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EXHIBIT 10.1
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▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
as Company,
PACIFICAMERICA MONEY CENTER, INC.
as Seller,
PACIFICAMERICA HOME EQUITY LOAN TRUST SERIES 1998-2F
as Issuer,
and
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.
as Indenture Trustee
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HOME EQUITY LOAN PURCHASE AGREEMENT
Dated as of June 22, 1998
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Fixed Rate Mortgage Loans
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1. Definitions .................................... 2
ARTICLE II
SALE OF MORTGAGE LOANS AND RELATED PROVISIONS
Section 2.1. Sale of Initial Mortgage Loans ................. 16
Section 2.2. Obligations Regarding the Mortgage Loans ....... 16
Section 2.3. Conveyance of the Subsequent Mortgage Loans .... 19
Section 2.4. Pre-Funding Account ............................ 22
Section 2.5. Interest Coverage Account ...................... 23
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 3.1. Seller Representations and Warranties .......... 24
Section 3.2 Company Representations and Warranties ......... 38
ARTICLE IV
SELLER'S COVENANTS
Section 4.1. Covenants of the Seller ........................ 39
Section 4.2. Payment of Expenses ............................ 40
ARTICLE V
CONDITIONS TO INITIAL MORTGAGE LOAN PURCHASE
Section 5.1. Conditions of Company's Obligations ............ 41
ARTICLE VI
LIMITATION ON LIABILITY OF THE SELLER
WITH RESPECT TO THE MORTGAGE LOANS
Section 6.1. Limitation on Liability of the Seller .......... 41
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ARTICLE VII
TERMINATION
Section 7.1. Termination .................................... 42
Section 7.2. Optional Redemption ............................ 43
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment ...................................... 44
Section 8.2. Governing Law .................................. 44
Section 8.3. Notices ........................................ 44
Section 8.4. Severability of Provisions ..................... 45
Section 8.5. Relationship of Parties ........................ 46
Section 8.6. Counterparts ................................... 46
Section 8.7. Further Agreements ............................. 46
Section 8.8. Intention of the Parties ....................... 46
Section 8.9. Successors and Assigns; Assignment of Purchase Agreement 46
Section 8.10. Survival ...................................... 47
Section 8.11. Third Party Beneficiary ....................... 47
Exhibits
Exhibit 1 Mortgage Loan Schedule for Initial Mortgage Loans
Exhibit 2 Subsequent Transfer Instrument
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This HOME EQUITY LOAN PURCHASE AGREEMENT (this "Agreement"),
dated as of June 22, 1998, is made among PacificAmerica Money Center, Inc. (the
"Seller"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc. (the "Company"),
PacificAmerica Home Equity Loan Trust Series 1998-2F (the "Issuer") and Bankers
Trust Company of California, N.A. (the "Indenture Trustee").
W I T N E S S E T H :
WHEREAS, the Seller owns certain fixed rate Mortgage Loans
indicated on the Mortgage Loan Schedule attached as Exhibit 1 hereto (the
"Initial Mortgage Loans"), including rights to (a) any property acquired by
foreclosure or deed in lieu of foreclosure or otherwise, and (b) the proceeds of
any insurance policies covering the Initial Mortgage Loans;
WHEREAS, pursuant to the terms of this Home Equity Loan Purchase
Agreement the parties hereto desire that the Seller sell (i) the Initial
Mortgage Loans to the Company on the Closing Date and (ii) the Subsequent
Mortgage Loans to the Issuer on each Subsequent Transfer Date, and that the
Seller make certain representations and warranties on the Closing Date and on
each Subsequent Transfer Date;
WHEREAS, the Company will sell the Initial Mortgage Loans and
transfer all of its rights under this Home Equity Loan Purchase Agreement to the
Issuer on the Closing Date;
WHEREAS, pursuant to the terms of the Trust Agreement, the Issuer
will issue and transfer to or at the direction of the Company, the Certificates;
WHEREAS, pursuant to the terms of the Indenture, the Issuer will
issue and transfer to or at the direction of the Company, the Notes; and
WHEREAS, pursuant to the terms of the Servicing Agreement, the
Master Servicer will service the Mortgage Loans directly or through one or more
Subservicers;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. For all purposes of this Agreement, all
capitalized terms used herein shall have the meanings specified herein.
Addition Notice: With respect to the transfer of Subsequent
Mortgage Loans to the Trust pursuant to Section 2.3 herein, a notice in
substantially the form set forth in Exhibit 3 to this Agreement given to the
Rating Agencies, the Indenture Trustee, the Note Insurer and the Owner Trustee,
which shall be given not later than seven Business Days prior to the related
Subsequent Transfer Date, of the Seller's designation of Subsequent Mortgage
Loans to be sold to the Issuer and the aggregate principal balance as of the
Subsequent Cut-off Date of such Subsequent Mortgage Loans.
Appraised Value: The appraised value of a Mortgaged Property
based upon the lesser of (i) the appraisal made at the time of the origination
of the related Mortgage Loan, or (ii) the sales price of such Mortgaged Property
at such time of origination. With respect to a Mortgage Loan the proceeds of
which were used to refinance an existing mortgage loan, the appraised value of
the Mortgaged Property based upon the appraisal (as reviewed and approved by the
Seller) obtained at the time of refinancing.
Assignment of Mortgage: An assignment of Mortgage, notice of
transfer or equivalent instrument, in recordable form, which is sufficient under
the laws of the jurisdiction wherein the related Mortgaged Property is located
to reflect of record the sale of the Mortgage, which assignment, notice of
transfer or equivalent instrument may be in the form of one or more blanket
assignments covering Mortgages secured by Mortgaged Properties located in the
same county, if permitted by law.
Bankruptcy Code: The Bankruptcy Code of 1978, as amended.
Basic Documents: The Trust Agreement, the Certificate of Trust,
the Indenture, this Agreement, the Insurance Agreement, the Indemnification
Agreement, the Servicing Agreement, the Sub-Servicing Agreement and the other
documents and certificates delivered in connection with any of the above.
Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the City of New York, Delaware or
California or in the city in which the corporate trust offices of the Indenture
Trustee or the principal office of the Note Insurer are located, are required or
authorized by law to be closed.
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Business Trust Statute: Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as the same may be amended from time to
time.
Certificate of Trust: The Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute.
Certificates or Home Equity Loan Asset-Backed Certificates: The
PacificAmerica Home Equity Loan Asset-Backed Certificates, Series 1998-2F,
evidencing the beneficial ownership interest in the Issuer and executed by the
Owner Trustee in substantially the form set forth in Exhibit A to the Trust
Agreement.
Certificateholder: The Person in whose name a Certificate is
registered in the Certificate Register. Pledgees of Certificates that have been
pledged in good faith may be regarded as Certificateholders if the pledgee
establishes to the satisfaction of the Indenture Trustee or the Owner Trustee,
as the case may be, the pledgee's right so to act with respect to such
Certificates and that the pledgee is not the Issuer, any other obligor upon the
Certificates or any Affiliate of any of the foregoing Persons.
Closing Date: June 25, 1998.
Collection Account: The account or accounts created and
maintained pursuant to the Servicing Agreement. The Collection Account shall be
an Eligible Account.
Combined Loan-to-Value Ratio: With respect to any Mortgage Loan
which is secured by a second lien on the related Mortgaged Property and any
date, the ratio, expressed as a percentage, the numerator of which is the sum of
(i) the unpaid principal balance of the Mortgage Loan plus (ii) the original
principal balance of any second lien on the related Mortgaged Property as of
such date, and the denominator of which is the lesser of (i) the Appraised Value
of the related Mortgaged Property as of the date of the appraisal used by or on
behalf of the Seller to underwrite such Mortgage Loan or (ii) the sale price of
the related Mortgaged Property if such a sale occurred at origination of the
Mortgage Loan.
Company: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., a Delaware
corporation, and its successors and assigns.
Cut-off Date: June 9, 1998.
Deficient Valuation: With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Mortgage Loan, or
any reduction in the amount of principal to be paid in
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connection with any scheduled Monthly Payment that constitutes a permanent
forgiveness of principal, which valuation or reduction results from a proceeding
under the Bankruptcy Code.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced
with an Eligible Substitute Mortgage Loan.
Determination Date: With respect to any Payment Date, the 15th
day of the related month, or if the 15th day of such month is not a Business
Day, the immediately preceding Business Day.
Due Date: The first day of the month of the related Payment Date.
Due Period: With respect to any Mortgage Loan and Due Date, the
period commencing on the second day of the month preceding the month of such
Payment Date (or, with respect to the first Due Period, the day following the
Cut-off Date) and ending on the related Due Date.
Eligible Account: An account that is either: (A) (1) a segregated
account or accounts maintained with an institution whose deposits are insured by
the FDIC, (2) the unsecured and uncollateralized long term debt obligations of
which institution shall be rated A+ or higher by Standard & Poor's and A1 or
higher by Moody's and the unsecured and uncollateralized short term debt
obligations of which institution shall be rated A-1 or higher by Standard &
Poor's and P-1 or higher by Moody's, and (3) which institution is (i) a federal
savings and loan association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state; (iii) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, (iv) a principal subsidiary of
a bank holding company or (v) approved in writing by the Note Insurer and each
Rating Agency or (B) a segregated trust account or accounts maintained with the
trust department of a federal or state chartered depository institution
acceptable to the Note Insurer and each Rating Agency, having capital and
surplus of not less than $100,000,000, acting in its fiduciary capacity.
Eligible Investments: One or more of the following:
(i) direct obligations of, and obligations fully guaranteed by,
the United States of America, any of the Federal Home Mortgage
Corporation, the Federal National Mortgage Association, the Federal Home
Loan Banks or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and credit
of the United States of America;
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(ii) (A) demand and time deposits in, certificates of deposit
of, banker's acceptances issued by or federal funds sold by any
depository institution or trust company (including the Indenture Trustee
or its agent acting in their respective commercial capacities)
incorporated under the laws of the United States of America or any State
thereof and subject to supervision and examination by federal and/or
state authorities, so long as at the time of such investment or
contractual commitment providing for such investment, such depository
institution or trust company has a short term unsecured debt rating in
the highest available rating category of each of the Rating Agencies and
provided that each such investment has an original maturity of no more
than 365 days, and (B) any other demand or time deposit or deposit which
is fully insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with a term not to exceed 30 days
with respect to any security described in clause (i) above and entered
into with a depository institution or trust company (acting as a
principal) rated "A" or higher by Standard & Poor's and A2 or higher by
Moody's; provided, however, that collateral transferred pursuant to such
repurchase obligation must (A) be valued daily at current market price
plus accrued interest, (B) pursuant to such valuation, equal, at all
times, 105% of the cash transferred by the Indenture Trustee in exchange
for such collateral and (C) be delivered to the Indenture Trustee or, if
the Indenture Trustee is supplying the collateral, an agent for the
Indenture Trustee, in such a manner as to accomplish perfection of a
security interest in the collateral by possession of certificated
securities.
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of
America or any State thereof which has a long term unsecured debt rating
in the highest available rating category of each of the Rating Agencies
at the time of such investment;
(v) commercial paper having an original maturity of less than
365 days and issued by an institution having a short term unsecured debt
rating in the highest available rating category of each of the Rating
Agencies at the time of such investment;
(vi) a guaranteed investment contract approved by each of the
Rating Agencies and the Note Insurer and issued by an insurance company
or other corporation having a long term unsecured debt rating in the
highest available rating category of each of the Rating Agencies at the
time of such investment;
(vii) money market funds having ratings in the highest available
long-term rating category of each of the Rating Agencies at the time of
such investment; any such money market funds which provide for demand
withdrawals being conclusively deemed to satisfy any maturity
requirement for Eligible Investments set forth in the Indenture; and
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(viii) any investment approved in writing by each of the Rating
Agencies and the Note Insurer.
provided, however, that each such instrument shall be acquired in an arm's
length transaction and no such instrument shall be an Eligible Investment if it
represents, either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from obligations underlying such instrument and the
principal and interest payments with respect to such instrument provide a yield
to maturity greater than 120% of the yield to maturity at par of such underlying
obligations; provided further, however, that each such instrument acquired shall
not be acquired at a price in excess of par.
The Indenture Trustee may purchase from or sell to itself or an affiliate, as
principal or agent, the Eligible Investments listed above.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by
the Seller for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officer's Certificate delivered to the
Indenture Trustee and the Note Insurer, (i) have an outstanding principal
balance, after deduction of the principal portion of the monthly payment due in
the month of substitution (or in the case of a substitution of more than one
Mortgage Loan for a Deleted Mortgage Loan, an aggregate outstanding principal
balance, after such deduction), not in excess of the outstanding principal
balance of the Deleted Mortgage Loan (the amount of any shortfall to be
deposited by the Seller in the Collection Account in the month of substitution);
(ii) comply in all material respects with each representation and warranty set
forth in clauses (i) through (lxvi) of Section 3.1(b) hereof other than clauses
(iii)-(xiv), (x), (liv) and (lvii); (iii) have a Mortgage Rate (or in the case
of a substitution of more than one Mortgage Loan for a Deleted Mortgage Loan, a
weighted average Mortgage Rate) no lower than no lower than and not more than 1%
per annum higher than the Mortgage Rate of the Deleted Mortgage Loan as of the
date of substitution (and in the case of a substitution of more than one
Mortgage Loan for a deleted Mortgage Loan, each such Mortgage Loan shall have a
Mortgage Rate in excess of [7.40%]) ; (iv) have a Loan-to-Value Ratio and
Combined Loan-to-Value Ratio, if applicable, at the time of substitution no
higher than that of the Deleted Mortgage Loan at the time of substitution; (v)
have a remaining term to stated maturity not greater than (and, unless consented
to by the Note Insurer, not more than one year less than) that of the Deleted
Mortgage Loan; (vi) not be 30 days or more delinquent; (vii) have a property
type, occupancy status, and credit quality based on the applicable underwriting
guidelines that are at least as favorable as those of the Deleted Mortgage Loan
and not provide for a balloon payment; (viii) be a Mortgage Loan having a
Mortgage Rate which is fixed; (x) be acceptable to the Note Insurer, in its sole
discretion and (xi) have a lien priority which is not lower than the lien
priority of the Deleted Mortgage Loan.
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Funding Period: The period beginning on the Closing Date and
ending on the earlier of the date on which (a) the amount on deposit in the
related Pre-Funding Account (net of any investment earnings thereon) is less
than $10,000 or (b) the close of business on August 25, 1998.
Home Equity Loan Purchase Agreement: This Agreement, dated June
22, 1998, among the Seller, the Company, the Indenture Trustee and the Issuer.
Indenture: The indenture relating to the Notes, to be dated as of
June 1, 1998, between the Issuer, as debtor, and the Indenture Trustee, as
Indenture Trustee.
Indenture Trustee: Bankers Trust Company of California, N.A., a
national banking association, and its successors and assigns or any successor
indenture trustee appointed pursuant to the terms of the Indenture.
Initial Mortgage Loan: A Mortgage Loan transferred and conveyed
by the Company to the Issuer on the Closing Date, as listed on the Mortgage Loan
Schedule.
Insurance Agreement: The Insurance and Indemnity Agreement, to be
dated as of June 25, 1998, among the Seller, the Company and the Note Insurer,
including any amendments and supplements thereto.
Interest Coverage Account: The account established and maintained
pursuant to Section 2.5 of this Agreement.
Interest Coverage Addition: As to any Payment Date, an amount,
not less than $0.00, equal to the sum of (x) interest accrued for the related
Interest Period on an amount equal to (i) the Original Pre-Funded Amount minus
(ii) the aggregate Principal Balance of any related Subsequent Mortgage Loans
transferred prior to the related Interest Period, calculated at a rate equal to
the Note Interest Rate and (y) the Note Insurance Premium accrued on the excess,
if any, of the Original Pre-Funded Amount over the aggregate Principal Balance
of any related Subsequent Mortgage Loans transferred prior to the related
Interest Period.
Interest Coverage Amount: The amount to be paid from proceeds
received from the sale of the Notes for deposit into the related Interest
Coverage Account pursuant to Section 2.5 hereof on the Closing Date, which
amount shall be $_____________.
Interest Payment Amount: With respect to any Payment Date, an
amount equal to the interest accrued during the related Interest Period on the
Note Principal Balances of the Notes at the Note Interest Rate.
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Interest Period: With respect to any Payment Date on the basis of
a 360-day year consisting of twelve 30-day months, the 30-day month prior to the
month in which the related Payment Date occurs.
Issuer: PacificAmerica Home Equity Loan Trust Series 1998-2F, a
Delaware business trust, or its successor in interest.
Lien: Any mortgage, deed of trust, pledge, conveyance,
hypothecation, assignment, participation, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority right or interest or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agree ment, any financing lease having substantially the same economic effect as
any of the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes only)
or comparable law of any jurisdiction to evidence any of the foregoing.
Loan-to-Value Ratio: With respect to any Mortgage Loan, as of any
date of determination, a fraction expressed as a percentage, the numerator of
which is the then current principal amount of the Mortgage Loan, and the
denominator of which is the lesser of the Purchase Price or the Appraised Value
of the related Mortgaged Property.
Master Servicer: PacificAmerica Money Center, Inc. a Delaware
corporation, and its successors and assigns.
Monthly Payment: With respect to any Mortgage Loan (including any
REO Property) and any Due Date, the payment of principal and interest due
thereon in accordance with the amortization schedule at the time applicable
thereto (after adjustment, if any, for partial Principal Prepayments and for
Deficient Valuations occurring prior to such Due Date but before any adjustment
to such amortization schedule by reason of any bankruptcy, other than a
Deficient Valuation, or similar proceeding or any moratorium or similar waiver
or grace period).
Mortgage: The mortgage, deed of trust or other instrument
creating a first or second lien on an estate in fee simple interest in real
property securing a Mortgage Loan.
Mortgage File: The file containing the Related Documents
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to Section 2.2 hereof or the Servicing
Agreement.
Mortgage Loan: Each of the Mortgage Loans identified in the
Mortgage Loan Schedule.
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Mortgage Loan Schedule: With respect to any date, the schedule of
Mortgage Loans pledged under the Indenture on such date, including, as
applicable, the schedule of Initial Mortgage Loans as of the Cut-off Date set
forth in Exhibit 1 of this Agreement and such schedule, as amended by the Seller
to reflect (i) Eligible Substitute Mortgage Loans and Deleted Mortgage Loans,
and (ii) as of each Subsequent Transfer Date, any Subsequent Mortgage Loans,
which schedules set forth as to each Mortgage Loan
(i) the loan number and name of the Mortgagor;
(ii) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ and zip code of the Mortgaged
Property;
(iii) the Mortgage Rate at origination;
(iv) the maturity date;
(v) the original principal balance;
(vi) the first payment date;
(vii) the type of Mortgaged Property;
(viii) the Monthly Payment;
(ix) the Principal Balance as of the Cut-off Date (with respect to an
Initial Mortgage Loan) or Subsequent Cut-off Date (with respect
to a Subsequent Mortgage Loan);
(x) the occupancy status;
(xi) the purpose of the Mortgage Loan;
(xii) the Appraised Value of the Mortgaged Property;
(xiii) the original term to maturity;
(xiv) the paid-through date of the Mortgage Loan;
(xv) the Loan-to-Value Ratio or, with respect to a Mortgage Loan
secured by a second lien, the combined Loan-to-Value Ratio;
(xvi) whether or not the Mortgage Loan was underwritten pursuant to a
limited documentation program; and
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(xvii) whether the Mortgaged Property is subject to a first or second
lien.
The Mortgage Loan Schedule shall also set forth the total of the
amounts described under (ix) above for all of the Mortgage Loans.
Mortgage Loans: At any time, collectively, all Mortgage Loans
that have been sold or otherwise transferred and conveyed by the Seller to the
Company or to the Issuer, as applicable, under this Agreement, in each case
together with the Related Documents, and that remain subject to the terms
thereof. As applicable, Mortgage Loan shall be deemed to refer to the related
REO Property and to Initial Mortgage Loans, Eligible Substitute Mortgage Loans
and Subsequent Mortgage Loans.
Mortgage Note: The note or other evidence of the indebtedness of
a Mortgagor under a Mortgage Loan.
Mortgage Rate: With respect to any Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan.
Mortgaged Property: The underlying property, including real
property and improvements thereon, securing a Mortgage Loan.
Mortgagor: The obligor or obligors under a Mortgage Note.
Note Insurer: Financial Security Assurance Inc., a New York stock
insurance corporation or any successor thereto.
Note Interest Rate: ____% per annum.
Note Principal Balance: With respect to any Note, the initial
principal balance thereof as of the Closing Date and reduced by all amounts
distributed in respect of principal with respect to such Note.
Noteholder or Holder: The Person in whose name a Note is
registered in the Note Register, except that, any Note registered in the name of
the Company, the Issuer or the Indenture Trustee or any Affiliate of any of them
shall be deemed not to be a Noteholder or Holder, nor shall any Note so owned be
considered outstanding, for purposes of giving any request, demand,
authorization, direction, notice, consent or waiver under the Indenture or the
Trust Agreement, provided that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that the Indenture Trustee
knows to be so owned shall be so disregarded. Any Notes on which payments are
made under the Note Insurance Policy shall be deemed Outstanding until the Note
Insurer has
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been reimbursed with respect thereto and the Note Insurer shall be deemed the
Noteholder thereof to the extent of such unreimbursed payment.
Notes: PacificAmerica Home Equity Loan Asset-Backed Notes, Series
1998-2F, designated as the "Notes" in the Indenture.
Officer's Certificate: With respect to the Master Servicer, a
certificate signed by the President, a Director, a Vice President or an
Assistant Vice President, of the Master Servicer and delivered to the Indenture
Trustee. With respect to the Seller, a certificate signed by the President, a
Director, a Vice President or an Assistant Vice President, of the Seller, under
the circumstances described in, and otherwise complying with, the applicable
requirements of Section 2.03(b)(vi) of this Agreement. With respect to the
Issuer, a certificate signed by any Authorized Officer of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 10.01 of the Indenture, and delivered to the Indenture
Trustee.
Opinion of Counsel: A written opinion of counsel acceptable to
the Note Insurer, who may be in-house counsel for the Master Servicer if
acceptable to the Indenture Trustee, the Note Insurer and the Rating Agencies or
counsel for the Company, as the case may be.
Original Pool Balance: The sum of (x) the Principal Balance of
the Mortgage Loans as of the Cut-Off Date and (y) the Original Pre-Funded
Amount, which sum equals $62,035,000.
Original Pre-Funded Amount: The amount deposited (from proceeds)
in the Pre-Funding Account on the Closing Date, which amount is $15,959,777.
Owner Trustee: Wilmington Trust Company and its successors and
assigns or any successor owner trustee appointed pursuant to the terms of the
Trust Agreement.
Payment Account: The account established by the Indenture Trustee
pursuant to Section 3.01 of the Indenture. The Payment Account shall be an
Eligible Account.
Payment Date: The 25th day of each month, or if such day is not a
Business Day, then the next Business Day.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Pre-Funded Amount: With respect to any date of determination, the
amount on deposit in the Pre-Funding Account.
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Pre-Funding Account: The account established and maintained
pursuant to Section 2.4 of this Agreement.
Principal Balance: With respect to any Mortgage Loan or related
REO Property, at any given time, (i) the Principal Balance of the Mortgage Loan
as of the Cut-off Date or Subsequent Cut-off Date, as applicable, minus (ii) the
sum of (a) the principal portion of the Monthly Payments which were received
with respect to such Mortgage Loan or REO Property during each Due Period ending
prior to the most recent Payment Date, and (b) all Principal Prepayments with
respect to such Mortgage Loan or REO Property, and all Insurance Proceeds,
Liquidation Proceeds and REO Proceeds, to the extent applied by the Master
Servicer as recoveries of principal in accordance with the Servicing Agreement
with respect to such Mortgage Loan or REO Property, and (c) the principal
portion of any Realized Loss with respect thereto for any previous Payment Date.
Prospectus: The Prospectus Supplement, together with the attached
Prospectus dated June 22, 1998, with respect to the Notes.
Prospectus Supplement: The Prospectus Supplement dated June 22,
1998, with respect to the Notes.
Purchase Price: The meaning specified in Sections 2.1 and 2.3(a)
of this Agreement.
Related Documents: With respect to each Mortgage Loan, the
documents specified in Section 2.2 of this Agreement and any documents required
to be added to such documents pursuant to this Agreement, the Trust Agreement,
the Indenture or the Servicing Agreement.
REO Property: A Mortgaged Property that is acquired by the Issuer
by foreclosure or by deed in lieu of foreclosure.
Repurchase Event: With respect to any Mortgage Loan, either (i) a
discovery that, as of the Closing Date the related Mortgage was not a valid
first or second lien on the related Mortgaged Property or a discovery that a
Mortgage Loan represented as of the Closing Date to be a valid first lien is a
valid second lien, in each case subject only to (A) the lien of real property
taxes and assessments not yet due and payable, (B) covenants, conditions, and
restrictions, rights of way, easements and other matters of public record as of
the date of recording of such Mortgage and such other permissible title
exceptions as are permitted and (C) other matters to which like properties are
commonly subject which do not materially adversely affect the value, use,
enjoyment or marketability of the related Mortgaged Property or (ii) with
respect to any Mortgage Loan as to which the Seller delivers an affidavit
certifying that the original Mortgage Note has been lost or destroyed, a
subsequent default on such Mortgage Loan if the enforcement thereof
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or of the related Mortgage is materially and adversely affected by the absence
of such original Mortgage Note.
Repurchase Price: With respect to any Mortgage Loan required to
be repurchased on any date pursuant to this Agreement or permitted to be
purchased by the Master Servicer pursuant to the Servicing Agreement, an amount
equal to the sum, without duplication, of (i) 100% of the Principal Balance
thereof (without reduction for any amounts charged off) and (ii) unpaid accrued
interest at the Mortgage Rate on the outstanding principal balance thereof from
the Due Date to which interest was last paid by the Mortgagor (or with respect
to which an Advance was last made by the Master Servicer) to the first day of
the month following the month of purchase plus (iii) the amount of any
unreimbursed Servicing Advances or unreimbursed Advances made with respect to
such Mortgage Loan plus (iv) any other amounts owed to the Master Servicer or
the Subservicer pursuant to Section 3.07 of the Servicing Agreement and not
included in clause (iii) of this definition.
Security: Any of the Certificates or Notes.
Securityholder or Holder: Any Noteholder or a Certificateholder.
Seller: PacificAmerica Money Center, Inc. a Delaware corporation,
and its successors and assigns.
Servicing Advances: All customary, reasonable and necessary "out
of pocket" costs and expenses incurred in connection with a default, delinquency
or other unanticipated event in the performance by the Master Servicer of its
servicing obligations, including, without duplication, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of any REO Property and (iv) compliance
with the obligations under Section 3.13 of the Servicing Agreement.
Servicing Agreement: The Servicing Agreement relating to the
Series 1998-2F transaction, to be dated as of June 1, 1998, among the Master
Servicer, the Indenture Trustee and the Issuer.
Servicing Officer: Any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Mortgage Loans
whose name and specimen signature appear on a list of servicing officers
furnished to the Indenture Trustee (with a copy to the Note Insurer) by the
Master Servicer or a Subservicer, as such list may be amended from time to time.
Subsequent Cut-off Date: With respect to those Subsequent
Mortgage Loans which are sold to the Trust pursuant to a Subsequent Transfer
Instrument the date specified in the related Subsequent Transfer Instrument.
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Subsequent Mortgage Loan: A Mortgage Loan sold by the Seller to
the Issuer pursuant to Section 2.3 of this Agreement, such Mortgage Loan being
identified on the Mortgage Loan Schedule attached to a Subsequent Transfer
Instrument, as set forth in such Subsequent Transfer Instrument.
Subsequent Transfer Date: With respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Mortgage Loans are
sold to the Trust.
Subsequent Transfer Instrument: Each Subsequent Transfer
Instrument dated as of a Subsequent Transfer Date executed by the Seller and the
Issuer substantially in the form of Exhibit 2 to this Agreement, by which
Subsequent Mortgage Loans are sold to the Trust.
Sub-Servicer: Advantage Mortgage Corp. USA, and its successors
and assigns.
Sub-Servicing Agreement: The Sub-Servicing Agreement relating to
the 1998-2F transaction, to be dated as of June 1, 1998, between the Master
Servicer and the Sub-Servicer.
Trust: The PacificAmerica Home Equity Loan Trust Series 1998-2F
to be created pursuant to the Trust Agreement.
Trust Agreement: The Trust Agreement relating to the Series
1998-2F transaction, to be dated as of June 1, 1998, as amended and restated by
the Amended and Restated Trust Agreement, to be dated as of June 1, 1998,
between the Owner Trustee and the Company.
Trust Estate: The meaning specified in the Granting Clause of the
Indenture.
UCC: The Uniform Commercial Code, as amended from time to time,
as in effect in any specified jurisdiction.
Underwriter: ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated.
ARTICLE II
SALE OF MORTGAGE LOANS AND RELATED PROVISIONS
Section 2.1. Sale of Initial Mortgage Loans.
The Seller hereby sells, and the Company hereby purchases on the
Closing Date, the Initial Mortgage Loans identified on the Mortgage Loan
Schedule annexed hereto as Exhibit 1. In addition, the Seller shall deposit with
the Indenture Trustee from proceeds of the issuance of the Notes on the Closing
Date (i) the Original Pre-Funded Amount for deposit in the Pre-
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Funding Account and (ii) the Interest Coverage Amount for deposit in the
Interest Coverage Account. The Initial Mortgage Loans will be fixed rate,
residential first and second lien mortgage loans. The Initial Mortgage Loans
will have a Principal Balance as of the close of business on the Cut-off Date,
after giving effect to any payments received, of approximately $46,076,103. The
sale of the Initial Mortgage Loans will take place on the Closing Date, subject
to and simultaneously with the deposit of the Initial Mortgage Loans and the
amounts in the Pre-Funding Account and the Interest Coverage Account into the
Trust Estate, the issuance of the Securities and the sale of the Notes by the
Issuer pursuant to the Underwriting Agreement. The purchase price (the "Purchase
Price") for the Initial Mortgage Loans to be paid by the Company to the Seller
on the Closing Date shall consist of the following:
(i) a payment in an amount equal to ____% of the aggregate
Principal Balance of the Initial Mortgage Loans as of the close of
business on the Cut-off Date, which payment shall be paid to the Seller
by wire transfer in immediately available funds on the Closing Date by
or on behalf of the Company, or as otherwise agreed by the Company; and
(ii) delivery to the Seller of the Certificates issued by the
Issuer pursuant to the Trust Agreement.
Section 2.2. Obligations Regarding the Mortgage Loans. (a) In
connection with the conveyances by the Seller of the Initial Mortgage Loans and
the Subsequent Mortgage Loans, the Seller shall on behalf of and at the
direction of the Company deliver to, and deposit with, the Indenture Trustee, on
or before the Closing Date in the case of an Initial Mortgage Loan, and one
Business Day prior to the related Subsequent Transfer Date in the case of a
Subsequent Mortgage Loan, the following documents or instruments with respect to
each Mortgage Loan (the "Mortgage File"):
(i) the original Mortgage Note endorsed to the order of "Bankers
Trust Company of California, N.A., as trustee pursuant to the Indenture
dated as of June 1, 1998, relating to the PacificAmerica Home Equity
Loan Asset-Backed Notes, 1998-2F";
(ii) the original Mortgage with evidence of recording thereon,
or, if the original Mortgage has not yet been returned from the public
recording office, a copy of the original Mortgage certified by the
Seller, its designee or the public recording office in which such
original Mortgage has been recorded;
(iii) an original assignment (which may be included in one or
more blanket assignments if permitted by applicable law) of the Mortgage
endorsed to "Bankers Trust Company of California, N.A., as trustee
pursuant to the Indenture dated as of June 1, 1998, relating to the
PacificAmerica Home Equity Loan Asset-Backed Notes, Series 1998-2F",
and otherwise in recordable form;
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(iv) originals of any intervening assignments of the Mortgage,
with evidence of recording thereon, or, if the original of any such
intervening assignment has not yet been returned from the public
recording office, a copy of such original intervening assignment
certified by the Seller, its designee or the public recording office in
which such original intervening assignment has been recorded;
(v) the original policy of title insurance (or a commitment for
title insurance, if the policy is being held by the title insurance
company pending recordation of the Mortgage or a binder or preliminary
title policy if the final title insurance policy is not available);
(vi) a true and correct copy of each assumption, modification,
consolidation or substitution agreement, if any, relating to the
Mortgage Loan.
If a material defect in any Mortgage File is discovered which may
materially and adversely affect the value of the related Mortgage Loan, or the
interests of the Indenture Trustee (as pledgee of the Mortgage Loans), the
Noteholders, the Certificateholders or the Note Insurer in such Mortgage Loan,
including if any document required to be delivered to the Indenture Trustee has
not been delivered (provided that a Mortgage File will not be deemed to contain
a defect for an unrecorded assignment under clause (iii) above for 180 days
following submission of the assignment if the Seller has submitted such
assignment for recording pursuant to the terms of the following paragraph), the
Seller shall cure such defect, repurchase the related Mortgage Loan at the
Repurchase Price or substitute an Eligible Substitute Mortgage Loan for the
related Mortgage Loan upon the same terms and conditions set forth in Section
3.1 hereof as to the Initial Mortgage Loans and the Subsequent Mortgage Loans
and Section 2.3(c) hereof as to the Subsequent Mortgage Loans.
Within 30 days after the Closing Date in the case of an Initial
Mortgage Loan or, in the case of a Subsequent Mortgage Loan, promptly after the
Subsequent Transfer Date (or after the date of transfer of any Eligible
Substitute Mortgage Loan), the Seller at its own expense shall complete and
submit for recording in the appropriate public office for real property records
each of the assignments referred to in clause (iii) above, with such assignment
completed in favor of the Indenture Trustee. While such assignment to be
recorded is being recorded, the Indenture Trustee shall retain a photocopy of
such assignment. If any assignment is lost or returned unrecorded to the
Indenture Trustee because of any defect therein, the Seller is required to
prepare a substitute assignment or cure such defect, as the case may be, and the
Seller shall cause such substitute assignment to be recorded in accordance with
this paragraph.
In instances where an original Mortgage or any original
intervening assignment of Mortgage is not, in accordance with clause (ii) or
(iv) above, delivered by the Seller to the
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Indenture Trustee prior to or on the Closing Date in the case of an Initial
Mortgage Loan or, in the case of a Subsequent Mortgage Loan, prior to or on the
Subsequent Transfer Date, the Seller will deliver or cause to be delivered the
originals of such documents to the Indenture Trustee promptly upon receipt
thereof.
Effective on the Closing Date, the Company hereby acknowledges
its acceptance of all right, title and interest to the Initial Mortgage Loans
and other property, existing on the Closing Date and thereafter created,
conveyed to it pursuant to Section 2.1 and this Section 2.2.
The Indenture Trustee, as assignee or transferee of the Company,
shall be entitled to all principal payments due after the Cut-off Date, all
other payments of principal due and collected after the Cut-off Date, and all
payments of interest on the Initial Mortgage Loans due and collected after June
1, 1998, minus that portion of any such payment which is allocable to the period
prior to June 1, 1998. The Servicing Agreement shall provide that any late
payment charges collected in connection with a Mortgage Loan shall be paid to
the Master Servicer or Sub-Servicer as provided therein.
(b) The parties hereto intend that the transactions set forth
herein constitute a sale by the Seller to the Company on the Closing Date of all
the Seller's right, title and interest in and to the Initial Mortgage Loans and
other property as and to the extent described above. Notwithstanding the
foregoing, in the event the transactions set forth herein shall be deemed not to
be a sale, the Seller hereby grants to the Company as of the Closing Date a
security interest in all of the Seller's right, title and interest in, to and
under the Initial Mortgage Loans and such other property, to secure all of the
Seller's obligations hereunder, and this Agreement shall constitute a security
agreement under applicable law. The Seller agrees to take or cause to be taken
such actions and to execute such documents, including without limitation the
filing of all necessary UCC-1 financing statements filed in the State of
Delaware and the State of California (which shall be submitted for filing within
10 days after the Closing Date), any continuation statements with respect
thereto and any amendments thereto required to reflect a change in the name or
corporate structure of the Seller or the filing of any additional UCC-1
financing statements due to the change in the principal office of the Seller, as
are necessary to perfect and protect the interests of the Company and its
assignees in each Initial Mortgage Loan and the proceeds thereof.
Section 2.3. Conveyance of the Subsequent Mortgage Loans.
(a) Subject to the conditions set forth in paragraphs (b) and (c)
below in consideration of the Issuer's delivery on the related Subsequent
Transfer Dates of all or a portion of the balance of funds in the Pre-Funding
Account, the Seller shall on any Subsequent Transfer Date sell, transfer,
assign, set over and convey without recourse to the Issuer but subject to the
other terms and provisions of this Agreement all of the right, title and
interest of the Seller in and
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to (i) the Subsequent Mortgage Loans identified on the related Mortgage Loan
Schedule attached to the related Subsequent Transfer Instrument delivered by the
Seller on such Subsequent Transfer Date, (ii) principal due and interest
accruing on the Subsequent Mortgage Loans after the related Subsequent Cut-off
Date and (iii) all items with respect to such Subsequent Mortgage Loans to be
delivered pursuant to Section 2.2 above and the other items in the related
Mortgage Files; provided, however, that the Seller reserves and retains all
right, title and interest in and to principal received and interest accruing on
the Subsequent Mortgage Loans prior to the related Subsequent Cut-off Date. The
transfer to the Issuer by the Seller of the Subsequent Mortgage Loans identified
on each Mortgage Loan Schedule attached to the related Subsequent Transfer
Instrument shall be absolute and is intended by the Issuer and the Seller to
constitute and to be treated as a sale of the Subsequent Mortgage Loans by the
Seller to the Issuer. In the event the transactions set forth herein shall be
deemed not to be a sale, the Seller hereby grants to the Issuer as of each
Subsequent Transfer Date a security interest in all of the Seller's right, title
and interest in, to and under the related Subsequent Mortgage Loans and such
other property, to secure all of the Seller's obligations hereunder, and this
Agreement shall constitute a security agreement under applicable law. The Seller
agrees to take or cause to be taken such actions and to execute such documents,
including without limitation the filing of all necessary UCC-1 financing
statements filed in the State of Delaware and the State of California (which
shall be submitted for filing as of the related Subsequent Transfer Date), any
continuation statements with respect thereto and any amendments thereto required
to reflect a change in the name or corporate structure of the Seller or the
filing of any additional UCC-1 financing statements due to the change in the
principal office of the Seller, as are necessary to perfect and protect the
interests of the Issuer and its assignees in each Subsequent Mortgage Loan and
the proceeds thereof.
The Issuer on each Subsequent Transfer Date shall acknowledge its
acceptance of all right, title and interest to the related Subsequent Mortgage
Loans and other property, existing on the Subsequent Transfer Date and
thereafter created, conveyed to it pursuant to this Section 2.3.
The Indenture Trustee, as assignee of the Issuer, shall be
entitled to all scheduled principal payments due after each Subsequent Cut-off
Date, all other payments of principal due and collected after each Subsequent
Cut-off Date, and all payments of interest on the Subsequent Mortgage Loans,
minus that portion of any such payment which is allocable to the period prior to
the related Subsequent Cut-off Date. No scheduled payments of principal due on
or before the related Subsequent Cut-off Date and collected after the related
Subsequent Cut-off Date shall belong to the Issuer pursuant to the terms of this
Agreement.
The Purchase Price paid for any Subsequent Mortgage Loan by the
Indenture Trustee, at the direction of the Issuer, from amounts on deposit in
the Pre-Funding Account shall be one-hundred percent (100%) of the aggregate
Principal Balances of the Subsequent Mortgage
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Loans so transferred (as identified on the Mortgage Loan Schedule attached to
the related Subsequent Transfer Instrument provided by the Seller).
(b) The Seller shall transfer to the Issuer the Subsequent
Mortgage Loans and the other property and rights related thereto described in
the first paragraph of Section 2.3 (a) above, and the Issuer shall cause to be
released funds from the related Pre-Funding Account, only upon the satisfaction
of each of the following conditions on or prior to the related Subsequent
Transfer Date:
(i) the Seller shall have provided the Indenture Trustee and the
Note Insurer with a timely Addition Notice and shall designate the
Subsequent Mortgage Loans to be sold to the Issuer and the aggregate
Principal Balances of such Subsequent Mortgage Loans as of the related
Subsequent Cut-off Date and any other information reasonably requested
by the Indenture Trustee or the Note Insurer with respect to the
Subsequent Mortgage Loans;
(ii) the Seller shall have delivered to the Indenture Trustee a
duly executed Subsequent Transfer Instrument substantially in the form
of Exhibit 2, (A) confirming the satisfaction of each condition
precedent and representations specified in this Section 2.3(b) and
Section 2.3(c) following and in the related Subsequent Transfer
Instrument and (B) including a Subsequent Mortgage Loan Schedule listing
the Subsequent Mortgage Loans;
(iii) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument in the form of Exhibit 2,
the Seller shall not be insolvent nor shall it have been made insolvent
by such transfer nor shall it be aware of any pending insolvency;
(iv) such sale and transfer shall not result in a material
adverse tax consequence to the Issuer or, due to any action or inaction
on the part of the Seller, to the Securityholders;
(v) the Funding Period shall not have terminated;
(vi) the Note Insurer shall have informed the Seller that the
Subsequent Mortgage Loans are acceptable to the Note Insurer in its sole
discretion, and the Seller shall have delivered to the Issuer and the
Indenture Trustee, with a copy to the Note Insurer, an Officer's
Certificate confirming such approval;
(vii) the Seller shall have delivered to the Indenture Trustee,
the Rating Agencies and the Note Insurer Opinions of Counsel addressed
to the Note Insurer, the Rating Agencies and the Indenture Trustee with
respect to the transfer of the Subsequent
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Mortgage Loans substantially in the form of the Opinions of Counsel
delivered to the Note Insurer and the Indenture Trustee on the Closing
Date regarding certain bankruptcy, corporate and tax matters.
(c) The obligation of the Issuer to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the following
conditions: (1) each such Subsequent Mortgage Loan must satisfy the
representations and warranties specified in the related Subsequent Transfer
Instrument and this Agreement; (2) the Seller will select such Subsequent
Mortgage Loans only in a manner that it reasonably believes is not adverse to
the interests of the Noteholders or the Note Insurer; (3) the Seller will
deliver to the Note Insurer and the Indenture Trustee certain Opinions of
Counsel acceptable to the Note Insurer and the Indenture Trustee with respect to
the validity of the conveyance of such Subsequent Mortgage Loans; and (4) as of
each Subsequent Cut-off Date each Subsequent Mortgage Loan will satisfy the
following criteria: (i) such Subsequent Mortgage Loan may not be 30 or more days
contractually delinquent as of the related Subsequent Cut-off Date; (ii) the
remaining stated term to maturity of such Subsequent Mortgage Loan will not
exceed 360 months; (iii) such Subsequent Mortgage Loan must have an outstanding
Principal Balance of at least $20,000 and no more than $500,000 as of the
Subsequent Cut-off Date; (iv) such Subsequent Mortgage Loan will be underwritten
in accordance with the criteria set forth under "Description of the Home Equity
Loan Pool -- Underwriting" in the Prospectus Supplement; (v) such Subsequent
Mortgage Loan must have a Loan-to-Value Ratio at origination of no more than
90.00% ; and, if applicable, a Combined Loan-to-Value Ratio at origination of no
more than 90.00%; (vi) the stated maturity of such Subsequent Mortgage Loan will
be no later than 360 months; (vii) such Subsequent Mortgage Loan must have a
fixed Mortgage Rate of at least 8.00%; (viii) following the purchase of such
Subsequent Mortgage Loans by the Issuer, the Mortgage Loans included in the
Trust Estate must have a weighted average interest rate, a weighted average
remaining term to maturity and a weighted average Loan-to-Value Ratio at
origination, as of each respective Subsequent Cut-off Date, which does not vary
materially from the Initial Mortgage Loans included in the Trust Estate on the
Closing Date and the percentage of Mortgage Loans included in the Trust Estate
(by aggregate principal balance) that are secured by second liens on the related
Mortgaged Properties shall be no greater than the percentage of Initial Mortgage
Loans included in the Trust Estate on the Closing Date. In addition, the
Indenture Trustee shall not agree to any transfer of Subsequent Mortgage Loans
without a signed certification required pursuant to Section 2.3(b)(vi).
Subsequent Mortgage Loans with characteristics varying from those set forth
above may be purchased by the Issuer and included in the Trust Estate if they
are acceptable to the Note Insurer, in its sole discretion, as evidenced by the
certification required pursuant to Section 2.3(b)(vi); provided, however, that
the addition of such Mortgage Loans will not materially affect the aggregate
characteristics of the entire Mortgage Loans. After receipt of a notice (as set
forth substantially in the form of Exhibit 4) from the Seller that the
Subsequent Mortgage Loans have been approved by the Note Insurer the Issuer
shall cause the Subsequent Transfer Instrument to be executed. Upon the end of
the
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Funding Period, the Note Insurer may adjust the Required Subordination Amount
(as defined in Appendix A to the Indenture) pursuant to Section 2.3(e) hereof.
(d) Within five Business Days after each Subsequent Transfer
Date, the Seller shall deliver to the Rating Agencies, the Indenture Trustee and
the Note Insurer a copy of the updated Mortgage Loan Schedule including the
Subsequent Mortgage Loans in electronic format.
(e) In the event that a mortgage loan is not acceptable to the
Note Insurer as a Subsequent Mortgage Loan pursuant to Section 2.3(b)(vi)
hereof, the Note Insurer and the Seller may mutually agree to the transfer of
such mortgage loan to the Issuer as a Subsequent Mortgage Loan, subject to any
increase in the Required Subordination Amount (as defined in Appendix A to the
Indenture) that may be agreed to by the Seller and the Note Insurer pursuant to
the Indenture, in which event the Seller shall deliver to the Issuer and the
Indenture Trustee, with a copy to the Note Insurer, an Officer's Certificate
confirming the agreement to the transfer of such Subsequent Mortgage Loan and
specifying the amount of such increase in the Required Subordination Amount.
Section 2.4. Pre-Funding Account.
(a) No later than the Closing Date, the Indenture Trustee shall
establish and maintain in the name of the Indenture Trustee one or more
segregated trust accounts that are Eligible Accounts, which shall be titled
"Pre-Funding Account, Bankers Trust Company of California, N.A., as indenture
trustee for the registered holders of PacificAmerica Home Equity Loan Asset
Trust Series 1998-2F" (the "Pre-Funding Account"). The Indenture Trustee shall,
promptly upon receipt, deposit in the Pre-Funding Account and retain therein the
Original Pre-Funded Amount remitted on the Closing Date to the Indenture
Trustee by the Issuer from proceeds of the sale of the Notes. Funds deposited in
the Pre-Funding Account shall be held in trust by the Indenture Trustee for the
Holders of the Notes and the Note Insurer for the uses and purposes set forth
herein. If the Indenture Trustee shall not have received an investment direction
from the Issuer, the Indenture Trustee will invest funds deposited in the
Pre-Funding Account in Eligible Investments of the kind described in clause
(vii) of the definition of Eligible Investments with a maturity date no later
than the second Business Day preceding each Payment Date. The Issuer shall be
the owner of the Pre-Funding Account and shall report all items of income,
deduction, gain or loss arising therefrom. All income and gain realized from
investment of funds deposited in the Pre-Funding Account shall be transferred to
the Interest Coverage Account on the Business Day immediately preceding each
Payment Date. The Issuer shall deposit in the Pre-Funding Account the amount of
any net loss incurred in respect of any such Eligible Investment immediately
upon realization of such loss without any right of reimbursement therefor.
(ii) Amounts on deposit in the Pre-Funding Account shall be
withdrawn by the Indenture Trustee as follows:
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(A) On any Subsequent Transfer Date, upon the direction of the
Issuer, the Indenture Trustee shall withdraw from the Pre-Funding
Account an amount equal to 100% of the Principal Balances of the
Subsequent Mortgage Loans transferred and assigned to the Indenture
Trustee on such Subsequent Transfer Date and pay such amount to or upon
the order of the Seller upon satisfaction of the conditions set forth in
Section 2.3 hereof with respect to such transfer and assignment; and
(B) If the Pre-Funded Amount has not been reduced to zero during
the Funding Period, on the second Business Day immediately prior to the
first Payment Date following the end of the Funding Period, the
Indenture Trustee shall deposit into the Payment Account any amounts
remaining in the Pre-Funding Account.
Section 2.5. Interest Coverage Account.
(a) No later than the Closing Date, the Indenture Trustee shall
establish and maintain on behalf of itself one or more segregated trust
accounts, which shall be Eligible Accounts, titled "Interest Coverage Account,
Bankers Trust Company of California, N.A., as indenture trustee for the
registered holders of PacificAmerica Home Equity Loan Asset Trust Series
1998-2F" (the "Interest Coverage Account"). The Indenture Trustee shall,
promptly upon receipt, deposit in the Interest Coverage Account and retain
therein the Interest Coverage Amount remitted on the Closing Date to the
Indenture Trustee by the Issuer. In addition, the Indenture Trustee shall
deposit into the Interest Coverage Account all income and gain on investments in
the Pre-Funding Account pursuant to Section 2.4. Funds deposited in the Interest
Coverage Account shall be held in trust by the Indenture Trustee for the Holders
of the Notes and the Note Insurer for the uses and purposes set forth herein. If
the Indenture Trustee shall not have received an investment direction from the
Issuer, the Indenture Trustee will invest funds deposited in the Interest
Coverage Account in Eligible Investments of the kind described in clause (vii)
of the definition of Eligible Investments with a maturity date no later than the
second Business Day preceding each Payment Date. The Seller shall deposit in the
Interest Coverage Account the amount of any net loss incurred in respect of any
such Eligible Investment immediately upon realization of such loss without any
right of reimbursement therefor. The Seller shall be the owner of the Interest
Coverage Account and shall report all items of income, deduction, gain or loss
arising therefrom.
(b) On each Payment Date during the Funding Period and on the
Payment Date immediately after the Funding Period, the Indenture Trustee shall
withdraw from the Interest Coverage Account and deposit in the Payment Account
the Interest Coverage Addition.
(c) On the Payment Date immediately following the conveyance of a
Subsequent Mortgage Loan to the Indenture Trustee, funds on deposit in the
Interest Coverage Account in an amount equal to 1/360 of the product of (i)(a)
the aggregate principal balance of
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the Subsequent Mortgage Loans conveyed to the Indenture Trustee and (b) the
weighted average of the Mortgage Rates of the Initial Mortgage Loans as of the
Cut-off Date and (ii) the actual number of days from the Subsequent Cut-off Date
to August 25, 1998 shall be remitted to the Seller.
(d) Upon the earlier of (i) termination of the Trust Estate in
accordance with Section 8.01 of the Trust Agreement and (ii) the Payment Date
following the end of the Funding Period, any amount remaining on deposit in the
Interest Coverage Account shall be withdrawn by the Indenture Trustee and paid
to the Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 3.1. Seller Representations and Warranties. The Seller
hereby represents and warrants to the Company, the Indenture Trustee and the
Note Insurer as of the date hereof and as of the Closing Date and as of each
Subsequent Transfer Date (or if otherwise specified below, as of the date so
specified):
(a) As to the Seller:
(i) The Seller (i) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
and (ii) is qualified and in good standing as a foreign corporation to
do business in each jurisdiction where such qualification is necessary,
except where the failure so to qualify would not have a material adverse
effect on the Seller's ability to enter into this Agreement and each
Subsequent Transfer Instrument and to consummate the transactions
contemplated hereby and thereby;
(ii) The Seller has the power and authority to make, execute,
deliver and perform its obligations under this Agreement and each
Subsequent Transfer Instrument and all of the transactions contemplated
under this Agreement and each Subsequent Transfer Instrument, and has
taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and each Subsequent Transfer
Instrument;
(iii) The Seller is not required to obtain the consent of any
other Person or any consent, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement or any Subsequent Transfer
Instrument, except for such consents, approvals or authorization, or
registration or declaration, as shall have been obtained or filed, as
the case may be;
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(iv) The execution and delivery of this Agreement and each
Subsequent Transfer Instrument and the performance of the transactions
contemplated hereby by the Seller will not violate any provision of any
existing law or regulation or any order or decree of any court
applicable to the Seller or any provision of the certificate of
incorporation or bylaws of the Seller, or constitute a material breach
of any mortgage, indenture, contract or other agreement to which the
Seller is a party or by which the Seller may be bound;
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the
knowledge of the Seller threatened, against the Seller or any of its
properties or with respect to this Agreement or any Subsequent Transfer
Instrument, the Notes or the Certificates which in the opinion of the
Seller has a reasonable likelihood of resulting in a material adverse
effect on the transactions contemplated by this Agreement or any
Subsequent Transfer Instrument;
(vi) This Agreement and each Subsequent Transfer Instrument
constitute the legal, valid and binding obligations of the Seller,
enforceable against the Seller in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect affecting the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of
equity (whether considered in a proceeding at law or in equity);
(vii) This Agreement constitutes a valid transfer and assignment
to the Company of all right, title and interest of the Seller in and to
the Cut-off Date Principal Balance of the Initial Mortgage Loans, all
monies due or to become due with respect thereto, and all proceeds of
such Cut-off Date Principal Balance of the Initial Mortgage Loans and
this Agreement and the related Subsequent Transfer Instrument constitute
a valid transfer and assignment to the Issuer of all right, title and
interest of the Seller in and to the Subsequent Cut-off Date Principal
Balance of the Subsequent Mortgage Loans, all monies due or to become
due with respect thereto, and all proceeds of such Subsequent Cut-off
Date Principal Balance of the Subsequent Mortgage Loans; and
(viii) The Seller is not in default with respect to any order or
decree of any court or any order or regulation of any federal, state or
governmental agency, which default might have consequences that would
materially and adversely affect the condition (financial or other) or
operations of the Seller or its properties or might have consequences
that would materially adversely affect its performance hereunder; and
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(b) As to each Initial Mortgage Loan as of the Closing Date, and with
respect to each Subsequent Mortgage Loan as of the related Subsequent Transfer
Date, except as otherwise expressly stated:
(i) The information set forth on the Mortgage Loan Schedule with
respect to each Mortgage Loan is true and correct in all material
respects as of the Closing Date, each Subsequent Transfer Date and each
date of substitution of an Eligible Substitute Mortgage Loan, as
applicable, and the information regarding the Mortgage Loans on the
computer diskette or tape delivered to the Note Insurer prior to the
Closing Date, each Subsequent Transfer Date and each date of
substitution of an Eligible Substitute Mortgage Loan, is true and
accurate in all material respects and describes the same Mortgage Loans
as the Mortgage Loans on the Mortgage Loan Schedule;
(ii) The Mortgage Loans are not being transferred with any
intent to hinder, delay or defraud any creditors;
(iii) No more than 3.20% of the Initial Mortgage Loans (by
Cut-off Date Principal Balance) were secured by condominium units; no
more than 4.44% of the Initial Mortgage Loans (by Cut-off Date Principal
Balance) were secured by attached housing; and no Initial Mortgage Loans
were secured by properties in planned unit developments;
(iv) As of the Cut-off Date, the remaining term of each Mortgage
Loan is not more than 360 months and not less than 118 months;
(v) No more than 51.21% of the Initial Mortgage Loans (by
Cut-off Date Principal Balance) have been the subject of cash-out
refinances;
(vi) No more than 34.72% of the Initial Mortgage Loans (by
Cut-off Date Principal Balance) have been the subject of rate and term
(no cash-out) refinances;
(vii) No fewer than 14.07% of the Initial Mortgage Loans (by
Cut-off Date Principal Balance) are purchase money loans;
(viii) No more than 26.80% of the Initial Mortgage Loans (by
Cut-off Date Principal Balance) are secured by Mortgaged Properties
located in the State of California, and no more than 73.28% of the
Initial Mortgage Loans (by Cut-off Date Principal Balance) are located
in any other state;
(ix) The original Principal Balances of the Initial Mortgage
Loans ranged from $18,090 to $437,500. The average outstanding Principal
Balance of the Initial Mortgage Loans (by Cut-off Date Principal
Balance) is approximately $79,441.56;
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(x) At least 87.54% of the Initial Mortgage Loans (by Cut-off
Date Principal Balance) were secured by a first or second lien on a
parcel of real property improved by a single family detached residence;
no more than 3.64% of the Initial Mortgage Loans (by Cut-off Date
Principal Balance) were secured by a first or second lien on a parcel of
real estate improved by a two-to four-unit single family residence; no
more than 0% of the Initial Mortgage Loans (by Cut-off Date Principal
Balance) were secured by a first or second lien on a parcel of real
estate improved by manufactured housing; and no more than 1.18% of the
Initial Mortgage Loans (by Cut-off Date Principal Balance) were secured
by a first or second lien on a parcel of real estate improved by a
townhouse;
(xi) The earliest year of origination of any Initial Mortgage
Loan is 1997 and the latest month and year of origination of any Initial
Mortgage Loan is June, 1998.
(xii) The Mortgage Rates borne by the Initial Mortgage Loans as
of the Cut-off Date range from 6.99% per annum to 16.79% per annum and
the weighted average Mortgage Rate (by Cut-off Date Principal Balance)
of the Initial Mortgage loans was 10.72% per annum;
(xiii) No Initial Mortgage Loan in the Mortgage Pool had a
Combined Loan-to-Value Ratio at origination in excess of 95.00%, and
the weighted average Combined Loan-to-Value Ratio (by Cut-off Date
Principal Balance) for the Initial Mortgage Loans was equal to or less
than 76.74%. 33.27% of the Initial Mortgage Loans (by Cut-off Date
Principal Balance) have a Loan-to-Value Ratio in excess of 80% and none
were covered by a Primary Insurance Policy.
(xiv) Approximately 86.33% and 13.67% of the Mortgage Loans are
secured by first and second liens, respectively, on the related
Mortgaged Property; with respect to each Mortgage Loan secured by a
second lien, either (i) no consent for such Mortgage Loan was required
by the holder of the related prior lien or (ii) such consent has been
obtained and is contained in the Mortgage File; 20.50% of the Initial
Mortgage Loans secured by first liens (by Cut-off Date Principal
Balance) have secondary financing on the related Mortgaged Property,
which secondary financing is not included in the Trust Estate;
(xv) To the best of the Seller's knowledge, there is no valid
offset, right of rescission, defense, claim or counterclaim of any
obligor under any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal of or interest on such
Mortgage Note, and any applicable right of rescission has expired, nor
will the operation of any of the terms of such Mortgage Note or
Mortgage, or the exercise of any right thereunder, render either the
Mortgage Note or the Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, recoupment, counterclaim or
defense, including, without limitation, the defense of usury, and no
such right of
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rescission, set-off, recoupment, counterclaim or defense has been
asserted with respect thereto, and, to the best of Seller's knowledge,
no Mortgagor as of the Cut-off Date or as of the Subsequent Cut-off
Date, as applicable, of the applicable Mortgage was a debtor in any
state or federal bankruptcy or insolvency proceeding;
(xvi) To the best of the Seller's knowledge, there are no
mechanics' liens or claims for work, labor or material affecting any
Mortgaged Property which are or may be a lien prior to, or equal with,
the lien of such Mortgage, except those which are insured against by the
title insurance policy referred to in clause (xix) below;
(xvii) To the best of the Seller's knowledge, as of the Cut-off
Date in the case of an Initial Mortgage Loan or as of the related
Subsequent Cut-off Date in the case of a Subsequent Mortgage Loan, each
Mortgaged Property is free of material damage and is in good repair and
there is no proceeding pending or threatened for the total or partial
condemnation of any Mortgage Property;
(xviii) Each Mortgage is a valid and enforceable first, or with
respect to those Mortgage Loans identified on the Mortgage Loan Schedule
as second liens, second lien on the Mortgaged Property securing the
related Mortgage Note and each Mortgaged Property is owned by the
Mortgagor in fee simple (except with respect to common areas in the case
of condominiums, PUDs and de minimis PUDs) subject only to (1) the lien
of nondelinquent current real property taxes and assessments, (2)
covenants, conditions and restrictions, rights of way, easements and
other matters of public record as of the date of recording of such
Mortgage, such exceptions appearing of record being acceptable to
mortgage lending institutions generally or specifically reflected in the
appraisal made in connection with the origination of the related
Mortgage Loan or referred to in the lender's title insurance policy
delivered to the originator of the related Mortgage Loan and (3) other
matters to which like properties are commonly subject that do not
materially interfere with the benefits of the security intended to be
provided by such Mortgage. Immediately prior to the sale of such
Mortgage Loan to the Company in the case of an Initial Mortgage Loan and
to the Issuer in the case of a Subsequent Mortgage Loan pursuant to this
Agreement, the Seller had full right to sell and assign the same to the
Company or the Issuer, as the case may be. Immediately following the
sale of such Mortgage Loan to the Company and the Company's assignment
and sale thereof to the Issuer in the case of an Initial Mortgage Loan
and immediately following the sale of such Mortgage Loan to the Issuer
in the case of a Subsequent Mortgage Loan, the Issuer will have good
title thereto subject to no claims or liens other than the lien of the
Indenture;
(xix) To the best of the Seller's knowledge, each Mortgage Loan
at origination complied in all material respects with applicable state
and federal laws, including, without limitation, usury, equal credit
opportunity, real estate settlement procedures, the Federal
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Truth-In-Lending Act and disclosure laws and consummation of the
transactions contemplated hereby, including without limitation, the
receipt of interest by the owner of such Mortgage Loan or the holders of
Notes secured thereby, will not violate any such laws. Each Mortgage
Loan is being serviced in all material respects in accordance with
applicable state and federal laws, including, without limitation, the
Federal Truth-In-Lending Act and other consumer protection laws, real
estate settlement procedures, usury, equal credit opportunity and
disclosure laws;
(xx) Neither the Seller nor any prior holder of any Mortgage has
impaired, waived, altered or modified the Mortgage or Mortgage Notes in
any material respect (except that a Mortgage Loan may have been modified
by a written instrument which has been recorded, if necessary to protect
the interests of the owner of such Mortgage Loan or the Notes, and which
has been delivered to the Indenture Trustee); satisfied, canceled or
subordinated such Mortgage in whole or in part; released the applicable
Mortgaged Property in whole or in part from the lien of such Mortgage;
or executed any instrument of release, cancellation or satisfaction with
respect thereto;
(xxi) A lender's policy of title insurance (on an ALTA or CLTA
form) or binder, or other assurance of title customary in the relevant
jurisdiction insuring the first or second lien priority of the Mortgage
Loan in an amount at least equal to the original Principal Balance of
each such Mortgage Loan or a commitment binder or commitment to issue
the same was effective on the date of the origination of each Mortgage
Loan, each such policy is valid and remains in full force and effect,
and each such policy was issued by a title insurer qualified to do
business in the jurisdiction where the Mortgaged Property is located,
which policy insures the Seller and successor owners of indebtedness
secured by the insured Mortgage as to the first or second priority lien
of the Mortgage as applicable. The Seller is, and such successor owners
will be, the sole insured under such lender's title insurance policy; no
claims have been made under such mortgage title insurance policy; no
prior holder of the applicable Mortgage, including the Seller, has done,
by act or omission, anything which would impair the coverage of such
mortgage title insurance policy; and each such policy, binder or
assurance contains all applicable endorsements;
(xxii) All of the improvements which were included for the
purpose of determining the Appraised Value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of such
property and no improvements on adjoining properties encroach upon the
Mortgaged Property;
(xxiii) No improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation,
subdivision law or ordinance, except where the failure to comply would
not have a material adverse effect on the market
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value of the Mortgaged Property. All inspections, licenses and
certificates required to be made or issued with respect to all occupied
portions of the Mortgaged Property and, with respect to the use and
occupancy and fire underwriting certificates, have been made or obtained
from the appropriate authorities and the Mortgaged Property is lawfully
occupied under applicable law except where the failure to comply would
not have a material adverse effect on the market value of the Mortgaged
Property;
(xxiv) Each Mortgage Note and the applicable Mortgage are
genuine, and each is the legal, valid and binding obligation of the
maker thereof, enforceable in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium,
receivership and other similar laws relating to creditors' rights
generally or by equitable principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law). All
parties to the Mortgage Note and the Mortgage had legal capacity to
execute the Mortgage Note and the Mortgage and each Mortgage Note and
Mortgage has been duly and properly executed by such parties;
(xxv) The proceeds of the Mortgage Loans have been fully
disbursed, there is no requirement for future advances thereunder and
any and all requirements as to completion of any on-site or off-site
improvements and as to disbursement of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in making,
closing or recording the Mortgage Loans were paid and the Mortgagor is
not entitled to any refund of amounts paid or due under the Mortgage
Note;
(xxvi) Each Mortgage contains customary and enforceable
provisions that render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (ii) otherwise by
judicial foreclosure or if applicable, non-judicial foreclosure. Upon
default by a Mortgagor on a Mortgage Loan and foreclosure on, or
trustee's sale of, the Mortgaged Property pursuant to the proper
procedures, the holder of the Mortgage Loan will be able to deliver good
and merchantable title to the property, subject to any applicable rights
of redemption;
(xxvii) With respect to each Mortgage constituting a deed of
trust, either a trustee, duly qualified under applicable law to serve as
such, has been properly designated and currently so serves and is named
in such Mortgage or if no duly qualified trustee has been properly
designated and so serves, the Mortgage contains satisfactory provisions
for the appointment of such trustee by the holder of the Mortgage at no
cost or expense to such holder, and no fees or expenses are or will
become payable by the Noteholders or the Note Insurer to the trustee
under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
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(xxviii) There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof cannot be made, and no escrow
deficits or payments of other charges or payments due the Seller have
been capitalized under the Mortgage or the applicable Mortgage Note;
(xxix) The Mortgage Note is not and has not been secured by any
collateral, pledged account or other security other than real estate
securing the Mortgagor's obligations and no Mortgage Loan is secured by
more than one Mortgaged Property;
(xxx) To the best of the Seller's knowledge, as of the Closing
Date in the case of an Initial Mortgage Loan, and as of the related
Subsequent Transfer Date in the case of a Subsequent Mortgage Loan, the
improvements upon each Mortgaged Property are covered by a valid and
existing hazard insurance policy substantially acceptable to the Seller
which policy provides for fire extended coverage and such other hazards
as are customary in the area where the Mortgaged Property is located
representing coverage in an amount not less than the lesser of (A) the
maximum insurable value of the improvements securing such Mortgage Loan
and (B) the outstanding Principal Balance of the related Mortgage Loan;
if the improvement on the Mortgaged Property is a condominium unit, it
is included under the coverage afforded by a blanket policy for the
condominium project. All individual insurance policies contain a
standard mortgagee clause naming the Seller or the original holder of
the Mortgage, and its successors in interest, as mortgagee, and the
Seller has received no notice that any premiums due and payable thereon
have not been paid; the Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense, and
upon the Mortgagor's failure to do so, authorizes the holder of the
Mortgage to obtain and maintain such insurance at the Mortgagor's cost
and expense and to seek reimbursement therefor from the Mortgagor. There
has been no act or omission which would impair the coverage of any such
policy, the benefits of the endorsement provided for herein, or the
validity and binding effect of either;
(xxxi) If the Mortgaged Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Mortgaged Property with
a generally acceptable carrier in an amount representing coverage not
less than the least of (A) the outstanding Principal Balance of the
Mortgage Loan, (B) the minimum amount required to compensate for damage
or loss on a replacement cost basis and (C) the maximum amount of flood
coverage that is available under federal law;
(xxxii) Except for the Mortgage Loans referred to in clause
(xli) as being delinquent, there is no material monetary default,
breach, violation or event of acceleration
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existing under the Mortgage or the applicable Mortgage Note; and no
material event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a material
default, breach, violation or event of acceleration, and neither the
Seller, any of its affiliates nor any Master Servicer or subservicer of
any related Mortgage Loan has waived any default, breach, violation or
event of acceleration; no foreclosure action is threatened or has been
commenced with respect to the Mortgage Loan;
(xxxiii) Each Mortgage Loan is being serviced by Advanta
Mortgage Corp. USA;
(xxxiv) There is no obligation on the part of the Seller or any
other party to make any payments with respect to the related Mortgage
Loan in addition to the Monthly Payments required to be made by the
applicable Mortgagor;
(xxxv) Any future advances made prior to the Cut-off Date in the
case of an Initial Mortgage Loan and as of the related Subsequent
Cut-off Date in the case of a Subsequent Mortgage Loan, with respect to
any Mortgage Loan have been consolidated with the outstanding principal
amount secured by such Mortgage, and the secured principal amount, as
consolidated, bears a single interest rate and single repayment term
reflected on the Mortgage Loan Schedule. The consolidated principal
amount does not exceed the original principal amount of the Mortgage
Loan. The Mortgage Note with respect to any Mortgage Loan does not
permit or obligate the Master Servicer to make future advances to the
Mortgagor at the option of the Mortgagor;
(xxxvi) The Seller has caused or will cause to be performed any
and all acts required to preserve the rights and remedies of the Company
and the Issuer evidencing an interest in the Mortgage Loans in any
insurance policies applicable to the Mortgage Loans including, without
limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of coinsured, joint
loss payee and mortgagee rights in favor of the Company or the Issuer,
as applicable;
(xxxvii) To the best of the Seller's knowledge, except as set
forth in clause (xli), there are no defaults by the Mortgagor in
complying with the terms of any Mortgage, and all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges
which previously became due and owing have been paid, or, if required by
the terms of the Mortgage Loan, an escrow of funds has been established
in an amount sufficient to pay for every such item which remains unpaid
and which has been assessed, but is not yet due and payable. Except for
(A) payments in the nature of escrow payments and (B) interest accruing
from the date of the Mortgage Note or date of disbursement of the
Mortgage proceeds to the day which precedes by one month the Due Date of
the first installment of principal and interest, including, without
limitation, taxes and insurance
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payments, the Master Servicer has not advanced funds, or induced,
solicited or knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage;
(xxxviii) At the time of origination, each Mortgaged Property
was the subject of an appraisal which conforms to the underwriting
requirements of the related originator; and the Mortgage File contains
an appraisal of the applicable Mortgaged Property;
(xxxix) None of the Mortgage Loans are graduated payment
Mortgage Loans or growth equity Mortgage Loans;
(xl) (a) None of the payments of principal of or interest on or
in respect of any Initial Mortgage Loan shall be 30 days or more but
less than 60 days past due as of June 1, 1998; none of the payments of
principal or interest on or in respect of any Initial Mortgage Loans or
Subsequent Mortgage Loans shall be 60 days or more past due as of the
Cut-off Date or Subsequent Cut-off Date, as applicable; (b) except as
set forth in clause (a) above, no Mortgage Loan has been contractually
delinquent for more than one monthly installment period during the
twelve months preceding the Cut-off Date or the Subsequent Cut-off Date,
as applicable; (c) except as set forth in clause (a) above, all payments
required to be made by the Mortgagor under the terms of the Mortgage
Note have been made and credited; and (d) to the Seller's knowledge,
there was no delinquent recording, tax or assessment lien against the
property subject to any Mortgage, except where such lien was being
contested in good faith and a stay had been granted against levying on
the property;
(xli) Upon payment of the Purchase Price for the Mortgage Loans
by the Company or the Issuer, as applicable, pursuant to this Agreement,
the Seller has transferred to the Company in the case of an Initial
Mortgage Loan and to the Issuer in the case of a Subsequent Mortgage
Loan good and marketable title to each Mortgage Note and Mortgage free
and clear of any and all liens (except the related first lien if such
Mortgage Loan is secured by a second lien and except as set forth in
clause (xviii) above), claims, encumbrances, participation interests,
equities, pledges, charges or security interests of any nature and has
or had full right and authority, subject to no participation of or
agreement with any other person, to sell and assign the same, and
following the sale of each Mortgage Loan, the Company, or the Issuer, as
applicable, will own such Mortgage Loan free and clear of any
encumbrance, equity interest, participation interest, lien, pledge,
charge, claim or security interest;
(xlii) The Seller acquired any right, title and interest in and
to the Mortgage Loans in good faith and without notice of any adverse
claim;
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(xliii) All of the Initial Mortgage Loans are Mortgage Loans
having a Mortgage Rate that is fixed;
(xliv) The Mortgage Note, the Mortgage, the related Assignment
of Mortgage and any other documents required to be delivered by the
Seller have been or will be delivered to the Indenture Trustee. The
Indenture Trustee is in possession of a complete, true and accurate
Mortgage File in accordance with Section 2.2 hereof. Substantially all
Mortgage Loans have monthly payments due on the first day of each month
and each Mortgage Loan had an original term to maturity of no greater
than 30 years;
(xlv) All of the Mortgage Loans contain a due-on-sale provision
except that all of the Mortgage Loans located in Minnesota that are
purchase money loans are assumable;
(xlvi) Each of the Mortgage and the Assignment of Mortgage is in
recordable form and is acceptable for recording under the laws of the
jurisdiction in which the Mortgaged Property is located;
(xlvii) The Mortgagor has not notified the Seller, and the
Seller has no knowledge of any relief requested or allowed to the
Mortgagor under the Soldiers' and Sailors' Civil Relief Act of 1940;
(xlviii) To the best of the Seller's knowledge, there exists no
violation of any local, state, or federal environmental law, rule or
regulation in respect of the Mortgaged Property which violation has or
could have a material adverse effect on the market value of such
Mortgaged Property. The Seller has no knowledge of any pending action or
proceeding directly involving the related Mortgaged Property in which
compliance with any environmental law, rule or regulation is in issue;
and, to the best of the Seller's knowledge, nothing further remains to
be done to satisfy in full all requirements of each such law, rule or
regulation constituting a prerequisite to the use and employment of such
Mortgaged Property;
(xlix) Each Mortgage Loan conforms, and all such Mortgage Loans
in the aggregate conform, to the description thereof set forth in the
Prospectus Supplement in all material respects;
(l) Immediately prior to the transfer to the Company or the
Issuer, as applicable, the Seller had good and marketable title thereto,
and the Seller is the sole owner of beneficial title to and holder of
the Mortgage Loan. The Seller is conveying the same to the Company or
the Issuer, as applicable, free and clear of any and all liens claims,
encumbrances, participation interests, equities, pledges, charges or
security
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interests of any nature and has full right and authority to sell and
assign the same pursuant to this Agreement, except for liens which will
be released simultaneously with such conveyance;
(li) For each Mortgage Loan, the related Mortgage File contains
a true, accurate and correct copy of each of the documents and
instruments required to be included therein;
(lii) The Seller, in its capacity as Master Servicer, meets all
applicable requirements under the Servicing Agreement;
(liii) No instrument of release or waiver has been executed in
connection with the Mortgage Loans, and no Mortgagor has been released,
in whole or in part from its obligations in connection with a Mortgage
Loan except in connection with an assumption agreement which has been
delivered to the Indenture Trustee;
(liv) On the basis of a representation by the Mortgagor at the
time of origination of the Mortgage Loans, at least ___% of the Initial
Mortgage Loans (by Cut-off Date Principal Balance) will be secured by
Mortgages on owner-occupied primary residence properties;
(lv) None of the Initial Mortgage Loans (by Cut-off Date
Principal Balance) provide for a balloon payment;
(lvi) No Mortgage Loan was originated based on an appraisal of
the related Mortgaged Property made prior to completion of construction
of the improvements thereon;
(lvii) None of the Mortgage Loans is a "buy down" mortgage loan;
(lviii) As of the Cut-Off Date, the Mortgage Rate of each
Initial Mortgage Loan was not more than ____% per annum and not less
than ___% per annum, and the weighted average Mortgage Rate of the
Initial Mortgage Loans was approximately ___% per annum;
(lix) No selection procedure reasonably believed by the Seller
to be adverse to the interests of the Noteholders or the Note Insurer
was utilized in selecting the Mortgage Loans;
(lx) No material misrepresentation, fraud or similar occurrence
with respect to a Mortgage Loan has taken place on the part of the
Seller, its affiliates or employees or
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to the best of the Seller's knowledge, any other person involved in the
origination of the Mortgage Loan or in the application for any insurance
in relation to such Mortgage Loan.
(lxi) Each Mortgage Loan was originated by a mortgagee approved
by the Secretary of Housing and Urban Development pursuant to Sections
203 and 211 of the Act, a savings and loan association, a savings bank,
a commercial bank, credit union, insurance company or similar
institution which is supervised and examined by a federal or state
authority.
(lxii) With respect to each Mortgage Loan secured by
manufactured housing, such manufactured housing is permanently affixed
to a foundation and constitutes real estate under applicable state law.
(lxiii) No Mortgage Loans are date of payment or simple interest
loans.
(lxiv) The sale, transfer, assignment and conveyance of Mortgage
Loans by the Seller pursuant to this Agreement is not subject to and
will not result in any tax, fee or governmental charge payable by the
Company, the Issuer or the Indenture Trustee to any federal, state or
local government ("Transfer Taxes") other than Transfer Taxes which have
or will be paid by the Seller as due.
Upon discovery by the Seller or upon notice from the Company, the
Note Insurer, the Issuer, the Owner Trustee or the Indenture Trustee, as
applicable, of a breach of any representation or warranty in subsection (a) of
this Section which materially and adversely affects the interests of the
Noteholders or the Certificateholders or the Note Insurer, as applicable, the
Seller shall, within 45 days of its discovery or its receipt of notice of such
breach, either (i) cure such breach in all material respects or (ii) to the
extent that such breach is with respect to a Mortgage Loan or a Related
Document, either (A) repurchase such Mortgage Loan from the Issuer at the
Repurchase Price, or (B) substitute one or more Eligible Substitute Mortgage
Loans for such Mortgage Loan, in each case in the manner and subject to the
conditions and limitations set forth below.
Upon discovery by the Seller or upon notice from the Company, the
Note Insurer, the Issuer, the Owner Trustee or the Indenture Trustee, as
applicable, of a breach of any representation or warranty in this subsection (b)
with respect to any Mortgage Loan or upon the occurrence of a Repurchase Event,
which materially and adversely affects the value of the related Mortgage Loan or
the interests of any Noteholders, Certificateholders or the Note Insurer, as
applicable, or of the Company or the Issuer in such Mortgage Loan (notice of
which shall be given to the Company and the Issuer by the Seller, with a copy to
the Note Insurer, if it discovers the same) the Seller shall, within 90 days
after the earlier of its discovery or receipt of notice thereof, either cure
such breach or Repurchase Event in all material respects or either (i)
repurchase such
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Mortgage Loan from the Issuer at the Repurchase Price, or (ii) substitute one or
more Eligible Substitute Mortgage Loans for such Mortgage Loan, in each case in
the manner and subject to the conditions set forth below. The Repurchase Price
for any such Mortgage Loan repurchased by the Seller shall be deposited or
caused to be deposited by the Master Servicer in the Collection Account
maintained by it pursuant to Section 3.06 of the Servicing Agreement. With
respect to the representations and warranties contained herein that the Seller
has made to the best of its knowledge, if it is discovered that the substance of
any such representation and warranty was inaccurate as of the date such
representation and warranty was made or deemed to be made, and such inaccuracy
materially and adversely affects the value of the related Mortgage Loan or the
interest therein of the Company or the Note Insurer, then notwithstanding the
lack of knowledge by the Seller with respect to the substance of such
representation and warranty being inaccurate at the time the representation and
warranty was made, the Seller shall take such action described in this paragraph
in respect of such Mortgage Loan.
In the event that the Seller elects to substitute an Eligible
Substitute Mortgage Loan or Loans for a Deleted Mortgage Loan pursuant to this
Section 3.1, the Seller shall deliver to the Indenture Trustee on behalf of the
Issuer, with respect to such Eligible Substitute Mortgage Loan or Loans, the
original Mortgage Note and all other documents and agreements as are required by
Section 2.2 hereof, with the Mortgage Note endorsed as required by such Section
2.2 hereof. No substitution will be made in any calendar month after the
Determination Date for such month. Monthly Payments due with respect to Eligible
Substitute Mortgage Loans in the month of substitution shall not be part of the
Trust Estate and will be retained by the Master Servicer and remitted by the
Master Servicer to the Seller on the next succeeding Payment Date. For the month
of substitution, distributions to the Payment Account pursuant to the Servicing
Agreement will include the Monthly Payment due on a Deleted Mortgage Loan for
such month and thereafter the Seller shall be entitled to retain all amounts
received in respect of such Deleted Mortgage Loan. The Seller shall cause the
Master Servicer to amend the Mortgage Loan Schedule to reflect the removal of
such Deleted Mortgage Loan and the substitution of the Eligible Substitute
Mortgage Loan or Loans and to deliver the amended Mortgage Loan Schedule to the
Indenture Trustee. Upon such substitution, the Eligible Substitute Mortgage Loan
or Loans shall be subject to the terms of this Agreement and the Servicing
Agreement in all respects, the Seller shall be deemed to have made the
representations and warranties with respect to the Eligible Substitute Mortgage
Loan contained herein set forth in this Section 3.1(b), to the extent set forth
in the definition of "Eligible Substitute Mortgage Loan", as of the date of
substitution, and the Seller shall be obligated to repurchase or substitute for
any Eligible Substitute Mortgage Loan as to which a Repurchase Event has
occurred as provided herein. In connection with the substitution of one or more
Eligible Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the
Master Servicer will determine the amount (such amount, a "Substitution
Adjustment Amount"), if any, by which the aggregate principal balance of all
such Eligible Substitute Mortgage Loans as of the date of substitution is less
than the aggregate principal balance of all such Deleted Mortgage Loans (after
application of the principal portion of the Monthly Payments due in the month of
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substitution that are to be distributed to the Payment Account in the month of
substitution). The Seller shall pay the amount of such shortfall to the Master
Servicer for deposit into the Collection Account on the day of substitution,
without any reimbursement therefor.
Upon receipt by the Issuer and the Indenture Trustee of written
notification, signed by a Servicing Officer, of the deposit of such Repurchase
Price or of such substitution of an Eligible Substitute Mortgage Loan and
deposit of any applicable Substitution Adjustment Amount as provided above, the
Indenture Trustee on behalf of the Issuer and the Note Insurer shall release to
the Seller the related Mortgage File for the Mortgage Loan being repurchased or
substituted for and the Issuer shall execute and deliver such instruments of
transfer or assignment prepared by the Master Servicer, in each case without
recourse, as shall be necessary to vest in the Seller or its designee such
Mortgage Loan released pursuant hereto and thereafter such Mortgage Loan shall
not be an asset of the Issuer.
It is understood and agreed that the obligation of the Seller to
cure any breach with respect to or to repurchase or substitute for, any Mortgage
Loan as to which such a breach has occurred and is continuing shall, except to
the extent provided in Section 5.1 of this Agreement, constitute the sole remedy
respecting such breach available to the Company, the Issuer, the
Certificateholders (or the Owner Trustee on behalf of the Certificateholders)
and the Noteholders (or the Indenture Trustee on behalf of the Noteholders)
against the Seller.
It is understood and agreed that the representations and
warranties set forth in this Section 3.1 shall survive delivery of the
respective Mortgage Files to the Issuer.
Section 3.2 Company Representations and Warranties. The Company
hereby represents and warrants to the Seller, the Indenture Trustee and the Note
Insurer as of the date hereof and as of the Closing Date that:
(a) The Company is duly organized and validly existing as a
corporation in good standing under the laws of the State of Delaware, with power
and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
(b) The Company is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of its property
or the conduct of its business shall require such qualifications and in which
the failure to so qualify would have a material adverse effect on the business,
properties, assets or condition (financial or other) of the Company and the
ability of the Company to perform under this Agreement.
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(c) The Company has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Company has full power
and authority to purchase the property to be purchased from the Seller and the
Company has duly authorized such purchase by all necessary corporate action; and
the execution, delivery and performance of this Agreement have been duly
authorized by the Company by all necessary corporate action.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under, the articles of incorporation
or bylaws of the Company, or any indenture, agreement or other instrument to
which the Company is a party or by which it is bound; nor result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument (other than pursuant to the
Basic Documents); nor violate any law or, to the best of the Company's
knowledge, any order, rule or regulation applicable to the Company of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Company or its
properties.
ARTICLE IV
SELLER'S COVENANTS
Section 4.1. Covenants of the Seller. The Seller hereby covenants
as of the date hereof and as of the Closing Date and as of each Subsequent
Transfer Date that, except for the transfer hereunder, on and after the Closing
Date, the Seller will not sell, pledge, assign or transfer to any other Person,
or grant, create, incur or assume any Lien on, any Initial Mortgage Loan or
Subsequent Mortgage Loan, whether now existing or hereafter created, or any
interest therein; the Seller will notify the Issuer, on its own behalf and as
assignee of the Company, the Indenture Trustee and the Note Insurer of the
existence of any such Lien on any Mortgage Loan immediately upon discovery
thereof; and the Seller will defend the right, title and interest of the Issuer,
on its own behalf and as assignee of the Company, the Indenture Trustee and the
Note Insurer in, to and under the Mortgage Loans, whether now existing or
hereafter created, against all claims of third parties claiming through or under
the Seller.
In the event that the Indenture Trustee receives actual notice of
any Transfer Taxes arising out of the transfer, assignment and conveyance of the
Mortgage Loans, on written demand by the Indenture Trustee, or upon the Seller's
otherwise being given notice thereof by the Indenture Trustee, the Seller shall
pay any and all such Transfer Taxes (it being understood that the Holders of the
Notes, the Indenture Trustee and the Note Insurer shall have no obligation to
pay such Transfer Taxes).
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Section 4.2. Payment of Expenses.
(a) The Seller will pay on the Closing Date all expenses incident
to the performance of its obligations under this Agreement, including (i) the
preparation, printing and any filing of the preliminary prospectus, Prospectus
Supplement and Prospectus (including any schedules or exhibits and any document
incorporated therein by reference) originally filed and of each amendment or
supplement thereto, (ii) the preparation, printing and delivery to the
Underwriter of this Agreement, the Indenture and such other documents as may be
required in connection with the offering, purchase, sale and delivery of the
Notes, (iii) the preparation, issuance and delivery of the certificates for the
Notes to the Underwriter, including any charges of DTC in connection therewith;
(iv) the fees and disbursements of the Company's accountants and other advisors,
(v) the qualification of the Notes under securities laws in accordance with the
provisions of Section 3(f) of the Underwriting Agreement, including filing fees
and the reasonable fees and disbursements of counsel for the Underwriter in
connection therewith, (vi) the printing and delivery to the Underwriter of
copies of the Prospectus and any amendments or supplements thereto, (vi) the
fees and expenses of the Indenture Trustee and Owner Trustee, including the fees
and disbursements of counsel for the Indenture Trustee and Owner Trustee in
connection with the Indenture, the Trust Agreement and the Notes and (vii) any
fees payable in connection with the rating of the Notes.
(b) If the Underwriting Agreement is terminated by the
Underwriter in accordance with the provisions of Section 5 or Section 9(a)(i)
thereof, the Seller shall reimburse the Underwriter for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriter.
ARTICLE V
CONDITIONS TO INITIAL MORTGAGE LOAN PURCHASE
Section 5.1. Conditions of Company's Obligations. The Company's
obligation to purchase the Initial Mortgage Loans which it accepts for purchase
hereunder shall be subject to each of the following conditions:
(i) the Mortgage File for each Initial Mortgage Loan
shall have been delivered in accordance with
this Agreement and the Trust Agreement;
(ii) the representations and warranties set forth in
Section 3.1(b) hereof with respect to each
Initial Mortgage Loan shall be true as of the
Closing Date;
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(iii) The Underwriter or its affiliates shall have had
an opportunity to perform a due diligence review
of each Mortgage Loan and shall have arranged
for reappraisals of value with respect to each
Mortgage Loan if desired by the Underwriter; and
(iv) The Seller shall have provided to the
Underwriter or its affiliates such other
documents which are then required to have been
delivered under this Agreement or which are
reasonably requested by the Underwriter or its
affiliates, which other documents may include
UCC financing statements, a favorable opinion or
opinions of counsel with respect to matters
which are reasonably requested by the
Underwriter, and/or an Officers' Certificate
from the Underwriter.
ARTICLE VI
LIMITATION ON LIABILITY OF THE SELLER
WITH RESPECT TO THE MORTGAGE LOANS
Section 6.1. Limitation on Liability of the Seller. None of the
directors, officers, employees or agents of the Seller shall be under any
liability to the Company, it being expressly understood that all such liability
is expressly waived and released as a condition of, and as consideration for,
the execution of this Agreement. Except as and to the extent expressly provided
in the Basic Documents, the Seller shall not be under any liability to the
Issuer, the Owner Trust, the Owner Trustee, the Indenture Trustee, the
Noteholders or the Certificateholders. The Seller and any director, officer,
employee or agent of the Seller 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.
ARTICLE VII
TERMINATION
Section 7.1. Termination.
(a) Except as provided in Section 7.1(b) hereof, the respective
obligations and responsibilities of the Seller, the Company, the Issuer and the
Indenture Trustee created hereby shall terminate, except for the Seller's
indemnity obligations as provided herein, upon the earlier of (i) the
termination of the Issuer pursuant to the terms of the Trust Agreement and (ii)
the
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purchase by the Seller from the Issuer of all, but not part, of the Mortgage
Loans and all property acquired, in respect of any Mortgage Loan pursuant to
Section 7.2 hereof.
(b) The Company may terminate this Agreement, by notice to the
Seller, at any time at or prior to the Closing Date:
(i) if the Underwriting Agreement is terminated by the
Underwriter pursuant to the terms of the Underwriting Agreement or if
there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the Prospectus,
any material adverse change in the financial condition, earnings,
business affairs or business prospects of the Seller, whether or not
arising in the ordinary course of business, or
(ii) if there has occurred any material adverse change in the
financial markets in the United States, any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of
which is such as to make it, in the judgment of the Underwriter,
impracticable to market the Notes or to enforce contracts for the sale
of the Notes, or
(iii) if trading in any securities of the Seller has been
suspended or limited by the Commission or the New York Stock Exchange,
or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the NASDAQ National Market System has been
suspended or limited, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental
authority,
(iv) if a banking moratorium has been declared by either Federal
or New York authorities,
(v) a change in control of the Seller shall have occurred other
than in connection with and as a result of the issuance and sale by the
Seller or registered, publicly offered common stock;
(vi) there is (A) a material breach by the Seller of any
representation and warranty contained in this Agreement or the
Underwriting Agreement other than a representation or warranty relating
to particular Mortgage Loans, and the Underwriter has reason to believe
in good faith either that such breach is not curable within 2 (two) days
or that such breach may not have been cured in all material respects at
the expiration of 2 (two) days following discovery thereof by the Seller
or (B) a failure by the Seller to make any payment payable by it under
this Agreement or (C) any other failure by the
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Seller to observe and perform in any material respect its material
covenants, agreements and obligations with the Company, including
without limitation those contained in this Agreement, and the Company
has reason to believe in good faith that such failure may not have been
cured in all material respects at the expiration of 2 (two) days
following discovery thereof by the Seller, or
(vii) the Seller fails to provide written notification to the
Underwriter of any change in its loan origination, acquisition or
appraisal guidelines or practices, or the Seller, without the prior
consent of the Underwriter (which shall not be unreasonably withheld),
amends in any material respect its loan origination, acquisition or
appraisal guidelines or practices.
If this Agreement is terminated pursuant to this Section 7.1(b),
such termination shall be without liability of any party to any other party
except as provided in Section 4.2 hereof.
Section 7.2. Optional Redemption. (a) Subject to the provisions
of clause (b) below, the majority Certificateholder has the right to purchase
the Mortgage Loans in whole, but not in part, on any Payment Date on or after
the Payment Date on which the aggregate Principal Balance of the Mortgage Loans
as of any Payment Date is less than or equal to 10% of the Original Pool
Balance. The purchase price will be equal to 100% of the aggregate outstanding
Note Principal Balance and accrued and unpaid interest thereon at the Note
Interest Rate through the date on which the Notes are redeemed in full together
with all amounts due and owing, including any such amounts due and owing in
connection with such redemption, to the Note Insurer, the Master Servicer and
the Indenture Trustee. If such right is exercised by the majority
Certificateholder, the majority Certificateholder shall deposit the amount
calculated above with the Indenture Trustee pursuant to Section 5.02 of the
Indenture and, upon the receipt of such deposit, the Indenture Trustee shall
release to the majority Certificateholder pursuant to Section 8.07 of the
Indenture the Mortgage Files pertaining to the Mortgage Loans being purchased.
(b) The majority Certificateholder, at its expense, shall prepare
and deliver to the Indenture Trustee for execution, at the time the Mortgage
Loans are to be released to the majority Certificateholder, appropriate
documents assigning each such Mortgage Loan from the Indenture Trustee or the
Trust to the majority Certificateholder or the appropriate party.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Amendment. This Agreement may be amended from time
to time by the Seller, the Indenture Trustee and the Company by written
agreement signed by the Seller, the Indenture Trustee and the Company, with the
prior written consent of the Note Insurer.
Section 8.2. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 8.3. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, postage prepaid, addressed
as follows:
(i) if to the Seller:
PacificAmerica Money Center, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
or, such other address as may hereafter be furnished to the Company in writing
by the Seller.
(ii) if to the Company:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc.
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Legal Department
or such other address as may hereafter be furnished to the Seller in writing by
the Company.
(iii) if to the Issuer:
PacificAmerica Home Equity Loan Trust
Series 1998-2F
c/o PacificAmerica Money Center, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇
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Attention:
or such other address as may hereafter be furnished to the Seller in writing by
the Issuer.
(iv) if to the Indenture Trustee:
Bankers Trust Company of California, N.A.
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: PacificAmerica Series 1998-2F
or such other address as may hereafter be furnished to the Seller in writing by
the Indenture Trustee.
(v) if to the Note Insurer:
Financial Security Assurance
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Surveillance Department
Re: PacificAmerica Home Equity Loan
Asset-Backed Notes Series 1998-2F
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.4. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be held
invalid for any reason whatsoever, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 8.5. Relationship of Parties. Nothing herein contained
shall be deemed or construed to create a partnership or joint venture between
the parties hereto, and the services of the Seller shall be rendered as an
independent contractor and not as agent for the Company.
Section 8.6. Counterparts. This Agreement may be executed in two
or more counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed to be an original
and such counterparts together shall constitute one and the same agreement.
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Section 8.7. Further Agreements. The Company, the Indenture
Trustee and the Seller each agree to execute and deliver to the other such
additional documents, instruments or agreements as may be necessary or
appropriate to effectuate the purposes of this Agreement. Each of the Company
and the Seller agrees to use its best reasonable efforts to take all actions
necessary to be taken by it to cause the Notes to be issued and rated in the
highest rating category by each of the Rating Agencies, and each party will
cooperate with the other in connection therewith.
Section 8.8. Intention of the Parties. It is the intention of the
parties that (i) the Company will be purchasing on the Closing Date, and the
Seller will be selling on the Closing Date, the Initial Mortgage Loans, rather
than the Company providing a loan to the Seller secured by the Initial Mortgage
Loans on the Closing Date, and (ii) the Issuer will be purchasing on each
Subsequent Transfer Date, and the Seller will be selling on each Subsequent
Transfer Date, the related Subsequent Mortgage Loans, rather than the Issuer
providing a loan to the Seller secured by the related Subsequent Mortgage Loans
on each Subsequent Transfer Date. Accordingly, the parties hereto each intend to
treat this transaction with respect to the transaction for federal income tax
purposes as (i) a sale by the Seller, and a purchase by the Company, of the
Initial Mortgage Loans on the Closing Date and (ii) a sale by the Seller, and a
purchase by the Issuer, of the related Subsequent Mortgage Loans on each
Subsequent Transfer Date. The Company and the Issuer will have the right to
review the Mortgage Loans and the Related Documents to determine the
characteristics of the Mortgage Loans which will affect the federal income tax
consequences of owning the Mortgage Loans and the Seller will cooperate with all
reasonable requests made by the Company and/or the Issuer in the course of such
review.
Section 8.9. Successors and Assigns; Assignment of Purchase
Agreement. This Agreement shall bind and inure to the benefit of and be
enforceable by the Seller, the Company, the Issuer, the Indenture Trustee and
the Note Insurer and their respective successors and assigns. The obligations of
the Seller under this Agreement cannot be assigned or delegated to a third party
without the consent of the Company and the Note Insurer, which consent shall be
at the Company's and the Note Insurer's sole discretion. The parties hereto
acknowledge that (i) the Company is acquiring the Initial Mortgage Loans for the
purpose of selling them to the Issuer, who will in turn pledge the Initial
Mortgage Loans to the Indenture Trustee for the benefit of the Noteholders and
the Note Insurer and (ii) the Issuer is acquiring the Subsequent Mortgage Loans
for the purpose of pledging the Subsequent Mortgage Loans to the Indenture
Trustee for the benefit of the Noteholders and the Note Insurer. As an
inducement to the Company and the Issuer to purchase the Mortgage Loans, the
Seller acknowledges and consents to (i) the assignment by the Company to the
Issuer of all of the Company's rights against the Seller pursuant to this
Agreement and to the enforcement or exercise of any right or remedy against the
Seller pursuant to this Agreement and (ii) the assignment by the Issuer to the
Indenture Trustee and the Note Insurer of such rights and to the enforcement or
exercise of any right or remedy against the Seller pursuant to this Agreement.
Such enforcement of a right or remedy by the Issuer, the Owner Trustee, the
Indenture Trustee or the Note Insurer, as applicable, shall have the same force
and
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effect as if the right or remedy had been enforced or exercised by the Company
or the Issuer directly.
Section 8.10. Survival. The representations and warranties made
herein by the Seller and the provisions of Article V hereof shall survive the
purchase of the Mortgage Loans hereunder.
Section 8.11. Third Party Beneficiary. The Note Insurer shall be
a third party beneficiary hereof and shall be entitled to enforce the provisions
of this Agreement as if a party hereto.
50
IN WITNESS WHEREOF, the Seller and the Company have caused their
names to be signed to this Home Equity Loan Purchase Agreement by their
respective officers thereunto duly authorized as of the day and year first above
written.
▇▇▇▇▇▇▇ ▇▇▇▇▇ MORTGAGE INVESTORS, INC.
as Company
By:___________________________________________
Name:
Title:
PACIFICAMERICA MONEY CENTER, INC.
as Seller
By:___________________________________________
Name:
Title:
PACIFICAMERICA HOME EQUITY LOAN
TRUST SERIES 1998-2F
as Issuer
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely in its capacity as
Owner Trustee
By:___________________________________________
Authorized Signatory
BANKERS TRUST COMPANY OF CALIFORNIA,
N.A.
as Indenture Trustee
By:___________________________________________
Name:
Title:
51
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
PROVIDED UPON REQUEST
52
EXHIBIT 2
SUBSEQUENT TRANSFER INSTRUMENT
Pursuant to this Subsequent Transfer Instrument (the
"Instrument"), dated ___________, 1998, between PacificAmerica Money Center,
Inc. as seller (the "Seller"), and PacificAmerica Home Equity Loan Trust Series
1998-2F as issuer (the "Issuer"), and pursuant to the Home Equity Loan Purchase
Agreement, dated as of June __, 1998, among the Seller, the Issuer, ▇▇▇▇▇▇▇
▇▇▇▇▇ Mortgage Investors, Inc. and Bankers Trust Company of California, N.A.
(the "Home Equity Loan Purchase Agreement"), the Seller and the Issuer agree to
the sale by the Seller and the purchase by the Issuer of the Mortgage Loans
listed on the attached Subsequent Mortgage Loan Schedule (the "Subsequent
Mortgage Loans").
Capitalized terms used and not defined herein have their
respective meanings as set forth in Section 1.1 of the Home Equity Loan Purchase
Agreement, which meanings are incorporated by reference herein. All other
capitalized terms used herein shall have the meanings specified herein.
Section 1. Conveyance of Subsequent Mortgage Loans.
(a) The Seller does hereby sell, transfer, assign, set over and
convey to the Issuer, without recourse, all of its right, title and interest in
and to the Subsequent Mortgage Loans, and including all principal received and
interest accruing on the Subsequent Mortgage Loans on and after the related
Subsequent Cut-off Date, and all items with respect to the Subsequent Mortgage
Loans to be delivered pursuant to Section 2.2 of the Home Equity Loan Purchase
Agreement; provided, however, that the Seller reserves and retains all right,
title and interest in and to principal received and interest accruing on the
Subsequent Mortgage Loans prior to the related Subsequent Cut-off Date. The
Seller, contemporaneously with the delivery of this Agreement, has delivered or
caused to be delivered to the Indenture Trustee each item set forth in Section
2.2 of the Home Equity Loan Purchase Agreement. The transfer to the Issuer by
the Seller of the Subsequent Mortgage Loans identified on the Subsequent
Mortgage Loan Schedule shall be absolute and is intended by the Seller, the
Issuer, the Indenture Trustee and the Noteholders to constitute and to be
treated as a sale by the Seller.
The parties hereto intend that the transactions set forth herein
constitute a sale by the Seller to the Issuer on the Subsequent Transfer Date of
all the Seller's right, title and interest in and to the Subsequent Mortgage
Loans, and other property as and to the extent described above. In the event the
transactions set forth herein shall be deemed not to be a sale, the Seller
hereby grants to the Issuer as of the Subsequent Transfer Date a security
interest in all of the Seller's right, title and interest in, to and under the
Subsequent Mortgage Loans, and such other property, to secure all of the
Issuer's obligations hereunder, and this Agreement shall constitute a security
agreement under applicable law. The Seller agrees to take or cause to be taken
such actions and to execute such documents, including without limitation the
filing of all necessary UCC-1
53
financing statements filed in the State of Delaware and the State of California
(which shall be submitted for filing as of the Subsequent Transfer Date), any
continuation statements with respect thereto and any amendments thereto required
to reflect a change in the name or corporate structure of the Seller or the
filing of any additional UCC-1 financing statements due to the change in the
principal office of the Seller, as are necessary to perfect and protect the
Issuer's interests in each Subsequent Mortgage Loan and the proceeds thereof.
(b) The expenses and costs relating to the delivery of the
Subsequent Mortgage Loans, this Instrument and the Home Equity Loan Purchase
Agreement shall be borne by the Seller.
(c) Additional terms of the sale are set forth on Attachment A
hereto.
Section 2. Representations and Warranties; Conditions Precedent.
(a) The Seller hereby affirms the representations and warranties
set forth in Section 3.1 of the Home Equity Loan Purchase Agreement that relate
to the Seller or the Subsequent Mortgage Loans as of the date hereof. The Seller
hereby confirms that each of the conditions set forth in Section 2.3(b) of the
Home Equity Loan Purchase Agreement are satisfied as of the date hereof and
further represents and warrants that each Subsequent Mortgage Loan complies with
the requirements of this Instrument and Section 2.3(c) of the Home Equity Loan
Purchase Agreement.
(b) The Seller is solvent, is able to pay its debts as they
become due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution and
delivery of this Instrument or by the performance of its obligations hereunder
nor is it aware of any pending insolvency; no petition of bankruptcy (or similar
insolvency proceeding) has been filed by or against the Seller prior to the date
hereof;
(c) All terms and conditions of the Home Equity Loan Purchase
Agreement are hereby ratified and confirmed; provided, however, that in the
event of any conflict the provisions of this Instrument shall control over the
conflicting provisions of the Home Equity Loan Purchase Agreement.
Section 3. Recordation of Instrument.
To the extent permitted by applicable law, this Instrument, or a
memorandum thereof if permitted under applicable law, is subject to recordation
in all appropriate public offices for real property records in all of the
counties or other comparable jurisdictions in which any or all of the properties
subject to the Mortgages are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Master
Servicer at the Noteholders' expense on direction of the majority Noteholders or
the Note Insurer, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and
54
beneficially affects the interests of the Noteholders or the Note Insurer or is
necessary for the administration or servicing of the Mortgage Loans.
Section 4. Governing Law.
This Instrument shall be construed in accordance with the laws of
the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws, without giving
effect to principles of conflicts of law.
Section 5. Counterparts.
This Instrument may be executed in one or more counterparts and
by the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same instrument.
Section 6. Successors and Assigns.
This Instrument shall inure to the benefit of and be binding upon
the Seller and the Issuer and their respective successors and assigns.
PACIFICAMERICA MONEY CENTER, INC.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
PACIFICAMERICA HOME EQUITY LOAN
TRUST SERIES 1998-2F
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely in its capacity as
Owner Trustee
By:___________________________________________
Authorized Signatory
55
Attachments
A. Additional terms of the sale.
B. Schedule of Subsequent Mortgage Loans.
C. Opinions of Seller's counsel (bankruptcy, corporate).
D. Seller's Officer's Certificate.
E. Seller's Officer's Certificate (confirmation of Note Insurer approval).
56
PACIFICAMERICA HOME EQUITY LOAN
ASSET-BACKED-
NOTES, SERIES 1998-2F
ATTACHMENT A TO SUBSEQUENT TRANSFER INSTRUMENT
Series 1998-2F
________, 1998
A.
1. Subsequent Cut-off Date:
2. Pricing Date:
3. Subsequent Transfer Date:
4. Aggregate Principal Balance of the Subsequent Mortgage Loans as of the
Subsequent Cut-off Date:
5. Purchase Price: 100.00%
B.
As to all the Subsequent Mortgage Loans the subject of this Instrument:
1. Longest stated term to maturity: _____ months
2. Minimum Mortgage Rate: _____ %
3. Maximum Mortgage Rate: _____ %
4. WAC of all Mortgage Loans: _____ %
5. WAM of all Mortgage Loans: _____ %
6. Largest Principal Balance: $________
7. Non-owner occupied Mortgaged Properties: _____ %
8. California zip code concentration: _____ %
9. Condominiums: _____ %
10. Single-family: _____ %
11. Weighted average term since origination:
12. [May/June/July 1998] first payment date: _____ %
57
EXHIBIT 3
ADDITION NOTICE
DATE:
Bankers Trust Company ▇▇▇▇▇'▇ Investor's Service, Inc.
of California, N.A. ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Financial Security Assurance Wilmington Trust Company
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Standard & Poor's Ratings Services
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Home Equity Loan Purchase Agreement, dated as of June 22,
1998 (the "Purchase Agreement"), among PacificAmerica
Money Center, Inc. (the "Seller"), PacificAmerica Home
Equity Loan Trust Series 1998-2F, a Delaware business
trust (the "Issuer"), Bankers Trust Company of California,
N.A., as indenture trustee (the "Indenture Trustee") and
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Investors, Inc., relating to
PacificAmerica Home Equity Loan Asset-Backed Notes and
Certificates, Series 1998-2F
Ladies and Gentlemen:
Pursuant to Section 2.3 of the above-captioned Purchase
Agreement, the Seller has designated the Subsequent Mortgage Loans (see
subsequent mortgage loan schedule attached hereto) to be sold to the Issuer on
_____________, 1998, with an aggregate principal balance of
$_____________________. Capitalized terms not otherwise defined herein have the
meaning set forth in the Purchase Agreement.
Please acknowledge your receipt of this notice by countersigning
the enclosed copy in the space indicated below and returning it to the attention
of the undersigned.
Very truly yours,
58
PACIFICAMERICA MONEY CENTER,
INC.
By:_________________________
Name:
Title:
ACKNOWLEDGED AND AGREED:
BANKERS TRUST COMPANY
OF CALIFORNIA, N.A.
By: ___________________________
Name:
Title:
59
EXHIBIT 4
Instruction to Owner Trustee to Execute and
Deliver Subsequent Transfer Instrument
___________, 1998
Wilmington Trust Company,
as Owner Trustee
▇▇▇▇▇▇ Square North
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Re: Instructions to Owner Trustee: PacificAmerica Home Equity
Loan Trust Series 1998-2F :Subsequent Transfer
Dear Sirs:
Reference is made to the Amended and Restated Trust Agreement, (the
"Trust Agreement"), dated as of June 1, 1998, between Wilmington Trust Company
("WTC"), as Owner Trustee (the "Owner Trustee"), and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage
Investors, Inc., a Delaware corporation (the "Depositor"). Capitalized terms
used but not otherwise defined herein shall have the meanings ascribed to them
in, or by reference in, the Trust Agreement.
The Seller, hereby instructs the Owner Trustee to execute and deliver
the Subsequent Transfer Instrument, dated as of _____________ __, 1998 between
PacificAmerica Money Center, Inc., as Seller, and PacificAmerica Home Equity
Loan Trust Series 1998-2F, as Issuer, (attached hereto as Exhibit A).
The Seller hereby confirms (i) that the Subsequent Mortgage Loan have
been approved by the Note Insurer and (ii) pursuant to the Trust Agreement, that
the indemnification provisions contained in the Trust Agreement apply to the
instructions to the Owner Trustee contained herein.
Very truly yours,
PACIFICAMERICA MONEY CENTER,
INC., as Seller
By:____________________________
Name:__________________________
Title:_________________________