applicable, and
the Trustee assumes no responsibility for their corrections. The Trustee makes
no representations as to the validity or sufficiency of this Agreement or of the
Certificates or any Mortgage Loans save that the Trustee represents that,
assuming due execution and delivery by the other parties hereto, this Agreement
has been duly authorized, executed and delivered by it and constitutes its
legal, valid and binding obligation, enforceable against it in accordance with
its terms, subject, as to enforcement of remedies, to applicable insolvency,
receivership, moratorium and other laws affecting the rights of creditors
generally, and to general principles of equity and the discretion of the court
(regardless of whether enforcement of such remedies is considered in a
proceeding in equity or at law). The Trustee shall not be accountable for the
use or application by the Sponsor of funds paid to the Sponsor in consideration
of the assignment of the Mortgage Loans hereunder by the Sponsor, or for the use
or application of any funds paid to Servicers or the Master Servicer in respect
of the Mortgage Loans or deposited into the Collection Account, or any other
account hereunder (other than the Distribution Account) by the Master Servicer.
The Trustee shall at no time have any responsibility or liability for
or with respect to the legality, validity and enforceability of any Mortgage or
any Mortgage Loan, or the perfection and priority of any Mortgage or the
maintenance of any such perfection and priority or for or with respect to the
sufficiency of the Trust or its ability to generate the payments to be
distributed to Certificateholders under this Agreement, including, without
limitation: the existence, condition and ownership of any Mortgaged Property;
the existence and enforceability of any hazard insurance thereon (other than if
the Trustee shall assume the duties of the Master Servicer pursuant to Section
8.05 and thereupon only for the acts or omissions of the successor Master
Servicer); the validity of the assignment of any Mortgage Loan to the Trustee or
of any intervening assignment; the completeness of any Mortgage Loan; the
performance or enforcement of any Mortgage Loan (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 8.05 and thereupon
only for the acts or omissions of the Trustee as successor Master Servicer); the
compliance by the Sponsor or the Master Servicer with any warranty or
representation made under this Agreement or in any related document or the
accuracy of any such warranty or representation; any investment of monies by or
at the direction of the Master Servicer or any loss resulting therefrom, it
being understood that the Trustee shall remain responsible for any Trust
property that it may hold in its individual capacity; the acts or omissions of
any of the Sponsor, the Master Servicer (other than if the Trustee shall assume
the duties of the Master Servicer pursuant to Section 8.05 and thereupon only
for the acts or omissions of the Trustee as successor Master Servicer), any
Servicer or any Mortgagor; any action of the Master Servicer (other than if the
Trustee shall assume the duties of the Master Servicer pursuant to Section 8.05
and thereupon only for the acts or omissions of the Trustee as successor Master
Servicer) or any Servicer taken in the name of the Trustee; the failure of the
Master Servicer or any Servicer to act or perform any duties acquired of it as
agent of the Trustee hereunder; or any action by the Trustee taken at the
instruction of the Master
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Servicer (other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 8.05 and thereupon only for the acts or omissions
of the Trustee as successor Master Servicer); provided, however, that the
foregoing shall not relieve the Trustee of its obligation to perform its duties
under this Agreement, including, without limitation, the Trustee's review of the
Mortgage Files pursuant to Section 2.02. The Trustee shall file any financing or
continuation statement in any public office at any time required to maintain the
perfection of any security interest or lien granted to it hereunder.
SECTION 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights it would have if it were not Trustee and may otherwise deal
with the Master Servicer, any Servicer or any of their respective affiliates
with the same right it would have if it were not the Trustee.
SECTION 9.05. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be (a) an institution the deposits of which are
fully insured by the FDIC and (b) a corporation or national banking association
organized and doing business under the laws of the United States of America or
of any State, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of not less than $30,000,000 and subject
to supervision or examination by Federal or State authority and (c) with respect
to every successor trustee hereunder either an institution (i) the long-term
unsecured debt obligations of which are rated at least "A" by S&P and "A" by
Fitch or (ii) whose serving as Trustee hereunder would not result in the
lowering of the ratings originally assigned to any Class of Certificates. The
Trustee shall not be an affiliate of the Sponsor or the Master Servicer. If such
corporation or national banking association publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 9.05,
the combined capital and surplus of such corporation or national banking
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provision of this
Section 9.05, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.06.
SECTION 9.06. Resignation and Removal of Trustee. The Trustee may
at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Master Servicer and mailing a copy of such notice
to all Holders of record. The Trustee shall also mail a copy of such notice of
resignation to each Rating Agency. Upon receiving such notice of resignation,
the Master Servicer shall use its best efforts to promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the resigning Trustee and one copy to the successor Trustee. If
no 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.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.05 and shall fail to resign after written
request therefor by the Master Servicer, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or
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control of the Trustee or of its property, 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 Master Servicer may
remove the Trustee and appoint a successor trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor.
The Holders of Certificates evidencing not less than 50% of the Voting
Rights may at any time remove the Trustee by written instrument or instruments
delivered to the Master Servicer and the Trustee; the Master Servicer shall
thereupon use its best efforts to appoint a successor Trustee in accordance with
this Section 9.06.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 9.06 shall
become effective upon acceptance of appointment by the successor Trustee as
provided in Section 9.07.
SECTION 9.07. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.06 shall execute, acknowledge and deliver to the Master
Servicer and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee herein. The predecessor Trustee shall duly assign, transfer,
deliver and pay over to the successor Trustee the whole of the Mortgage Files
and related documents and statements held by it hereunder, together with all
instruments of transfer and assignment or other documents properly executed as
may be reasonably required to effect such transfer and such of the records or
copies thereof maintained by the predecessor Trustee in the administration
hereof as may be reasonably requested by the successor Trustee and shall
thereupon be discharged from all duties and responsibilities under this
Agreement; provided, however, that if the predecessor Trustee has been
terminated pursuant to the third paragraph of Section 9.06, all reasonable
expenses of the predecessor Trustee incurred in complying with this Section 9.07
shall be reimbursed by the Trust.
No successor Trustee shall accept appointment as provided in this
Section 9.07 unless at the time of such appointment such successor Trustee shall
be eligible under the provisions of Section 9.05.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.07, the Master Servicer shall mail notice of the succession of
such Trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register and to each Rating Agency. If the Master
Servicer fails to mail such notice within ten days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Master Servicer.
SECTION 9.08. Merger or Consolidation of Trustee. Any corporation
or national banking association 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
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banking association succeeding to all or substantially all of the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
if such corporation or national banking association is eligible under the
provisions of Section 9.05, 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 9.09. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any of the provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any Mortgaged
Property may at the time be located or for any other reason, the Master Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee,
as co-trustee or separate trustee, of all or any part of the Trust Fund, and to
vest in such Person or Persons, in such capacity, such title to the Trust Fund,
or any part thereof, and, subject to the other provision of this Section 9.09,
such powers, duties, obligations, rights and trusts as the Master Servicer and
the Trustee may consider necessary or desirable. If the Master Servicer shall
not have joined in such appointment within ten days after the receipt by it of a
request to do so, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 9.05 and no
notice to Holders of Certificates of the appointment of co-trustee(s) or
separate trustee(s) shall be required under Section 9.07.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 9.09, 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 Master Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the 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. No trustee
hereunder shall be held personally liable by reason of any act or omission of
any other trustee hereunder; provided, however, that no appointment of a
co-trustee or separate trustee hereunder shall relieve the Trustee of its
obligations hereunder.
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.
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
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act under or in respect of this Agreement on its behalf and in its name. If any
separate trustee or co-trustee shall become incapable of acting, resign or be
removed, or shall be adjudged a bankrupt or insolvent, or a receiver of its
property shall be appointed, or any public officer shall take charge or control
of such trustee or co-trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, 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 9.10. Authenticating Agents. The Trustee may appoint one or
more authenticating agents ("Authenticating Agents") which shall be authorized
to act on behalf of the Trustee in authenticating or countersigning
Certificates. Wherever reference is made in this Agreement to the authentication
or countersigning of Certificates by the Trustee or the Trustee's certificate of
authentication or countersigning, such reference shall be deemed to include
authentication or countersigning on behalf of the Trustee by an Authenticating
Agent and a certificate of authentication or countersignature executed on behalf
of the Trustee by an Authenticating Agent. Each Authenticating Agent must be
acceptable to the Master Servicer and must be a corporation or national banking
association organized and doing business under the laws of the United States of
America or of any State, having a principal office and place of business in New
York, New York, having a combined capital and surplus of at least $15,000,000,
authorized under such laws to do a trust business and subject to supervision or
examination by Federal or State authorities.
Any corporation or national banking association into which any
Authenticating Agent 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 any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Master Servicer. The Trustee may
at any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Master Servicer.
Upon receiving a notice of resignation or upon such a termination, or in case,
at any time any Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 9.10, the Trustee may appoint a successor
Authenticating Agent, shall give written notice of such appointment to the
Master Servicer and shall mail notice of such appointment to all
Certificateholders. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent.
SECTION 9.11. Trustee's Fees and Expenses. The Trustee, as
compensation for its activities hereunder, shall be entitled to receive on each
Distribution Date an amount equal to the Trustee Fee for such Distribution Date
pursuant to Section 5.02(a). The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Trust and held harmless against
any loss, liability or expense (including reasonable attorney's fees) (a)
incurred in
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connection with any claim or legal action relating to (i) this Agreement, (ii)
the Certificates, or (iii) the performance of any of the Trustee's duties
hereunder, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of any of the
Trustee's duties hereunder, (b) resulting from any tax or information return
which was prepared by, or should have been prepared by, the Master Servicer and
(c) arising out of the transfer of any Private Certificate not in compliance
with ERISA. Such indemnity shall survive the termination of this Agreement or
the resignation or removal of the Trustee hereunder. Without limiting the
foregoing, except as otherwise agreed upon in writing by the Sponsor and the
Trustee, and except for any such expense, disbursement or advance as may arise
from the Trustee's negligence, bad faith or willful misconduct, the Trust shall
reimburse the Trustee, for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement; provided, however, that the Sponsor and the Trustee intend to enter
into a separate agreement for custody-related services. Except as otherwise
provided herein, the Trustee shall not be entitled to payment or reimbursement
for any routine ongoing expenses incurred by the Trustee in the ordinary course
of its duties as Trustee, Certificate Registrar or Paying Agent hereunder or for
any other expenses.
SECTION 9.12. Tax Returns. The Trustee will prepare any federal,
state and local income tax or information returns of the Trust, the Master REMIC
and the Subsidiary REMIC and shall file or cause to be filed such returns.
SECTION 9.13. Paying Agents. The Trustee may appoint one or more
Paying Agents which shall be authorized to act on behalf of the Trustee in
making withdrawals from the Collection Account, and distributions to
Certificateholders as provided in Section 3.08 and Section 5.02. Wherever
reference is made in this Agreement to the withdrawal from the Collection
Account by the Trustee, such reference shall be deemed to include such a
withdrawal on behalf of the Trustee by a Paying Agent. Whenever reference is
made in this Agreement to a distribution by the Trustee or the furnishing of a
statement to Certificateholders by the Trustee, such reference shall be deemed
to include such a distribution or furnishing on behalf of the Trustee by a
Paying Agent. Each Paying Agent shall provide to the Trustee such information
concerning the Collection Account as the Trustee shall request from time to
time. Each Paying Agent must be reasonably acceptable to the Master Servicer and
must be a corporation or banking association organized and doing business under
the laws of the United States of America or of any state, having a principal
office and place of business in New York, New York, having a combined capital
and surplus of at least $15,000,000, authorized under such laws to do a trust
business and subject to supervision or examination by federal or state
authorities.
Any corporation into which any Paying Agent may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which any Paying Agent shall be a party,
or any corporation succeeding to the corporate agency business of any Paying
Agent, shall continue to be the Paying Agent provided that such corporation
after the consummation of such merger, conversion, consolidation or succession
meets the eligibility requirements of this Section 9.13.
Any Paying Agent may at any time resign by giving written notice of
resignation to the Trustee and to the Master Servicer; provided that the Paying
Agent has returned to the Collection
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Account or otherwise accounted, to the reasonable satisfaction of the Trustee,
for all amounts it has withdrawn from the Collection Account. The Trustee may,
upon prior written approval of the Master Servicer, at any time terminate the
agency of any Paying Agent by giving written notice of termination to such
Paying Agent and to the Master Servicer. Upon receiving a notice of resignation
or upon such a termination, or in case at any time any Paying Agent shall cease
to be eligible in accordance with the provisions of the first paragraph of this
Section 9.13, the Trustee may appoint, upon prior written approval of the Master
Servicer, a successor Paying Agent, shall give written notice of such
appointment to the Master Servicer and shall mail notice of such appointment to
all Certificateholders. Any successor Paying Agent upon acceptance of its
appointment hereunder shall become vested with all rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if originally
named as Paying Agent. The Trustee shall remain liable for any duties and
obligations assumed by its appointed Paying Agent.
SECTION 9.14. Limitation of Liability. The Certificates are
executed by the Trustee, not in its individual capacity but solely as Trustee of
the Trust, in the exercise of the powers and authority conferred and vested in
it by this Agreement. Each of the undertakings and agreements made on the part
of the Trustee in the Certificates is made and intended not as a personal
undertaking or agreement by the Trustee but is made and intended for the purpose
of binding only the Trust.
SECTION 9.15 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates 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, and such preceding 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, disbursement and advances of the Trustee, its agents and counsel, be
for the ratable benefit or the Certificateholders in respect of which such
judgment has been recovered.
SECTION 9.16 Suits for Enforcement. In case an Event of Default or
other default by the Master Servicer or the Sponsor hereunder shall occur and be
continuing, the Trustee, in its discretion, may proceed to protect and enforce
its rights and the rights of the Holders of Certificates under this Agreement by
a suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Agreement or
in aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy, as the Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of the Trustee and the Certificateholders.
SECTION 9.17 Waiver of Bond Requirement. The Trustee shall be
relieved of, and each Certificateholder hereby waives, any requirement of any
jurisdiction in which the Trust, or any part thereof, may be located that the
Trustee post a bond or other surety with any court, agency or body whatsoever.
SECTION 9.18 Waiver of Inventory, Accounting and Appraisal
Requirement. The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee file any
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inventory, accounting or appraisal of the Trust with any court, agency or body
at any time or in any manner whatsoever.
SECTION 9.19 Year 2000 Compliance. The Trustee is working to
modify its computer and other systems used in the performance of its duties as
trustee and/or bond administrator for the Certificates to operate in a manner
such that, on and after January 1, 2000, the Trustee can perform its duties in
accordance with the terms of this Agreement.
ARTICLE X
TERMINATION
SECTION 10.01. Termination upon Purchase by the Sponsor or
Liquidation of All Mortgage Loans. Subject to Section 10.02, the respective
obligations and responsibilities of the Sponsor, the Master Servicer and the
Trustee created hereby (other than the obligation of Trustee to make certain
payments to Certificateholders after the Final Distribution Date, the
obligations of the Master Servicer to send certain notices as hereinafter set
forth and pursuant to Sections 9.11 and 9.12 hereof and the obligation of the
Master Servicer pursuant to Section 5.05(b)) shall terminate upon the last
action required to be taken by the Trustee on the Final Distribution Date
pursuant to this Article X following the earlier of (a) the purchase by the
Sponsor of all Mortgage Loans and all REO Property remaining in the Trust Fund
at a price equal to the sum of (i) 100% of the Stated Principal Balance of each
Mortgage Loan (other than any Mortgage Loan as to which REO Property has been
acquired and whose fair market value is included pursuant to clause (ii) below)
and (ii) the fair market value of such REO Property (as determined by the
Sponsor as of the close of business on the third Business Day next preceding the
date upon which notice of any such termination is furnished to
Certificateholders pursuant to the third paragraph of this Article X), plus any
Class Unpaid Interest Shortfall for any Class of Certificates as well as one
month's interest at the related Mortgage Rate on the Stated Principal Balance of
each Mortgage Loan (including any Mortgage Loan as to which REO Property has
been acquired) or (b) the final payment or other liquidation (or any advance
with respect thereto) of the last Mortgage Loan remaining in the Trust Fund or
the disposition of all REO Property; provided, however, that in no event shall
the Trust created hereby continue beyond the expiration of 21 years from the
death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. ▇▇▇▇▇, living on the date
hereof.
The right of the Sponsor to repurchase all Mortgage Loans pursuant to
(a) above is conditioned upon the Pool Stated Principal Balance as of the Final
Distribution Date being less than 5% of the Cut-Off Date Pool Principal Balance.
If such right is exercised, the Trustee shall, promptly following payment of the
purchase price, release to the Sponsor or its designee the Mortgage Files
pertaining to the Mortgage Loans being purchased.
Notice of any termination, specifying the Final Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and for cancellation, shall be given
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promptly by the Sponsor (if exercising its right to purchase the assets of the
Trust) or by the Trustee (in any other case) by letter to Certificateholders
mailed not earlier than the 15th day and not later than the 25th day of the
month next preceding the month of such final distribution specifying (1) the
Final Distribution Date upon which final payment of the Certificates will be
made upon presentation and surrender of Certificates at the office or agency of
the Trustee therein designated, (2) the amount of any such final payment and (3)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. If the
Sponsor is obligated to give notice to Certificateholders as aforesaid, it shall
give such notice to the Trustee and the Certificate Registrar at the time such
notice is given to Certificateholders. In the event such notice is given by the
Sponsor, the Sponsor shall deposit in the Collection Account on or before the
Final Distribution Date in immediately available funds an amount equal to the
amount necessary to make the amount, if any, on deposit in the Collection
Account on the Final Distribution Date equal to the purchase price for the
assets of the Trust computed as above provided together with a statement as to
the amount to be distributed on each Class of Certificates pursuant to the next
succeeding paragraph.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class, in the order set
forth in Section 5.02 hereof, on the final Distribution Date and in proportion
to their respective Percentage Interests, with respect to Certificateholders of
the same Class, an amount equal to (I) as to each Class of Certificates, the
Class Certificate Balance thereof plus (a) accrued interest thereon (or on their
Notional Amount, if applicable) in the case of an interest bearing Certificate
and (b) the Class A-PO Deferred Amount with respect to the Class A-PO
Certificates, and (II) as to the Class R-I Certificates, the amount, if any,
which remains on deposit in the Distribution Account (other than the amounts
retained to meet claims) after application pursuant to clause (I) above.
If all of the Certificateholders do not surrender their Certificates
for final payment and cancellation on or before the Final Distribution Date, the
Trustee shall on such date cause all funds in the Collection Account not
distributed in final distribution to Certificateholders to continue to be held
by the Trustee in an Eligible Account for the benefit of such Certificateholders
and the Sponsor (if it exercised its right to purchase the assets of the Trust
Fund) or the Trustee (in any other case) 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
one year after the second notice all 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 on deposit in such Eligible Account.
SECTION 10.02. Additional Termination Requirements.
(a) If the Sponsor exercises its purchase option as provided in Section
10.01, the Trust shall be terminated in accordance with the following additional
requirements, unless the Trustee has received an Opinion of Counsel to the
effect that the failure of the Trust to comply with the requirements of this
Section 10.02 will not (i) result in the imposition of taxes on "prohibited
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transactions" of the Trust as defined in Section 860F of the Code, or (ii) cause
the Trust to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(A) within 90 days prior to the Final Distribution Date set
forth in the notice given by the Sponsor under Section 10.01, the
Trustee shall sell all of the assets of the Trust Fund to the Sponsor
for cash; and
(B) the notice given by the Sponsor or the Trustee pursuant to
Section 10.01 shall provide that such notice constitutes the adopting
of a plan of complete liquidation of the Subsidiary REMIC and the
Master REMIC as of the date of such notice (or, if earlier, the date on
which such notice was mailed to Certificateholders). The Trustee shall
also specify such date in the final tax return of the Subsidiary REMIC
and the Master REMIC.
(b) By their acceptance of the Residual Certificates, the Holders
thereof hereby agree to take such other action in connection with such plan of
complete liquidation as may be reasonably requested by the Sponsor.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment. This Agreement may be amended from time to
time by the Sponsor, the Master Servicer and the Trustee, without the consent of
any of the Certificateholders, (a) to cure any ambiguity, (b) to correct or
supplement any provisions herein or therein which may be defective or
inconsistent with any other provisions herein or therein, as the case may be,
(c) to modify, eliminate or add to any of its provisions to such extent as shall
be necessary to maintain the qualification of the Master REMIC and the
Subsidiary REMIC as REMICs or (d) to add 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 (i)
as evidenced by an Opinion of Counsel in each case such action shall not,
adversely affect in any material respect the interests of any Certificateholder,
(ii) in each case, such action is necessary or desirable to maintain the
qualification of the Master REMIC and the Subsidiary REMIC as REMICs or shall
not adversely affect such qualification and (iii) if the opinion called for in
clause (i) cannot be delivered with regard to an amendment pursuant to clause
(c) above, such amendment is necessary to maintain the qualification of the
Master REMIC and the Subsidiary REMIC as REMICs; and, provided further, that the
amendment shall not be deemed to adversely affect in any material respect the
interests of the Certificateholders and no Opinion of Counsel to that effect
shall be required if the Person requesting the amendment obtains a letter from
each Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the
Certificates.
This Agreement may also be amended from time to time by the Sponsor,
the Master Servicer and the Trustee, with the consent of the Holders of
Certificates of each Class of Certificates which is affected by such amendment,
evidencing, as to each such Class of Certificates, Percentage Interests
aggregating not less than 66-2/3%, for the purpose of adding any provisions to
or changing
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in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders of such Certificates;
provided, however, that no such amendment shall (A) reduce in any manner the
amount of, or delay the timing of, collections of payments on Mortgage Loans or
distributions which are required to be made on any Certificate without the
consent of the Holder of such Certificate or (B) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the Holders of
all Certificates then Outstanding.
Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of the Master REMIC and the Subsidiary
REMIC as REMICs and notice of the conclusion expressed in such Opinion of
Counsel shall be included with any such solicitation. An amendment made with the
consent of all Certificateholders and executed in accordance with this Section
11.01 shall be permitted or authorized by this Agreement notwithstanding that
such Opinion of Counsel may conclude that such amendment would adversely affect
the qualification of the Master REMIC and the Subsidiary REMIC as REMICs.
Promptly after the execution of any such amendment or consent the
Trustee shall furnish written notification of the substance of or a copy of such
amendment to each Certificateholder and to each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section 11.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
SECTION 11.02. Recordation of Agreement. This Agreement is subject
to recordation in all appropriate public offices for real property records in
all the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer and at its expense on direction by the Trustee, who will act at
the direction of Holders of Certificates evidencing not less than 50% of all
Voting Rights, but only upon direction of the Trustee accompanied by an Opinion
of Counsel to the effect that such recordation materially and beneficially
affects the interests of Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
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SECTION 11.03. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
herein) or in any manner otherwise control the operation and management of the
Trust, or the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision hereof.
No Certificateholder shall have any right by virtue 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 a written notice
of default and of the continuance thereof, as provided herein, and unless also
the Holders of Certificates evidencing Percentage Interests aggregating not less
than 25% of each Class of Certificates affected thereby shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue 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 11.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT APPLICATION OF THE
CONFLICTS OF LAWS PROVISIONS THEREOF, AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.05. Notices. All demands, notices and communications
required to be delivered hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered at or mailed by certified mail,
return receipt requested, (provided, however, that notices to the Trustee shall
be deemed effective upon receipt) to (a) in the case of the Sponsor, NationsBanc
▇▇▇▇▇▇▇▇▇▇ Funding Corp., NationsBanc Corporate Center, 11th Floor, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Secretary,
(b) in the case of the Master Servicer, NationsBanc Mortgage Corporation, ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
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Kentucky 40202, Attention: Servicing Manager, with a copy to: NationsBanc
Mortgage Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel and Treasurer, (c) in the case of the
Trustee, Norwest Bank Minnesota, National Association, at the Corporate Trust
Office, Attention: NationsBanc ▇▇▇▇▇▇▇▇▇▇ Funding Corp. 1998-1, with a copy to
Norwest Bank Minnesota, National Association, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: NationsBanc ▇▇▇▇▇▇▇▇▇▇ Funding Corp.
1998-1; provided that any correspondence concerning a Mortgage File or any
Request for Release should be sent to: Norwest Bank Minnesota, National
Association, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Inventory Control, (d) in the case of S&P, Standard & Poor's, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attn: Mortgage Surveillance Group, and (e) in the case of Fitch, Fitch
IBCA, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Residential
Mortgage Surveillance Group; or, as to each party, at such other address as
shall be designated by such party in a written notice to each other party. Any
notice required or permitted to be mailed to a Certificateholder shall be given
by first class mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder receives such notice.
SECTION 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
SECTION 11.07. Certificates Nonassessable and Fully Paid. It is the
intention of the Trustee that Certificateholders shall not be personally liable
for obligations of the Trust Fund, that the beneficial ownership interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust Fund or for any reason whatsoever, and that Certificates
upon execution, countersignature and delivery thereof by the Trustee pursuant to
Section 6.01 are and shall be deemed fully paid.
SECTION 11.08. Access to List of Certificateholders. The Certificate
Registrar will furnish or cause to be furnished to the Trustee, within 15 days
after the receipt of a request by the Trustee in writing, a list, in such form
as the Trustee may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date for payment of
distributions to Certificateholders.
If three or more Certificateholders apply in writing to the Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and is accompanied by a copy of the communication which such
applicants propose to transmit, then the Trustee shall, within five Business
Days after the receipt of such application, afford such applicants access during
normal business hours to the most recent list of Certificateholders held by the
Trustee. If such a list is as of a date more than 90 days prior to the date of
receipt of such applicants' request, the Trustee shall
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promptly request from the Certificate Registrar a current list as provided
above, and shall afford such applicants access to such list promptly upon
receipt.
Every Certificateholder, by receiving and holding such list, agrees
with the Certificate Registrar and the Trustee that neither the Certificate
Registrar nor the Trustee shall be held accountable by reason of the disclosure
of any such information as to the names and addresses of the Certificateholders
hereunder, regardless of the source from which such information was derived.
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IN WITNESS WHEREOF, the Sponsor, the Master Servicer and the Trustee
have caused this Agreement to be duly executed by their respective officers
thereunto duly authorized to be hereunto affixed, all as of the day and year
first above written.
NATIONSBANC ▇▇▇▇▇▇▇▇▇▇ FUNDING CORP.,
as Sponsor
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
NATIONSBANC MORTGAGE CORPORATION,
as Master Servicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
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99
STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF MECKLENBURG )
On the 25th day of August, 1998, before me, a notary public in and for
the State of North Carolina, personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, known to me
who, being by me duly sworn, did depose and say that he is a Senior Vice
President of NationsBanc ▇▇▇▇▇▇▇▇▇▇ Funding Corp., a Delaware corporation, one
of the parties that executed the foregoing instrument; and that he signed his
name thereto by order of the Board of Directors of such corporation.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Notary Public
[Notarial Seal]
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
) ss.:
COUNTY OF MECKLENBURG )
On the 25th day of August, 1998, before me, a notary public in and for
the State of North Carolina, personally appeared ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, known to me
who, being by me duly sworn, did depose and say that they are an Authorized
Signatory of NationsBanc Mortgage Corporation, a Texas corporation, one of the
parties that executed the foregoing instrument; and that they signed their name
thereto by order of the Board of Directors of such corporation.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Notary Public
[Notarial Seal]
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ )
) ss.:
COUNTY OF MECKLENBURG )
On the 25th day of August, 1998, before me, a notary public in and for
the State of North Carolina, personally appeared ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, known to me
who, being by me duly sworn, did depose and say that they are an Authorized
Signatory for Norwest Bank Minnesota, National Association, a national banking
association, one of the parties that executed the foregoing instrument; and that
they signed their name thereto by order of the Board of Directors of said
national banking association.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
-------------------------------
Notary Public
[Notarial Seal]