Exhibit 4.4
SALE AND SERVICING AGREEMENT
Dated as of ____________ __, 2000
among
CENTEX CREDIT CORPORATION
d/b/a
CENTEX HOME EQUITY CORPORATION
(Seller and Servicer)
CHEC FUNDING, LLC
(Depositor)
CENTEX HOME EQUITY LOAN TRUST 2000-__
(Trust)
and
--------------------------------------------
(Indenture Trustee)
CENTEX HOME EQUITY LOAN TRUST 2000-__
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01 Definitions.................................................................................6
Section 1.02 Other Definitional Provisions..............................................................35
Section 1.03 Captions; Table of Contents................................................................35
Section 1.04 Opinions...................................................................................36
ARTICLE II
CONVEYANCE OF THE HOME EQUITY LOANS
Section 2.01 Conveyance of the Home Equity Loans........................................................37
Section 2.02 Representations and Warranties of the Depositor............................................37
Section 2.03 Representations and Warranties of the Servicer.............................................39
Section 2.04 Representations and Warranties of the Seller...............................................42
Section 2.05 Covenants of Seller to Take Certain Actions with Respect to the Home Equity Loans
in Certain Situations......................................................................45
Section 2.06 Sale Treatment of the Home Equity Loans and Qualified Replacement Mortgages................54
Section 2.07. Acceptance by Indenture Trustee; Certain Substitutions of Home Equity Loans;
Certification by Indenture Trustee.........................................................58
Section 2.08. Custodian..................................................................................60
Section 2.09. Cooperation Procedures.....................................................................60
ARTICLE III
ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS
Section 3.01 The Servicer...............................................................................62
Section 3.02 Collection of Certain Home Equity Loan Payments............................................64
Section 3.03 Principal and Interest Account.............................................................65
Section 3.04 Delinquency Advances and Servicing Advances................................................67
Section 3.05 Compensating Interest; Repurchase of Home Equity Loans.....................................68
Section 3.06 Maintenance of Insurance...................................................................69
Section 3.07 Reserved...................................................................................69
Section 3.08 Reserved...................................................................................69
Section 3.09 Due-on-Sale Clauses; Assumption and Substitution Agreements................................69
Section 3.10 Realization Upon Defaulted Home Equity Loans; Workout of Home Equity Loans.................71
Section 3.11 Indenture Trustee to Cooperate; Release of Mortgage Files..................................72
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Section 3.12 Servicing Compensation.....................................................................73
Section 3.13 Annual Statement as to Compliance..........................................................74
Section 3.14 Annual Independent Certified Public Accountants' Reports...................................74
Section 3.15 Reserved...................................................................................74
Section 3.16 Assignment of Agreement....................................................................74
Section 3.17 Inspections by Insurer; Errors and Omissions Insurance.....................................75
Section 3.18 Additional Servicing Responsibilities for Second Mortgage Loans............................75
Section 3.19 The Group III Home Equity Loans............................................................75
Section 3.20 Reserved...................................................................................76
Section 3.21 Notices of Material Events.................................................................76
Section 3.22 Reports on Foreclosure and Abandonment of Properties.......................................76
ARTICLE IV
INSURER
Section 4.01 Claims upon the Insurance Policies.........................................................78
Section 4.02 Effect of Payments by the Insurer; Subrogation.............................................79
Section 4.05 Replacement Insurance Policy...............................................................79
ARTICLE V
PRIORITY OF DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS; RIGHTS OF NOTEHOLDERS
Section 5.01 Distributions..............................................................................81
Section 5.02 Calculation of the Note Rate...............................................................83
Section 5.03 Statements to Noteholders..................................................................83
Section 5.04 Cross-Collateralization Reserve Accounts...................................................87
Section 5.05 Distribution Account.......................................................................88
Section 5.06 Investment of Accounts.....................................................................88
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 Liability of the Seller, the Servicer and the Depositor....................................91
Section 6.02 Merger or Consolidation of, or Assumption of the Obligations of, the Seller, the
Servicer or the Depositor..................................................................91
Section 6.03 Limitation on Liability of the Servicer and Others.........................................91
Section 6.04 Servicer Not to Resign.....................................................................92
Section 6.05 Delegation of Duties.......................................................................92
Section 6.06 Indemnification by the Servicer............................................................92
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ARTICLE VII
SERVICING TERMINATION
Section 7.01 Events of Servicing Termination............................................................94
Section 7.02 Indenture Trustee to Act; Appointment of Successor.........................................96
Section 7.03 Waiver of Defaults.........................................................................97
Section 7.04 Notification to Noteholders................................................................97
ARTICLE VIII
TERMINATION
Section 8.01 Termination................................................................................98
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01 Amendment.................................................................................100
Section 9.02 Recordation of Agreement..................................................................101
Section 9.03 Duration of Agreement.....................................................................101
Section 9.04 Governing Law.............................................................................101
Section 9.05 Notices...................................................................................102
Section 9.06 Severability of Provisions................................................................102
Section 9.07 No Partnership............................................................................102
Section 9.08 Counterparts..............................................................................102
Section 9.09 Successors and Assigns....................................................................102
Section 9.10 Headings..................................................................................103
Section 9.11 Indenture Trustee.........................................................................103
Section 9.12 Reports to Rating Agencies................................................................103
Section 9.13 Inconsistencies Among Transaction Documents...............................................103
Section 9.14 Rights of the Insurer to Exercise Rights of Noteholders...................................103
EXHIBITS
EXHIBIT A-1 Home Equity Loan Schedule for Group I
EXHIBIT A-2 Home Equity Loan Schedule for Group II
EXHIBIT A-3 Home Equity Loan Schedule for Group III
[EXHIBIT B List of Servicing Officers]
[EXHIBIT C Form of Monthly Statement to Noteholders]
[EXHIBIT D Form of Servicing Certificate]
[EXHIBIT E Letter of Depositor to Indenture Trustee Re: Exchange Act Reports]
[EXHIBIT F Form of Liquidation Report]
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[EXHIBIT G Form of Notes]
[EXHIBIT H Form of Mortgage Note]
[EXHIBIT I Form of Mortgage]
[EXHIBIT J Form of Request for Release]
[EXHIBIT K Specimens of Insurance Policies]
[EXHIBIT L Custodial Fee Letter]
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This Sale and Servicing Agreement (the "Agreement") is entered into
effective as of ____________________, among CENTEX HOME EQUITY LOAN TRUST
2000-__, a Delaware business trust (the "Trust"), CENTEX CREDIT CORPORATION
d/b/a CENTEX HOME EQUITY CORPORATION, a Nevada corporation ("Centex") as seller
(the "Seller") and as servicer (the "Servicer"), CHEC FUNDING, LLC, a Delaware
limited liability company, as depositor (the "Depositor"), and
____________________, a ____________ banking corporation, as Indenture Trustee
on behalf of the Noteholders (in such capacity, the "Indenture Trustee").
PRELIMINARY STATEMENT
WHEREAS, the Seller desires to sell to the Depositor, the Depositor
desires to purchase from the Seller and to sell to the Trust, and the Trust
desires to purchase from the Depositor a pool of Home Equity Loans, divided into
three separate loan groups, which were originated by the Seller in the ordinary
course of business of the Seller; and
WHEREAS, the Servicer is willing to service such Home Equity Loans in
accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto hereby agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
ACCOUNT: Any of the Principal and Interest Account, the Distribution
Account, the Group I Cross-Collateralization Reserve Account, the Group II
Cross-Collateralization Reserve Account or Group III Cross-Collateralization
Reserve Account.
ADJUSTMENT DATE: As to each adjustable-rate Home Equity Loan, each date
on which the related Coupon Rate is subject to adjustment, as provided in the
related Mortgage Note.
ADMINISTRATION AGREEMENT: The Administration Agreement dated as of
__________ among the Trust, the Administrator, the Indenture Trustee and
Centrex.
ADMINISTRATOR: _______________________.
AFFILIATE: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
AGREEMENT: This Sale and Servicing Agreement and all amendments hereof
and supplements hereto.
ANNUAL LOSS PERCENTAGE (ROLLING TWELVE MONTH): As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator of
which is the aggregate of the Realized Losses as of the last day of the calendar
month of each Remittance Period for the twelve immediately preceding Remittance
Periods and the denominator of which is the aggregate of the Principal Balances
as of the first day of the first such Remittance Period.
APPRAISED VALUE: The appraised value of any Mortgaged Property based
upon the appraisal made at the time of the origination of the related Home
Equity Loan, or, in the case of a Home Equity Loan which is a purchase money
mortgage or with respect to which the Mortgaged Property was sold within 12
months preceding the time of origination, the sales price of the Mortgaged
Property, if such sales price is less than such appraised value.
ASSIGNMENT OF MORTGAGE: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the
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Indenture Trustee, which assignment, notice of transfer or equivalent
instrument may be in the form of one or more blanket assignments covering the
Home Equity Loans secured by Mortgaged Properties located in the same
jurisdiction.
AUTHORIZED OFFICER: With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon such Person; with respect to the
Indenture Trustee, Depositor, the Seller and the Servicer, initially including
those individuals whose names appear on the lists of Authorized Officers
delivered at the Closing; with respect to the Indenture Trustee, any officer
assigned to the Corporate Trust Department (or any successor thereto), including
any Vice President, Assistant Vice President, Trust Officer, any Assistant
Secretary, any trust officer or any other officer of the Indenture Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
this Agreement.
AVAILABLE FUNDS: As to any Distribution Date and Group, the sum of (A)
the Monthly Remittance Amount; (B) Insured Payments, if any, in respect of such
Group; (C) the amount of any Cross-Collateralization Payment in respect of the
other Groups and Distribution Date; (D) any Delinquency Advances made during the
related Remittance Period; (E) the proceeds of any liquidation of the Trust
Estate; and (F) any Termination Price with respect to the related Home Equity
Loans deposited to the Distribution Account pursuant to Section 8.01(b).
AVAILABLE FUNDS CAP: With respect to any Interest Period and any
Distribution Date, a rate per annum equal to the fraction, expressed as a
percentage, the numerator of which is an amount equal to (i) the product of (A)
the weighted average of the Net Coupon Rates (net of the Minimum Spread) of the
Home Equity Loans in Group III (by outstanding principal balance) at the
beginning of the related Remittance Period, and (B) the aggregate Principal
Balance of the Home Equity Loans in Group III as of the beginning of the
Remittance Period), minus (ii) the product of (A) the Class A-3 Note Rate and
(B) the Outstanding Note Principal Balance before giving effect to payments of
principal on such Distribution Date, and the denominator of which is the
outstanding Outstanding Note Principal Balance before giving effect to payments
of principal on such Distribution Date such rate, as calculated on the basis of
a 360 day year and the actual number of days elapsed in the related Interest
Period.
BASE O/C AMOUNT: With respect to any Distribution Date and Group, an
amount equal to the product of (x) the related Base O/C Percentage and (y) the
Cut-Off Date Principal Balance for such Group.
BASE O/C PERCENTAGE: With respect to Group I, ___%, with respect to
Group II, ___% and with respect to Group III, __%.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or if at any time after the
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execution of this instrument the Bank Insurance Fund is not existing and
performing duties now assigned to it, the body performing such duties on such
date.
BOOK-ENTRY NOTE: Any Note registered in the name of the Depository or
its nominee, ownership of which is reflected on the books of the Depository or
on the books of a Person maintaining an account with such Depository (directly
or as an indirect participant in accordance with the rules of such Depository).
BUSINESS DAY: Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in New York, New York, Dallas, Texas, the State
of Maryland, the city in which the Corporate Trust Office of
______________________ is located, the city in which the Insurer is located, or,
with respect to the obligations of the Custodian hereunder, the State of
California, are authorized or obligated by law or executive order to be closed.
BUSINESS TRUST STATUTE: Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code Sections 3801 ET SEQ., as the same may be amended from time to time.
CLASS: With respect to each of the Class A-1 Notes, Class A-2 Notes and
Class A-3 Notes, all of the Notes of such Class.
CLASS A-1 INTEREST RATE CAP: For any Distribution Date, as of the
related Monthly Remittance Date, a rate per annum equal to the weighted average
of the Net Coupon Rates on the Home Equity Loans in Group I as of the beginning
of the related Remittance Period.
CLASS A-1 NOTE: Any Class A-1 Note executed by the Trust and
authenticated by the Indenture Trustee substantially in the form set forth in
Exhibit ______ hereto.
CLASS A-1 NOTE RATE: For any Distribution Date and the applicable
Interest Period, the lesser of (A) in any month up to and including the month in
which the Clean-Up Call Date occurs, ___% per annum, and ___% thereafter; and
(B) the Class A-1 Interest Rate Cap.
CLASS A-2 INTEREST RATE CAP: For any Distribution Date, as of the
related Monthly Remittance Date, a rate per annum equal to the weighted average
of the Net Coupon Rates on the Home Equity Loans in Group II as of the beginning
of the related Remittance Period.
CLASS A-2 NOTE: Any Class A-2 Note executed by the Trust and
authenticated by the Indenture Trustee substantially in the form set forth in
Exhibit _______ hereto.
CLASS A-2 NOTE RATE: For any Distribution Date and the applicable
Interest Period, the lesser of (A) in any month up to and including the month in
which the Clean-Up Call Date occurs, __% per annum, and ___% thereafter; and (B)
the Class A-2 Interest Rate Cap.
CLASS A-3 NOTE: Any Class A-3 Note executed by the Trust and
authenticated by the Indenture Trustee substantially in the form set forth in
Exhibit _______ hereto.
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CLASS A-3 NOTE RATE: For any Distribution Date and the applicable
Interest Period, the lesser of the Class A-3 Formula Rate and (B) the Available
Funds Cap.
CLASS A-3 FORMULA RATE: For any Distribution Date and the applicable
Interest Period, the sum of (A) One-Month LIBOR and (B) in any month up to and
including the month in which the Clean-Up Call Date occurs, __% per annum, and
__% per annum thereafter.
CLEAN-UP CALL DATE: The first Monthly Remittance Date on which the
aggregate outstanding principal balances of the Home Equity Loans as of the
close of business on the last day of the immediately preceding Remittance Period
has declined to 10% or less of the Maximum Collateral Amount.
CLOSING DATE: _____________, 2000.
CODE: The Internal Revenue Code of 1986, as amended from time to time,
and Treasury Regulations promulgated thereunder.
COMBINED LOAN-TO-VALUE RATIO or CLTV: With respect to any Home Equity
Loan, the sum of the original principal balance of such Home Equity Loan and the
outstanding principal balance of the First Lien, if any, as of the date of
origination of the Home Equity Loan, divided by the Appraised Value.
COMPENSATING INTEREST: As to any Distribution Date, the amount
calculated pursuant to Section 3.05.
CORPORATE TRUST OFFICE: The principal office of the Indenture Trustee
at which at any particular time its corporate business shall be administered,
which office on the Closing Date is located at ________________________.
COUPON RATE: The rate of interest borne by each Mortgage Note from time
to time.
CRAM DOWN LOSS: With respect to a Home Equity Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Principal Balance of such Home Equity Loan, the amount of such
reduction. A "Cram Down Loss" shall be deemed to have occurred on the date of
issuance of such order.
CROSS-COLLATERALIZATION PAYMENT: For any Distribution Date and Group,
subject to Section 5.04(d), the lesser of (a) the sum of (i) the Excess
Available Funds in respect of such Group and Distribution Date and (ii) amounts
withdrawn from the Cross-Collateralization Reserve Account for such Group and
Distribution Date pursuant to Sections 5.04(b) and (c), and (b) the sum of (i)
any Interest Deficiency, (ii) any Insurer Reimbursement Deficiency and (iii) any
Undercollateralization Amount, in each case for such Distribution Date and with
respect to the other Groups.
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CROSS-COLLATERALIZATION RESERVE ACCOUNT: Any of the Group I
Cross-Collateralization Reserve Account, Group II Cross-Collateralization
Reserve Account or Group III Cross-Collateralization Account established
pursuant to Section 5.04.
CROSS-COLLATERALIZATION RESERVE DEPOSIT: For any Group and Distribution
Date, the lesser of (a) Remaining Excess Available Funds, and (b) the product of
(x) the excess of (i) the Required Cross-Collateralization Reserve Amount for
such Group over (ii) the amount on deposit in the Cross-Collateralization
Reserve Account for such Group and (y) a fraction, the numerator of which is the
Remaining Excess Available Funds for such Group and Distribution Date and the
denominator of which is the aggregate Remaining Excess Available Funds for all
Groups for such Distribution Date.
CROSS-COLLATERALIZATION RESERVE RELEASE AMOUNTS: For any Group and
Distribution Date, the product of (x) the excess, if any, of (a) the aggregate
amount on deposit in the Cross-Collateralization Reserve Account for all Groups
on such Distribution Date, as reduced by amounts withdrawn from such
Cross-Collateralization Reserve Accounts pursuant to Sections 5.04(b) and (c)
for such Distribution Date, over (b) the Required Aggregate
Cross-Collateralization Reserve Amount for all Groups on such Distribution Date
and (y) a fraction, the numerator of which is the amount on deposit in the
Cross-Collateralization Reserve Account for such Group on such Distribution
Date, as reduced by amounts withdrawn from such Cross-Collateralization Reserve
Account pursuant to Sections 5.04(b) and (c) for such Distribution Date and the
denominator of which is the amount calculated pursuant to subclause (a) of
clause (x) above.
CUMULATIVE LOSS PERCENTAGE: As of any date of determination thereof,
the aggregate of all Realized Losses since the Startup Day as a percentage of
the Maximum Collateral Amount.
CUMULATIVE UNCOVERED LOSSES: For any Group and Distribution Date, the
sum of Uncovered Losses in respect of such Group for such Distribution Date and
all prior Distribution Dates.
CURTAILMENT: With respect to a Home Equity Loan, any payment of
principal received during a Remittance Period as part of a payment that is in
excess of the amount of the Monthly Payment due for such Remittance Period and
which is not intended to satisfy the Home Equity Loan in full, nor is intended
to cure a delinquency or to be applied for subsequent Monthly Payments as and
when the same come due pursuant to directions from the Mortgagor to such effect.
CUSTODIAL AGREEMENT: The Custodial Agreement dated as of _____________
between the Custodian and the Indenture Trustee.
CUSTODIAN: The Indenture Trustee.
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CUSTODIAL FEE: The fees and expenses as set forth in the Custodial
Agreement.
CUT-OFF DATE: The opening of business on ________________, 2000.
CUT-OFF DATE POOL PRINCIPAL BALANCE: $____________
CUT-OFF DATE PRINCIPAL BALANCE: With respect to any Home Equity Loan,
the unpaid principal balance thereof as of the Cut-Off Date (or as of the
applicable date of substitution with respect to a Qualified Replacement Mortgage
pursuant to Section 2.03 or 2.06).
DEFICIENCY EXCESS: As defined in Section 5.04(c).
DEFINITIVE NOTES: As defined in the Indenture.
DELINQUENCY ADVANCE: As defined in Section 3.04(a) hereof.
DELINQUENCY PERCENTAGE: With respect to a Group, the rolling three
month average of the percentage equivalent of a fraction, the numerator of which
is (x) the sum of the aggregate principal balances of all Home Equity Loans in
such Group which are (i) at or over 90 Days Delinquent, (ii) in bankruptcy and
at or over 90 Days Delinquent, (iii) in foreclosure or (iv) relating to REO
Properties, and the denominator of which is (y) the Group Principal Balance of
such Group.
DELINQUENT: A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related Due
Date. A Home Equity Loan is "30 days Delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
DEPOSITOR: CHEC Funding, LLC, a Delaware limited liability company, or
its successors.
DEPOSITORY: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of (i)
Class A-1 Notes evidencing $__________ in initial aggregate principal amount of
the Class A-1 Notes, (ii) Class A-2 Notes evidencing $____________ in initial
aggregate principal amount of the Class A-2 Notes, and (iii) Class A-3 Notes
evidencing $______________ in initial aggregate principal amount of the Class
A-3 Notes. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(a)(5) of the UCC of the State of New York.
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DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DETERMINATION DATE: The 15th day of each month, or if such day is not a
Business Day, on the preceding Business Day, commencing in _______________.
DISTRIBUTABLE EXCESS SPREAD: As to any Distribution Date and Group, the
lesser of (i) the Excess Spread for such Distribution Date and Group and (ii)
the excess, if any, of the Specified O/C Amount for such Distribution Date and
Group over the O/C Amount in respect of such Group on such date before giving
effect to the application of Distributable Excess Spread in respect of such
Group on such Distribution Date.
DISTRIBUTION ACCOUNT: The account established by the Indenture Trustee
pursuant to Section 5.05. The Distribution Account shall be an Eligible Account.
DISTRIBUTION DATE: Any date on which the Indenture Trustee is required
to make distributions to the Owners, which shall be the 25th day of each month
or if such day is not a Business Day, the next Business Day thereafter,
commencing in the month following the Startup Day. The first Distribution Date
will be _________ ___, 2000.
DUE DATE: With respect to any Home Equity Loan, the date on which the
Monthly Payment with respect to such Home Equity Loan is required to be paid
pursuant to the related Mortgage Note exclusive of any days of grace.
ELIGIBLE ACCOUNT: A segregated trust account that is (i) maintained
with a depository institution whose debt obligations at the time of any deposit
therein have the highest short-term debt rating by the Rating Agencies and whose
accounts are fully insured by either the SAIF or the BIF of the Federal Deposit
Insurance Corporation established by such fund with a minimum long-term
unsecured debt rating of "A2" by ▇▇▇▇▇'▇ and "A" by Standard & Poor's, and which
is any of (A) a federal savings and loan association duly organized, validly
existing and in good standing under the federal banking laws, (B) an institution
duly organized, validly existing and in good standing under the applicable
banking laws of any state, (C) a national banking association duly organized,
validly existing and good standing under the federal banking laws, (D) a
principal subsidiary of a bank holding company, and in each case of (A)-(D)
above, approved in writing by the Insurer; (ii) a segregated trust account
maintained with the corporate trust department of a federal or state chartered
depository institution or trust company, having capital and surplus of not less
than $50,000,000, acting in its fiduciary capacity; or (iii) otherwise
acceptable to each Rating Agency and the Insurer as evidenced by a letter from
each Rating Agency and the Insurer to the Owner Trustee and the Indenture
Trustee, without reduction or withdrawal of the then current ratings of the
Notes, without regard to any Insurance Policy.
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ELIGIBLE INVESTMENTS: One or more of the following (excluding any
callable investments purchased at a premium):
(i) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and interest by, the
United States or any agency or instrumentality thereof, PROVIDED that
such obligations are backed by the full faith and credit of the United
States;
(ii) repurchase agreements on obligations specified
in clause (i) maturing not more than three months from the date of
acquisition thereof, PROVIDED that the short-term unsecured debt
obligations of the party agreeing to repurchase such obligations are at
the time rated by each Rating Agency in its highest short-term rating
category (which is "A-1+" for Standard & Poor's and "P-1" for Moody's);
(iii) certificates of deposit, time deposits and
bankers' acceptances (which, if ▇▇▇▇▇'▇ is a Rating Agency, shall each
have an original maturity of not more than 90 days and, in the case of
bankers' acceptances, shall in no event have an original maturity of
more than 365 days) of any U.S. depository institution or trust company
incorporated under the laws of the United States or any state thereof
and subject to supervision and examination by federal and/or state
banking authorities, PROVIDED that the unsecured short-term debt
obligations of such depository institution or trust company at the date
of acquisition thereof have been rated by Moody's and Standard & Poor's
in its highest unsecured short-term debt rating category;
(iv) commercial paper (having original maturities of
not more than 90 days) of any corporation incorporated under the laws
of the United States or any state thereof which on the date of
acquisition has been rated by Standard & Poor's and Moody's in their
highest short-term rating categories;
(v) short term investment funds ("STIFS") sponsored
by any trust company or national banking association incorporated under
the laws of the United States or any state thereof which on the date of
acquisition has been rated by Standard & Poor's and Moody's in their
respective highest rating category of long term unsecured debt;
(vi) interests in any money market fund which at the
date of acquisition of the interests in such fund and throughout the
time as the interest is held in such fund has a rating of "Aaa" by
Moody's and either "AAAm" or "AAAm-G" by Standard & Poor's; and
(vii) other obligations or securities that are
acceptable to each Rating Agency and the Insurer as an Eligible
Investment hereunder and will not result in a reduction in the then
current rating of the Notes, as evidenced by a letter to such effect
from such Rating Agency and the Insurer and with respect to which the
Servicer has
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received confirmation that, for tax purposes, the investment complies
with each proviso set forth below in the last clause of this
definition;
PROVIDED that no instrument described hereunder shall evidence either
the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provided a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying obligations;
and PROVIDED, FURTHER, that no instrument described hereunder may be purchased
at a price greater than par if such instrument may be prepaid or called at a
price less than its purchase price prior to its stated maturity.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
EVENT OF SERVICING TERMINATION: As defined in Section 7.01.
EXCESS AVAILABLE FUNDS: With respect to any Payment Date and Group, the
amount of Available Funds in respect of such Group remaining after distributions
are made in respect of such Group pursuant to Sections 5.01(a)(i)-(vi).
EXCESS O/C AMOUNT: As to any Distribution Date and Group, the amount by
which (i) the O/C Amount for such Distribution Date and Group exceeds (ii) the
Specified O/C Amount for such Distribution Date and Group.
EXCESS SPREAD: With respect to any Distribution Date and Group, the
excess, if any, of (a) Available Funds (other than the portion thereof in
respect of any related Cross-Collateralization Payment) for such Distribution
Date and Group over (b) the aggregate of amounts required to be distributed in
respect of such Group pursuant to subclauses (i) through (iv) of Section 5.01(a)
herein on such Distribution Date.
FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
FINAL CERTIFICATION: As defined in Section 2.07(c) hereof.
FINAL DISTRIBUTION DATE: The Distribution Date in _________________.
FINAL RECOVERY DETERMINATION: With respect to any defaulted Home Equity
Loan or REO Property (other than a Home Equity Loan purchased by the Seller, the
Depositor or the Servicer), a determination made by the Servicer that all
recoveries which the Servicer, in its reasonable business judgment expects to be
finally recoverable in respect thereof have been so recovered or that the
Servicer believes in its reasonable business judgment the cost of obtaining any
additional
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recoveries therefrom would exceed the amount of such recoveries. The Servicer
shall maintain records of each Final Recovery Determination.
FIRST LIEN: With respect to any Home Equity Loan that is a second
priority lien, the home equity loan or home equity loans relating to the
corresponding Mortgaged Property having a first priority lien to such Home
Equity Loan.
FIRST MORTGAGE LOAN: A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
FISCAL AGENT: As defined in the Insurance Policies.
FNMA: The Federal National Mortgage Association, a federally-chartered
and privately-owned corporation existing under the Federal National Mortgage
Association Charter Act, as amended, or any successor thereof.
FNMA GUIDE": FNMA's Servicing Guide, as the same may be amended by FNMA
from time to time.
GROUP: Any of Group I, Group II or Group III.
GROUP PRINCIPAL BALANCE: With respect to any date of determination and
Group, the aggregate of the Principal Balances of all Home Equity Loans in such
Group on such date.
GROUP I: With respect to the Home Equity Loans, the pool of Home Equity
Loans identified in the related Schedule of Home Equity Loans as having been
assigned to Group I, including any Qualified Replacement Mortgage delivered in
replacement thereof.
GROUP I CROSS-COLLATERALIZATION RESERVE ACCOUNT: The account in respect
of Group I established by the Indenture Trustee pursuant to Section 5.04 hereof.
The Group I Cross-Collateralization Reserve Account shall be an Eligible
Account.
GROUP I INTEREST REMITTANCE AMOUNT: As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest paid during the related
Remittance Period with respect to the Home Equity Loans in Group I (net of the
Group I Servicing Fees), (ii) all Compensating Interest paid by the Servicer on
such Monthly Remittance Date with respect to Group I, (iii) the portions of the
Loan Purchase Prices and the Substitution Amount relating to interest on the
Home Equity Loans in Group I paid by the Seller or Servicer on or prior to such
Monthly Remittance Date and (iv) the interest portion of all Net Liquidation
Proceeds actually collected by the Servicer with respect to such Home Equity
Loans in Group I during the related Remittance Period.
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GROUP I MONTHLY REMITTANCE AMOUNT: As of any Monthly Remittance Date,
the sum of (i) the Group I Interest Remittance Amount for such Monthly
Remittance Date and (ii) the Group I Principal Remittance Amount for such
Monthly Remittance Date.
GROUP I PRINCIPAL REMITTANCE AMOUNT: As of any Monthly Remittance Date,
the sum, without duplication, of (i) the principal actually collected by the
Servicer with respect to Home Equity Loans in Group II during the related
Remittance Period, (ii) the outstanding principal balance of each such Home
Equity Loan in Group II that was purchased from the Indenture Trustee on or
prior to such Monthly Remittance Date, to the extent such outstanding principal
balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts relating to principal delivered by the Seller in connection
with a substitution of a Home Equity Loan in Group II, to the extent such
Substitution Amounts were actually deposited in the Principal and Interest
Account on or prior to such Monthly Remittance Date, (iv) the principal portion
of all Net Liquidation Proceeds actually collected by the Servicer with respect
to such Home Equity Loans in Group II during the related Remittance Period (to
the extent such Net Liquidation Proceeds related to principal) and (v) the
amount of investment losses required to be deposited pursuant to Section
3.03(b).
GROUP I SERVICING FEE: With respect to any Home Equity Loan in Group I
and each Remittance Period, an amount retained by the Servicer as compensation
for servicing and administration duties relating to such Home Equity Loan
pursuant to Section 3.12 and equal to one month's interest at 0.50% per annum of
the then outstanding principal balance of such Home Equity Loan as of the first
day of each Remittance Period payable on a monthly basis; provided, however,
that if a successor Servicer is appointed pursuant to Section 7.02 hereof, the
Group I Servicing Fee shall be the amount as agreed upon by the Indenture
Trustee, the Insurer and the successor Servicer, and the per annum rate at which
the Group I Servicing Fee is calculated shall not exceed 0.50% per annum.
GROUP II: With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as having
been assigned to Group II, including any Qualified Replacement Mortgage
delivered in replacement thereof.
GROUP II CROSS-COLLATERALIZATION RESERVE ACCOUNT: The account in
respect of Group II established by the Indenture Trustee pursuant to Section
5.04 hereof. The Group II Cross-Collateralization Reserve Account shall be an
Eligible Account.
GROUP II INTEREST REMITTANCE AMOUNT: As of any Monthly Remittance Date,
the sum, without duplication, of (i) all interest paid during the related
Remittance Period with respect to the Home Equity Loans in Group II (net of the
Group II Servicing Fees), (ii) all Compensating Interest paid by the Servicer on
such Monthly Remittance Date with respect to Group II, (iii) the portions of the
Loan Purchase Prices and the Substitution Amount relating to interest on the
Home Equity Loans in Group II paid by the Seller or Servicer on or prior to such
Monthly Remittance Date and (iv) the interest portion of all Net Liquidation
Proceeds actually collected
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by the Servicer with respect to such Home Equity Loans in Group II during the
related Remittance Period.
GROUP II MONTHLY REMITTANCE AMOUNT: As of any Monthly Remittance Date,
the sum of (i) the Group II Interest Remittance Amount for such Monthly
Remittance Date and (ii) the Group II Principal Remittance Amount for such
Monthly Remittance Date.
GROUP II PRINCIPAL REMITTANCE AMOUNT: As of any Monthly Remittance
Date, the sum, without duplication, of (i) the principal actually collected by
the Servicer with respect to Home Equity Loans in Group II during the related
Remittance Period, (ii) the outstanding principal balance of each such Home
Equity Loan in Group II that was purchased from the Indenture Trustee on or
prior to such Monthly Remittance Date, to the extent such outstanding principal
balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts relating to principal delivered by the Seller in connection
with a substitution of a Home Equity Loan in Group II, to the extent such
Substitution Amounts were actually deposited in the Principal and Interest
Account on or prior to such Monthly Remittance Date, (iv) the principal portion
of all Net Liquidation Proceeds actually collected by the Servicer with respect
to such Home Equity Loans in Group II during the related Remittance Period (to
the extent such Net Liquidation Proceeds related to principal) and (v) the
amount of investment losses required to be deposited pursuant to Section
3.03(b).
GROUP II SERVICING FEE: With respect to any Home Equity Loan in Group
II, an amount retained by the Servicer as compensation for servicing and
administration duties relating to such Home Equity Loan pursuant to Section 3.12
and equal to one month's interest at 0.50% per annum of the then outstanding
principal balance of such Home Equity Loan as of the first day of each
Remittance Period payable on a monthly basis, provided, however, that if a
successor Servicer is appointed pursuant to Section 7.02 hereof, the Group II
Servicing Fee shall be such amount as agreed upon by the Indenture Trustee, the
Insurer and the successor Servicer, and the per annum rate at which the Group II
Servicing Fee is calculated shall not exceed 0.50% per annum.
GROUP III: With respect to the Home Equity Loans, the pool of Home
Equity Loans identified in the related Schedule of Home Equity Loans as having
been assigned to Group III, including any Qualified Replacement Mortgage
delivered in replacement thereof.
GROUP III CROSS-COLLATERALIZATION RESERVE ACCOUNT: The account in
respect of Group III established by the Indenture Trustee pursuant to Section
5.04 hereof. The Group III Cross-Collateralization Reserve Account shall be an
Eligible Account.
GROUP III INTEREST REMITTANCE AMOUNT: As of any Monthly Remittance
Date, the sum, without duplication, of (i) all interest paid during the related
Remittance Period with respect to the Home Equity Loans in Group III (net of the
Group III Servicing Fee), (ii) all Compensating Interest paid by the Servicer on
such Monthly Remittance Date with respect to Group III and (iii) the portion of
the Loan Purchase Prices and Substitution Amount relating to interest on the
Home
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Equity Loans in Group III paid by the Seller or the Servicer on or prior to
such Monthly Remittance Date and (iv) the interest portion of all Net
Liquidation Proceeds actually collected by the Servicer with respect to the
Home Equity Loans in Group III during the related Remittance Period.
GROUP III MONTHLY REMITTANCE AMOUNT: As of any Monthly Remittance Date,
the sum of (i) the Group III Interest Remittance Amount for such Monthly
Remittance Date and (ii) the Group III Principal Remittance Amount for such
Monthly Remittance Date.
GROUP III PRINCIPAL REMITTANCE AMOUNT: As of any Monthly Remittance
Date, the sum, without duplication, of (i) the principal actually collected by
the Servicer with respect to Home Equity Loans in Group III during the related
Remittance Period, (ii) the outstanding principal balance of each such Home
Equity Loan in Group III that was purchased from the Indenture Trustee on or
prior to such Monthly Remittance Date, to the extent such outstanding principal
balance was actually deposited in the Principal and Interest Account, (iii) any
Substitution Amounts relating to principal delivered by the Seller in connection
with a substitution of a Home Equity Loan in Group III, to the extent such
Substitution Amounts were actually deposited in the Principal and Interest
Account on or prior to such Monthly Remittance Date, (iv) the principal portion
of all Net Liquidation Proceeds actually collected by the Servicer with respect
to such Home Equity Loans in Group III during the related Remittance Period (to
the extent such Net Liquidation Proceeds related to principal) and (v) the
amount of investment losses required to be deposited pursuant to Section
3.03(b).
GROUP III SERVICING FEE: With respect to any Home Equity Loan in Group
III, an amount retained by the Servicer as compensation for servicing and
administration duties relating to such Home Equity Loan pursuant to Section 3.12
and equal to one month's interest at 0.50% per annum of the then outstanding
principal balance of such Home Equity Loan as of the first day of each
Remittance Period payable on a monthly basis, provided, however, that if a
successor Servicer is appointed pursuant to Section 7.02 hereof, the Group III
Servicing Fee shall be such amount as agreed upon by the Indenture Trustee, the
Insurer and the successor Servicer, and the per annum rate at which the Group
III Servicing Fee is calculated shall not exceed 0.50% per annum.
GUARANTEED PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date (other than the Final Distribution Date) and a Class of Notes,
the amount, if any, by which the Note Principal Balance of such Class of Notes
exceeds the sum of (i) the related Group Principal Balance as of the end of the
related Remittance Period (after giving effect to all payments of principal on
such Notes on such Distribution Date pursuant to Section 5.01(a) hereof). With
respect to the Final Distribution Date and a Class of Notes, the outstanding
Note Principal Balance of such Class of Notes (after giving effect to all
payments of principal on such Notes on such Final Distribution Date pursuant to
Section 5.01(a) hereof).
HOME EQUITY LOANS: Such home equity loans transferred and assigned to
the Trust pursuant to Section 2.01 hereof together with any Qualified
Replacement Mortgages substituted
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therefor in accordance with this Agreement, as from time to time are held as
a part of the Trust Estate, the Home Equity Loans originally so held being
identified in the Schedules of Home Equity Loans. The term "Home Equity Loan"
includes the terms "First Mortgage Loan" and "Second Mortgage Loan". The term
"Home Equity Loan" includes any Home Equity Loan which is Delinquent, which
relates to a foreclosure or which relates to a Mortgaged Property which is
REO Property prior to such REO Property's disposition by the Trust. Any home
equity loan which, although intended by the parties hereto to have been, and
which purportedly was, transferred and assigned to the Trust by the
Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth in Section 2.05(b)(x) hereof with respect to such home
equity loan, shall nevertheless be considered a "Home Equity Loan" for all
purposes of this Agreement.
INDENTURE: The Indenture, dated as of ______________, between the
Issuer and the Indenture Trustee.
INDENTURE TRUSTEE: _____________________, an ___________ banking
corporation, as Indenture Trustee under the Indenture or any successor indenture
trustee under the Indenture appointed in accordance with such agreement.
INDENTURE TRUSTEE FEE: With respect to any Distribution Date and Group,
the greater of (i) the sum of (a) 1/12 of the product of (1) the Indenture
Trustee Fee Rate and (2) the Group Principal Balance of the Home Equity Loans in
such Group as of the end of the second preceding Remittance Period (or, in the
case of the first Distribution Date, as of the Cut-Off Date) and (b) any
Custodial Fees in respect of such Group to the extent not paid by the Servicer,
or (ii) an amount equal to the product of (a) $1,000 and (b) the percentage
obtained by dividing the aggregate Group Principal Balance of such Group by the
aggregate Pool Principal Balance, in each case as of the end of the second
preceding Remittance Period (or, in the case of the first Distribution Date, as
of the Cut-Off Date).
INDENTURE TRUSTEE FEE RATE: The per annum rate at which the Indenture
Trustee Fee is calculated, which is an amount equal to ______% per annum.
INDENTURE TRUSTEE'S STATEMENT TO NOTEHOLDERS: As defined in Section
5.03.
INSURANCE AGREEMENT: The Insurance Agreement dated as of __________
among the Indenture Trustee, the Seller, the Servicer, the Depositor and the
Insurer, including any amendments and supplements thereto in accordance with the
terms thereof.
INSURANCE POLICY: For each Class of Notes, the Financial Guaranty
Insurance Policy No. ________, No. _________ or No. _________, respectively, and
all endorsements thereto, if any, each dated the Closing Date, issued by the
Insurer for the benefit of the Holders of the relevant Class or Notes, copies of
which are attached hereto as Exhibit ____, ____ or ____ hereto.
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INSURED PAYMENT: With respect to any Distribution Date and Class of
Notes, an amount equal to the sum of the (i) the Guaranteed Principal
Distribution Amount for such Distribution Date and Class of Notes and (ii) the
amount, if any, by which the aggregate of the Interest Distributions with
respect to the Notes for such Distribution Date and Class of Notes exceeds the
amount on deposit in the Distribution Account available to be distributed
therefor on such Distribution Date, including Cross-Collateralization Payments,
if any.
INSURER: ______________________, a stock insurance company organized
and created under the laws of the State of _________, or any successor thereto.
INSURER DEFAULT: For an Insurance Policy, (i) Any failure and
continuance of such failure of the Insurer to make a payment required under an
Insurance Policy in accordance with its terms; (ii) the entry by a court having
jurisdiction in the premises of (A) a decree or order for relief in respect of
the Insurer in an involuntary case or proceeding under any applicable United
States federal or state bankruptcy, insolvency, rehabilitation, reorganization
or other similar law, or (B) a decree or order adjudging the Insurer as bankrupt
or insolvent, or approving as properly filed a petition seeking reorganization,
rehabilitation, arrangement, adjustment or composition of or in respect of the
Insurer under any applicable United States federal or state law, or appointing a
custodian, receiver, liquidator, rehabilitator, assignee, trustee, sequestrator
or other similar official of the Insurer or of any substantial part of its
property, or ordering the winding-up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in each case in effect for a period of 60 consecutive days;
or (iii) the commencement by the Insurer of a voluntary case or proceeding under
any applicable United States federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated as bankrupt or insolvent, or the consent by the Insurer to the entry
of a decree or order for relief in respect of the Insurer in an involuntary case
or proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against the Insurer, or the filing
by the Insurer of a petition or answer or consent seeking reorganization or
relief under any applicable United States federal or state law, or the consent
by the Insurer to the filing of such petition or to the appointment of or the
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Insurer or of any substantial part of
its property, or the making by the Insurer of an assignment for the benefit of
its creditors, or the failure by the Insurer to pay debts generally as they
become due, or the admission by the Insurer in writing of its inability to pay
its debts generally as they become due, or the taking of corporate action by the
Insurer in furtherance of any such action.
INSURER REIMBURSEMENT DEFICIENCY: With respect to any Distribution Date
and Group, the amount by which the Available Funds for such Group (applied in
the order described in Section 5.01(a)) is insufficient to pay amounts payable
to the Insurer under the Insurance Agreement as reimbursement for prior draws on
the applicable Insurance Policy, including interest thereon, in respect of such
Group and Distribution Date.
-20-
INTEREST CARRYOVER SHORTFALL: With respect to any Distribution Date and
each Class of Notes, the amount by which the related Interest Distribution for
such Class for the preceding Distribution Date exceeded the amount of interest
that was actually distributed to such Class on such preceding Distribution Date.
INTEREST DEFICIENCY: With respect to any Distribution Date and Group,
the amount by which the Available Funds for such Group (applied in the order
described in Section 5.01(a)) is insufficient to pay the Interest Distribution
for the related Class of Notes on such Distribution Date.
INTEREST DISTRIBUTION: With respect to any Distribution Date and each
Class of Notes, the sum of (a) the related Monthly Interest Distributable Amount
for such Class, for such Distribution Date, and (b) any related Outstanding
Interest Carryover Shortfall for such, for such Distribution Date.
INTEREST INDEX CARRYOVER: As of any distribution date for any Class A-3
Note, the sum of (A) the excess of (1) the amount of interest the Notes would
otherwise be entitled to receive on the Distribution Date had the rate not been
limited by the Available Funds Cap over (2) the amount of interest payable on
the applicable Notes at the Available Funds Cap for the Distribution Date and
(B) the Interest Index Carryover for all previous distribution dates not
previously paid to the applicable class of noteholders (including any interest
accrued thereon at the applicable note rate).
INTEREST PERIOD: As of any Distribution Date, (A) for each of the Class
A-1 and Class A-2 Notes, the calendar month deemed to consist of 30 days and
immediately preceeding the month in which the Distribution Date occurs; and (B)
for the Class A-3 Notes, the period commencing on the immediately preceding
Distribution Date (or the Closing Date, in the case of the first Distribution
Date) to and including the day prior to the current Distribution Date. All
calculations of interest on the Class A-1 and Class A-2 Notes will be made on
the basis of a 360-day year assumed to consist of twelve 30-day months. All
calculations of interest on the Class A-3 Notes will be made on the basis of the
actual number of days elapsed in the related Interest Period, and a year of 360
days.
ISSUER: Centex Home Equity Loan Trust 2000-__.
LIBOR BUSINESS DAY: means any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking institutions in the State of New York or in the
city of London, England are required or authorized by law to be closed.
LIQUIDATED LOAN: A Home Equity Loan as to which a Final Recovery
Determination has been made.
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LIQUIDATION PROCEEDS: With respect to any Liquidated Loan, all amounts
(including the proceeds of any Home Equity Loan Insurance Policy) recovered by
the Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
LOAN PURCHASE PRICE: With respect to any Home Equity Loan purchased
from the Trust on or prior to a Monthly Remittance Date pursuant to Section
2.04, 2.05, 2.07 or 3.05 hereof, an amount equal to the outstanding principal
balance of such Home Equity Loan as of the date of purchase (assuming that the
Monthly Remittance Amount remitted by the Servicer on such Monthly Remittance
Date has already been remitted), plus all accrued and unpaid interest on such
Home Equity Loan at the Coupon Rate to but not including the date of such
purchase together with (without duplication) the aggregate amounts of (i) all
unreimbursed Delinquency Advances and Servicing Advances theretofore made with
respect to such Home Equity Loan, (ii) all Delinquency Advances which the
Servicer has theretofore failed to remit with respect to such Home Equity Loan
and (iii) all reimbursed Delinquency Advances and Servicing Advances to the
extent that reimbursement is not made from the Mortgagor.
LOAN-TO-VALUE RATIO: As of any particular date (i) with respect to any
First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Mortgage Note relating to such First
Mortgage Loan and (ii) with respect to any Second Mortgage Loan, the percentage
obtained by dividing the Appraised Value as of the date of origination of such
Second Mortgage Loan into an amount equal to the sum of (a) the remaining
principal balance of the Senior Lien relating to such First Mortgage Loan as of
the date of origination of the related Second Mortgage Loan and (b) the original
principal balance of the Mortgage Note relating to such Second Mortgage Loan.
MAJORITY NOTEHOLDER: With respect to each Class of Notes, the Holder or
Holders of Notes of such Class representing at least 51% of the aggregate Note
Principal Balance of such Class. With respect to all the Notes, the Holder or
Holders of Notes representing at least 51% of the aggregate Note Principal
Balance of all Classes of Notes.
MANUFACTURED HOME: A unit of manufactured housing, including all
accessions thereto, securing the indebtedness of the Mortgagor under the related
Home Equity Loan treated as real estate under applicable state law.
MAXIMUM COLLATERAL AMOUNT: ______________ outstanding principal balance
of Home Equity Loans on the Cut-Off Date.
MAXIMUM RATE: With respect to any Home Equity Loan in Group III, means
the maximum rate at which interest may accrue on such Home Equity Loan.
MINIMUM RATE: With respect to each Home Equity Loan in Group III, the
minimum Coupon Rate permitted over the life of such Home Equity Loan.
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MINIMUM SPREAD: A percentage per annum equal to ____% for Distribution
Dates which occur prior to ___________ and equal to _____% for Distribution
Dates which occur in __________ or thereafter.
MONTHLY INTEREST DISTRIBUTABLE AMOUNT: As to any Distribution Date and
each Class of Notes, interest at the related Note Rate that accrued during the
related Interest Period on the Note Principal Balance thereof immediately prior
to such Distribution Date.
MONTHLY PAYMENT: With respect to a Home Equity Loan, the scheduled
monthly payment of principal and/or interest required to be made by a Mortgagor
on such Home Equity Loan.
MONTHLY PAYMENT: With respect to any Home Equity Loan and any
Remittance Period, the payment of principal, if any, and interest due on the Due
Date in such Remittance Period pursuant to the related Note.
MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT: as of any Distribution Date
with respect to a Class of Notes, an amount with respect to the immediately
preceeding Remittance Period, and to the extent of Available Funds, equal to the
sum of (A) all collections allocable to principal with respect to the applicable
Group, whether through prepayment or liquidation of Mortgaged Properties,
repurchased Home Equity Loans, or otherwise; (B) the Principal Balance of any
Home Equity Loan that became a Liquidated Loan during the Remittance Period
immediately preceding such Distribution Date; and (C) the Distributable Excess
Spread.
MONTHLY REMITTANCE AMOUNT: The sum of the Group I Monthly Remittance
Amount, the Group II Monthly Remittance Amount and the Group III Monthly
Remittance Amount.
MONTHLY REMITTANCE DATE: The 18th day of each month, or if such day is
not a Business Day, on the preceding Business Day, commencing in _____________
_____.
MOODY'S: ▇▇▇▇▇'▇ Investors Service, Inc., or any successor thereto.
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 Home Equity Loan.
MORTGAGE FILE: The documents delivered to the Custodian pursuant to
Section 2.06(b) hereof pertaining to a particular Home Equity Loan and any
additional documents required to be added to the Mortgage File pursuant to this
Agreement.
MORTGAGE NOTE: With respect to a Home Equity Loan, the promissory note
pursuant to which the related Mortgagor agrees to pay the indebtedness evidenced
thereby which is secured by the related Mortgage.
MORTGAGED PROPERTY or PROPERTY: The underlying property, including any
real property and improvements thereon, securing a Home Equity Loan.
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MORTGAGOR: With respect to any Home Equity Loan, the obligor or
obligors under the related Mortgage Note.
MORTGAGOR: The obligor on a Note.
NET COUPON RATE: With respect to any Home Equity Loan in a Group, means
a rate per annum equal to the Coupon Rate of such Home Equity Loan minus the sum
of (i) the rate at which the Servicing Fee accrues, (ii) the rate at which the
Indenture Trustee Fee accrues, (iii) the rate at which the Owner Trustee Fee
accrues, and (iv) the applicable Premium Amount (expressed as a per annum
percentage of the aggregate Principal Balance of the Home Equity Loans in the
applicable Group).
NET LIQUIDATION PROCEEDS: As to any Liquidated Loan, Liquidation
Proceeds net of expenses incurred by the Servicer (including unreimbursed
Servicing Advances) in connection with the liquidation of such Home Equity Loan
and unreimbursed Delinquency Advances relating to such Home Equity Loan. In no
event shall Net Liquidation Proceeds with respect to any Liquidated Loan be less
than zero.
90-DAY DELINQUENT LOAN: With respect to any Determination Date, all REO
Properties and each Home Equity Loan, with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, three
months (calculated from Due Date with respect to such Home Equity Loan to Due
Date) or more past due (without giving effect to any grace period).
90+ DELINQUENCY PERCENTAGE (ROLLING THREE MONTH): With respect to any
Determination Date, the average of the percentage equivalents of the fractions
determined for each of the three immediately preceding Remittance Periods (or
such fewer number of Remittance Periods since the Cut-Off Date, in the case of
the first three Determination Dates) the numerator of each of which is equal to
the sum of (without duplication) (i) the aggregate Principal Balance of 90-Day
Delinquent Loans, (ii) the aggregate outstanding principal balance of Home
Equity Loans in foreclosure and (iii) the aggregate outstanding principal
balance of Home Equity Loans relating to REO Properties as of the end of such
Remittance Period and the denominator of which is the Principal Balance of all
of the Home Equity Loans as of the end of such Remittance Period.
NONRECOVERABLE ADVANCE: With respect to any Home Equity Loan for which
a Final Recovery Determination has been made, any Delinquency Advance previously
made and not reimbursed from proceeds on the related Home Equity Loan or
otherwise hereunder which the Servicer has determined, in good faith business
judgment, as evidenced by an Officer's Certificate delivered to the Insurer and
the Indenture Trustee no later than the Business Day following such
determination, would not be ultimately recovered.
NOTE: Any of the Class A-1, Class A-2 or Class A-3 Notes, or, where the
context requires, a Mortgage Note.
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NOTE OWNER or OWNER: The Person who is the beneficial owner of a
Book-Entry Note.
NOTE PRINCIPAL BALANCE: With respect to any date of determination and
each Class of Notes, (a) the Original Note Principal Balance of such Class LESS
(b) the aggregate of amounts distributed as principal to the Noteholders of such
Class on previous Distribution Dates.
NOTE RATE: The Class A-1 Note Rate, the Class A-2 Note Rate, or the
Class A-3 Note Rate, as applicable.
NOTE REGISTER AND NOTE REGISTRAR: As defined in the Indenture.
NOTEHOLDER or HOLDER: The Person in whose name a Note is registered in
the Note Register, except that, solely for the purpose of giving any consent,
direction, waiver or request pursuant to this Agreement, (x) any Note registered
in the name of the Seller or the Depositor, or any Person actually known to a
Responsible Officer of the Indenture Trustee to be an Affiliate of the Seller or
the Depositor, (y) any Note for which the Seller or the Depositor, or any Person
actually known to a Responsible Officer of the Indenture Trustee to be an
Affiliate of the Seller or the Depositor is the Note Owner shall be deemed not
to be outstanding (unless to the actual knowledge of a Responsible Officer of
the Indenture Trustee (i) the Seller or the Depositor, or such Affiliate, is
acting as trustee or nominee for a Person who is not an Affiliate of the Seller
or the Depositor and who makes the voting decision with respect to such Note or
(ii) the Seller or the Depositor, or such Affiliate, is the Note Owner of all
the Notes) and the Percentage Interest evidenced thereby shall not be taken into
account in determining whether the requisite amount of Percentage Interests
necessary to effect any such consent, direction, waiver or request has been
obtained and (z) the Insurer shall be deemed to be the owner of 100% of the
Notes so long as no Insurer Default is then continuing.
O/C AMOUNT: As to any Distribution Date and Group, the excess, if any,
of (a) the Group Total Balance of such Group as of the close of business on the
last day of the related Remittance Period over (b) the Note Principal Balance of
the related Class of Notes (after giving effect to amounts available in respect
of the related Monthly Principal Distributable Amount for such Distribution
Date).
O/C DEFICIENCY AMOUNT: For any Group and Distribution Date, the excess,
if any, of (a) the Specified O/C Amount for such Group and Distribution Date,
over (b) the O/C Amount for such Group and Distribution Date (after giving
effect to distributions of principal, including Cross-Collateralization
Payments, for such Group and Distribution Date).
O/C REDUCTION AMOUNT: As to any Distribution Date and Group, an amount
equal to the lesser of (i) the Excess O/C Amount for such Distribution Date and
Group and (ii) the Monthly Principal Distributable Amount for such Distribution
Date and Group.
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OFFICER'S CERTIFICATE: A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Indenture Trustee
and the Insurer.
ONE-MONTH LIBOR" means, with respect any Interest Period, an amount
established by the Indenture Trustee equal to the rate for United States dollar
deposits for one month which appears on the display designated as page 3750 on
the Telerate Service or a successor page as of 11:00 A.M., London time, on the
second LIBOR Business Day prior to the first day of the related Interest Period.
If the rate does not appear on that page, the rate will be determined on the
basis of the rates at which deposits in U.S. Dollars are offered by three major
banks in the London interbank market, selected by the servicer, as of 11:00
A.M., London time, on the determination date to prime banks in the London
interbank market for a period of one month in amounts approximately equal to the
principal amount of the notes then outstanding. The Indenture Trustee will
request the principal London office of each of the reference banks to provide a
quotation of its rate. If at least two such quotations are provided, the rate
will be the arithmetic mean of the quotations. If on such date fewer than two
quotations are provided as requested, the rate will be the arithmetic mean of
the rates quoted by two or more major banks in New York City, selected by the
servicer after consultation with the Indenture Trustee, as of 11:00 A.M., New
York City time, on such date for loans in U.S. Dollars to leading European banks
for a period of one month in amounts approximately equal to the principal amount
of the notes then outstanding. If no such quotations can be obtained, the rate
will be one-month LIBOR for the prior distribution date.
OPINION OF COUNSEL: A written Opinion of Counsel acceptable, in form
and substance, to the Indenture Trustee, and in the case of opinions delivered
to any of the Insurer or the Rating Agencies, reasonably acceptable, in form and
substance, to such party.
ORIGINAL AGGREGATE PRINCIPAL BALANCE: The aggregate Principal Balances
of all Home Equity Loans as of the Cut-Off Date, which is
$_______________________.
ORIGINAL NOTE PRINCIPAL BALANCE: For the A-1 Notes, $__________; for
the A-2 Notes, $________; and for the A-3 Notes, $____________.
ORIGINAL TRUST AGREEMENT: shall mean the Trust Agreement dated as of
_________ between ____________ and ________________, a ________ banking
corporation.
OUTSTANDING INTEREST CARRYOVER SHORTFALL: With respect to any
Distribution Date and each Class of Notes, the amount of Interest Carryover
Shortfall for such Distribution, plus one month's interest thereon, at the
related Note Rate, to the extent permitted by law.
OWNER TRUSTEE: ______________________, as owner trustee under the Trust
Agreement, and any successor owner trustee under the Trust Agreement appointed
in accordance with the terms thereof.
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OWNER TRUSTEE FEE: With respect to any Distribution Date and Group, a
monthly fee equal to the product of (a) 1/12 of $________ and (b) the percentage
obtained by dividing the aggregate Group Principal Balance of such Group by the
aggregate Pool Principal Balance in each case as of the end of the second
preceding Remittance Period (or, in the case of the first Distribution Date, as
of the Cut-Off Date).
OWNERSHIP INTEREST: The Transferor Interest issued pursuant to the
Trust Agreement.
PAYING AGENT: Any paying agent appointed pursuant to the Indenture.
PERCENTAGE INTEREST: As to a Class of Notes and any date of
determination, the percentage obtained by dividing the principal denomination of
such Class by the aggregate of the principal denominations of all the Notes of
such Class.
PERSON: Any individual, corporation, partnership, joint venture,
limited partnership, limited liability company, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
POOL PRINCIPAL BALANCE: With respect to any date of determination, the
aggregate of the Principal Balance of all Home Equity Loans.
PREFERENCE EVENT: As defined in Section 4.01(c).
PREMIUM AMOUNT: The premium payable to the Insurer pursuant to the
Insurance Agreement.
PREPAYMENT: Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment, Substitution Amounts, the
portion of the purchase price of any Home Equity Loan purchased from the Trust
pursuant to Section 2.04, 2.05, 2.07 or 3.05 hereof representing principal and
the proceeds of any Home Equity Loan Insurance Policy which are to be applied as
a payment of principal on the related Home Equity Loan shall be deemed to be
Prepayments for all purposes of this Agreement.
PRESERVATION EXPENSES: Expenditures made by the Servicer in connection
with a foreclosed Home Equity Loan prior to the liquidation thereof, including,
without limitation, expenditures for real estate property taxes, hazard
insurance premiums, property restoration or preservation.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
created by the Servicer pursuant to Section 3.03 hereof.
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PRINCIPAL BALANCE: As to any Home Equity Loan and any day, other than a
Liquidated Loan, the Cut-Off Date Principal Balance, minus all collections
credited against the Principal Balance of any such Home Equity Loan in
accordance with the related Mortgage Note. For purposes of this definition, a
Liquidated Loan shall be deemed to have a Principal Balance equal to the
Principal Balance of the related Home Equity Loan immediately prior to the final
recovery of related Liquidation Proceeds and a Principal Balance of zero
following the end of the Remittance Period in which such Home Equity Loan
becomes a Liquidated Loan.
PRINCIPAL DISTRIBUTION: With respect to any Distribution Date (other
than the Final Distribution Date) and each Class of Notes, the excess of (A) the
Monthly Principal Distributable Amount for such Distribution Date and such Class
of Notes over (B) the related O/C Reduction Amount for such Distribution Date
and such Class of Notes; PROVIDED, HOWEVER, that the Principal Distribution
shall not exceed the Note Principal Balance of such Class. The "Principal
Distribution" on the Final Distribution Date for a Class of Notes will equal the
Note Principal Balance of such Class as of such Distribution Date.
PRINCIPAL REMITTANCE AMOUNT: The Group I Principal Remittance Amount,
the Group II Principal Remittance Amount, or the Group III Principal Remittance
Amount.
PROHIBITED TRANSACTION: "Prohibited Transaction" shall have the meaning
set forth from time to time in the definition thereof at Section 860F(a)(2) of
the Code (or any successor statute thereto) and applicable to the Trust.
PROSPECTUS: The base prospectus of the Depositor dated
___________________.
PROSPECTUS SUPPLEMENT: The prospectus supplement dated
__________________, relating to the offering of the Notes.
QUALIFIED MORTGAGE: The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
QUALIFIED REPLACEMENT MORTGAGE: A Home Equity Loan substituted for
another pursuant to Section 2.04, 2.05 and 2.07(b) hereof, which (i) has a
Coupon Rate at least equal to the Coupon Rate of the Home Equity Loan being
replaced; (ii) is of the same or better property type or is a single family
dwelling and the same or better occupancy status or is a primary residence as
the Home Equity Loan being replaced, (iii) shall mature no later than the
final scheduled distribution date with respect to the related Home Equity
Group, (iv) has a Loan-to-Value Ratio as of the Replacement Cut-Off Date no
higher than the Loan-to-Value Ratio of the replaced Home Equity Loan at such
time, (v) shall be of the same or higher credit quality classification
(determined in accordance with the Seller's credit underwriting guidelines
set forth in the Seller's underwriting manual) as the Home Equity Loan which
such Qualified Replacement Mortgage replaces, (vi) shall be a First Mortgage
Loan if the Home Equity Loan which such Qualified Replacement Mortgage
replaces was a First Mortgage Loan and shall be a First Mortgage Loan or
Second Mortgage Loan if the Home Equity Loan which such Qualified Replacement
Mortgage
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replaces was a Second Mortgage Loan, (vii) has an outstanding principal
balance as of the related Replacement Cut-Off Date equal to or less than the
outstanding principal balance of the replaced Home Equity Loan as of such
Replacement Cut-Off Date, (viii) shall not provide for a "balloon" payment if
the related Home Equity Loan did not provide for a "balloon" payment (and if
such related Home Equity Loan provided for a "balloon" payment, such
Qualified Replacement Mortgage shall have an original maturity of not less
than the original maturity of such related Home Equity Loan), (ix) shall be a
fixed rate Home Equity Loan if the Home Equity Loan being replaced is in
Group I or Group II or an adjustable rate Home Equity Loan if the Home Equity
Loan being replaced is in Group III, (x) satisfies the criteria set forth
from time to time in the definition thereof at Section 860G(a)(4) of the Code
(or any successor statute thereto) and applicable to the Trust, (xi)
satisfies the representations and warranties set forth in Section 2.04(b)
hereof, (xii) shall not be 30 days or more delinquent and (xiii) if such Home
Equity Loan being replaced is in the Group III, shall adjust based on the
same index, have no lower margin, have the same interval between adjustment
dates and have a maximum Coupon Rate no lower than, and a minimum Coupon Rate
no lower than the Home Equity Loan being replaced. In the event that one or
more home equity loans are proposed to be substituted for one or more Home
Equity Loans, the Insurer may allow the foregoing tests to be met on a
weighted average basis or other aggregate basis acceptable to the Insurer, as
evidenced by a written approval delivered to the Indenture Trustee by the
Insurer, except that the requirements of clauses (i), (iii), (iv), (ix), (x),
(xi) and (xii) hereof must be satisfied as to each Qualified Replacement
Mortgage.
"RATING AGENCIES": Collectively, Moody's and Standard & Poor's.
"REALIZED LOSS": As to any Liquidated Loan (or, in the case of a Cram
Down Loss a Home Equity Loan that is not a Liquidated Loan), the amount (not
less than zero), if any, by which (A) the sum of (x) the Principal Balance
thereof as of the date of liquidation, (y) the amount of accrued but unpaid
interest thereon and (z) the amount of any Cram Down Loss with respect thereto
is in excess of (B) the Net Liquidation Proceeds, if any, realized thereon
applied in reduction of such Principal Balance.
RATINGS: The ratings initially assigned to the Notes by the Rating
Agencies, as evidenced by letters from the Rating Agencies.
RECORD DATE: With respect to (i) any Distribution Date and each of the
Class A-1 and Class A-2 Notes, the last Business Day of the calendar month
immediately preceding the calendar month in which such Distribution Date occurs
and (ii) any Distribution Date and the Class A-3 Notes, the Business Day
immediately preceding such Distribution Date, or if Definitive Notes have been
issued, the last Business Day of the calendar month immediately preceding the
calendar month in which such Distribution Date occurs.
REGISTRATION STATEMENT: The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
___-________), including all amendments thereto and including the Prospectus and
Prospectus Supplement relating to the Notes.
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"REIMBURSEMENT AMOUNT": With respect to each Group and any Distribution
Date, (i) all amounts owing to the Insurer for draws on any Insurance Policy
paid by the Insurer, or any other amounts owed under the Insurance Agreement,
including, without limitation, any unpaid Premium Amount relating to such
Distribution Date or any earlier Distribution Date, plus (ii) interest on such
amounts as specified in the Insurance Agreement. The Insurer shall notify the
Indenture Trustee, the Depositor and the Seller in writing of the amount of any
Reimbursement Amount.
REMAINING EXCESS AVAILABLE FUNDS: For any Group and Distribution Date,
the excess of Excess Available Funds for such Group over the
Cross-Collateralization Payment made from such Group.
REMITTANCE PERIOD: With respect to each Monthly Remittance Date,
Determination Date or Distribution Date, as applicable, the calendar month
immediately preceding such Monthly Remittance Date, Determination Date or
Distribution Date, as applicable.
REO PROPERTY: A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
REPLACEMENT CUT-OFF DATE: With respect to any Qualified Replacement
Mortgage, the opening of business of the first day of the calendar month in
which such Qualified Replacement Mortgage is conveyed to the Trust.
REQUIRED AGGREGATE CROSS-COLLATERALIZATION RESERVE AMOUNT: For any
Distribution Date, the lesser of (a) the sum of Cumulative Uncovered Losses for
each Group for such Distribution Date and (b) the O/C Deficiency Amount for each
Group for such Distribution Date after the application of funds on deposit to
each of such accounts pursuant to Section ____ of the Insurance Agreement on
such Distribution Date.
REQUIRED CROSS-COLLATERALIZATION RESERVE AMOUNT: For any Group and
Distribution Date, the lesser of (a) Cumulative Uncovered Losses for the other
Groups and Distribution Date, and (b) the O/C Deficiency Amount for the other
Groups and Distribution Date after application of funds on deposit in such
account pursuant to the Section ____ of the Insurance Agreement on such
Distribution Date.
RESPONSIBLE OFFICER: With respect to the Indenture Trustee, any officer
assigned to the corporate trust group (or any successor thereto), including any
vice president, assistant vice president, trust officer, assistant secretary or
any other officer of the Indenture Trustee customarily performing functions
similar to those performed by any of the above designated officers and having
direct responsibility for the administration of this Agreement. When used with
respect to the Seller or Servicer, the President or any Vice President,
Assistant Vice President, Treasurer, Assistant Treasurer or any Secretary or
Assistant Secretary.
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SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
SCHEDULE OF HOME EQUITY LOANS": The schedules of Home Equity Loans with
respect to the Home Equity Loans listing each Home Equity Loan to be conveyed on
the Startup Day. Such Schedule of Home Equity Loans shall identify each Home
Equity Loan by the Servicer's loan number, borrower's name and address
(including the state and zip code) of the Property and shall set forth as to
each Home Equity Loan the lien status thereof, the Loan-to-Value Ratio and the
Principal Balance as of the Cut-Off Date, the Coupon Rate thereof, the original
loan balance thereof, the current scheduled monthly payment of principal and
interest and the maturity date of the related Note, the property type, occupancy
status, Appraised Value and the original term-to-maturity thereof and whether or
not such Home Equity Loan (including related Note) has been modified and in the
case of the Group III Home Equity Loans, the Maximum Rate, the Minimum Rate and
the next adjustment date. The Schedule of Home Equity Loans will be delivered to
the Custodian via electronic transmission in a mutually acceptable format
between the Custodian and the Servicer, with a hard copy attached to the
Mortgage Files when they are delivered.
SECOND MORTGAGE LOAN: A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
SECURITIES ACT: The Securities Act of 1933, as amended.
SELLER: Centex, as seller under this Agreement, or its successors.
SENIOR LIEN: With respect to any Second Mortgage Loan, the home equity
loan relating to the corresponding Property having a first priority lien.
SERVICER: Centex and its permitted successors and assigns.
SERVICER LOSS TEST: The Servicer Loss Test for any period set out below
is satisfied, if the Cumulative Loss Percentage for such period does not exceed
the percentage set out for such period below (provided, that for purposes of the
Servicer Loss Test, Realized Losses attributable solely to Cram Down Losses
should be excluded from the calculation of Cumulative Loss Percentage):
Cumulative Loss
Period Percentage
------ ---------------
_________ ____ _ _________ _____ ____%
_________ ____ _ _________ _____ ____%
_________ ____ _ _________ _____ ____%
_________ ____ _ _________ _____ ____%
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_________ ____ _ _________ _____ ____%
_________ ____ and thereafter ____%
SERVICER TERMINATION TEST: The Servicer Termination Test is satisfied
for any date of determination thereof, if (w) the Servicer's Tangible Net Worth
is at least the greater of (a) $___________ and (b) the amount required pursuant
to any credit facility of the Servicer, (x) the 90+ Delinquency Percentage
(Rolling Three Month) is less than or equal to ___%, (y) the Servicer Loss Test
is satisfied and (z) the Annual Loss Percentage (Rolling Twelve Month) for the
twelve month period immediately preceding the date of determination thereof is
not greater than ___%.
SERVICING ADVANCE: As defined in Section 3.04 hereof.
SERVICING CERTIFICATE: A certificate completed and executed by a
Servicing Officer on behalf of the Servicer.
SERVICING FEE: The Group I Servicing Fee, the Group II Servicing Fee,
or the Group III Servicing Fee, as the context may require.
SERVICING OFFICER: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Home Equity Loans whose
name and specimen signature appear on a list of servicing officers furnished to
the Indenture Trustee (with a copy to the Insurer) by the Servicer on the
Closing Date, as such list may be amended from time to time, initially set forth
in Exhibit B hereto.
60-DAY DELINQUENT LOAN: With respect to any Determination Date, all REO
Properties and each Home Equity Loan, with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, two
months (calculated from Due Date with respect to such Home Equity Loan to Due
Date) or more past due (without giving effect to any grace period).
SPECIFIED O/C AMOUNT: With respect to any Distribution Date and each
Group set forth in Exhibit ____ hereto.
STANDARD & POOR'S: Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or any successor thereto.
STARTUP DAY: _______________.
SUBSERVICER: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
7.02 and in respect of the qualification of a Subservicer.
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SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Home
Equity Loans as provided in Section 3.01(a), a copy of which shall be delivered,
along with any modifications thereto, to the Indenture Trustee and the Insurer.
SUBSTITUTION AMOUNT: As defined in Section 2.04 hereof.
SUB-TRUST: As defined in Section 3.1 of the Trust Agreement. It
includes Sub-Trust 1, Sub-Trust 2 or Sub-Trust 3, each of which constitute a
separate interest in the Trust Estate (as defined in the Trust Agreement)
pursuant to Section 3806(b)(2) of the Business Trust Statute.
SUB-TRUST 1: The portion of the Trust Estate assigned to Group I.
SUB-TRUST 2: The portion of the Trust Estate assigned to Group II.
SUB-TRUST 3: The portion of the Trust Estate assigned to Group III.
TANGIBLE NET WORTH: Shall mean the difference between: (A) the tangible
assets of the Seller or Servicer, as applicable, and its Affiliates calculated
in accordance with GAAP, as reduced by adequate reserves in each case where a
reserve is appropriate; and (B) all indebtedness, including subordinated debt,
of the Seller or Servicer, as applicable, and its Affiliates; provided, however,
that (i) intangible assets such as patents, trademarks, trade names, copyrights,
licenses, good will, organization costs, advances or loans to, or receivables
from directors, officers, employees or affiliates, prepaid assets, amounts
relating to covenants not to compete, pension assets, deferred charges or
treasury stock of any securities unless the same are readily marketable in the
United States of America or are entitled to be used as a credit against federal
income tax liabilities, shall not be included in the calculation of (A) above,
(ii) securities included as tangible assets shall be valued at their current
market price or costs, whichever is lower and (iii) any write-up in book value
of any assets shall not be taken into account.
TERMINATION PRICE: With respect to Section 8.01 hereof, and on any date
of determination thereof, an amount equal to the sum of (w) the greater of (i)
100% of the aggregate outstanding principal balances of the Home Equity Loans as
of such date of determination less amounts remitted to the Principal and
Interest Account representing collections of principal on the Home Equity Loans
during the current Remittance Period, and (ii) the greater of (A) the aggregate
outstanding Note Principal Balance of the Notes and (B) the fair market value of
such Home Equity Loans (disregarding accrued interest), (x) one month's interest
on such amount (calculated at the Adjusted Certificate Rate), (y) all
Reimbursement Amounts and (z) the sum of the aggregate amount of any
unreimbursed Delinquency Advances, Servicing Advances, Compensating Interest and
any Delinquency Advances which the Servicer has theretofore failed to remit.
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TRANSACTION DOCUMENTS: This Agreement, the Insurance Agreement, the
Insurance Policies, the Notes, the Custodial Agreement, the Administration
Agreement, the Trust Agreement and the Indenture.
TRANSFEROR: The Depositor, or any such permitted holder of the
Transferor Interest.
TRANSFEROR INTEREST: The Transferor Interest issued pursuant to the
Trust Agreement.
TRANSITION EXPENSES: All actual and reasonable costs associated with
the transfer of servicing from the predecessor servicer, including, without
limitation, any costs or expenses associated with the complete transfer of
servicing data and any completion, manipulation or correction of servicing data
required by the Indenture Trustee to correct any errors or insufficiency therein
or otherwise to enable the Indenture Trustee to service the Home Equity Loans
properly and effectively.
[TRIGGER EVENT: As defined in Section ____ of the Insurance
Agreement.]
TRUST: The trust created by the Trust Agreement. The Trust will consist
of three separate Sub-Trusts, as provided in the Trust Agreement. The Trust is a
series trust under the Business Trust Statute, and the relative rights,
obligations and liabilities of each such series are as set forth in Article III
of the Trust Agreement.
TRUST AGREEMENT: The Original Trust Agreement as amended and restated
by the Amended and Restated Trust Agreement dated as of _________, among the
Seller, the Depositor and the Owner Trustee.
TRUST ESTATE: As defined in the Trust Agreement.
UCC: The Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.
UNCOVERED LOSS: For any Group and Distribution Date, the excess, if
any, of (i) the O/C Amount as of the prior Distribution Date for such Group,
over (ii) the O/C Amount as of the current Distribution Date for such Group
(after giving effect to distributions of principal, excluding
Cross-Collateralization Payments, but before giving effect to any O/C Reduction
Amount, in each case for such Group and current Distribution Date).
UNDERCOLLATERALIZATION AMOUNT: As to any Distribution Date and Group,
the amount by which the aggregate Note Principal Balance of the Notes in the
related Class of Notes (after giving effect to distributions in respect of
principal on such Notes, other than any portion thereof in respect of
Cross-Collateralization Payments and Insured Payments, on such Distribution
Date) exceeds the Group Principal Balance at the end of the related Remittance
Period.
UNDERWRITER: ________________________
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Section 1.02 OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Indenture and the Trust Agreement, as
applicable.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
Section 1.03 CAPTIONS; TABLE OF CONTENTS.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
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Section 1.04 OPINIONS.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Notes may be qualified to the extent that the
same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the of creditors' rights generally
and by general principles of equity (whether considered in a proceeding or
action in equity or at law) and may state that no opinion is expressed on the
availability of the remedy of specific enforcement, injunctive relief or any
other equitable remedy. Any opinion required to be furnished by any Person
hereunder must be delivered by counsel upon whose opinion the addressee of such
opinion may reasonably rely, and such opinion may state that it is given in
reasonable reliance upon an opinion of another, a copy of which must be
attached, concerning the laws of a foreign jurisdiction. Any opinion delivered
hereunder shall be addressed to the Rating Agencies, the Insurer and the
Indenture Trustee.
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ARTICLE II
CONVEYANCE OF THE HOME EQUITY LOANS
Section 2.01 CONVEYANCE OF THE HOME EQUITY LOANS.
The Seller hereby bargains, sells, conveys, assigns and transfers to
the Depositor, in trust, without recourse and for the exclusive benefit of the
Owners of the Notes and the Insurer, all of its right, title and interest in and
to any and all benefits accruing from (a) the Home Equity Loans, which the
Depositor will cause to be delivered to the Custodian on behalf of the
Indenture, together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts as
may be held by the Indenture in the Distribution Account and the
Cross-Collateralization Reserve Accounts, together with investment earnings on
such amounts and such amounts as may be held in the name the Indenture in the
Principal and Interest Account, if any, inclusive of investment earnings
thereon, whether in the form of cash, instruments, securities or other
properties (including any Eligible Investments held by the Servicer), and (c)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Notes as specified
herein. In addition to the foregoing, the Depositor shall cause the Insurer to
deliver the three Insurance Policies to the Indenture Trustee for the benefit of
the Owners of the Notes of each Class.
The Depositor, concurrently with the execution and delivery hereof,
hereby sells, transfers, assigns, sets over and otherwise conveys to the Trust,
to be included as ▇▇▇-▇▇▇▇▇ ▇, ▇▇▇-▇▇▇▇▇ 2 or Sub-Trust 3, as specified in the
Schedule of Home Equity Loans, without recourse, all the right, title and
interest of the Depositor in and to the Trust Estate.
The Indenture Trustee acknowledges such sale, accepts the trusts
hereunder in accordance with the provisions hereof and the Indenture Trustee
agrees to perform the duties herein to the best of its ability to the end that
the interests of the Owners may be adequately and effectively protected.
Section 2.02 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents, warrants and covenants to the
Indenture Trustee and the Insurer that as of the Startup Day:
(a) The Depositor is a limited liability company duly formed and
validly existing under the laws of the State of Delaware, is in compliance with
the laws of each state in which any
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Property or the Depositor is located or doing business and is in good
standing in each jurisdiction in which the nature of its business, or the
properties owned or leased by it make such qualification necessary. The
Depositor has all requisite authority to own and operate its properties, to
carry out its business as presently conducted and as proposed to be conducted
and to enter into and discharge its obligations under this Agreement and the
other Transaction Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Transaction Documents to which it is a party by the Depositor and its
performance and compliance with the terms of this Agreement and the other
Transaction Documents to which it is a party have been duly authorized by all
necessary action on the part of the Depositor and will not violate the
Depositor's Certificate of Formation or Amended and Restated Limited Liability
Company Agreement or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result in a breach
of, any material contract, agreement or other instrument to which the Depositor
is a party or by which the Depositor is bound or violate any statute or any
order, rule or regulation of any court, governmental agency or body or other
tribunal having jurisdiction over the Depositor or any of its properties.
(c) This Agreement and the other Transaction Documents to which
the Depositor is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, each constitutes a valid, legal and
binding obligation of the Depositor, enforceable against it in accordance with
the terms hereof and thereof, except as the enforcement thereof may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles of
equity (whether considered in a proceeding or action in equity or at law).
(d) The Depositor is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default could materially and adversely
affect the condition (financial or other) or operations of the Depositor or its
properties or the consequences of which could materially and adversely affect
its performance hereunder and under the other Transaction Documents to which the
Depositor is a party.
(e) No litigation, proceeding or investigation is pending with
respect to which the Depositor has received service of process or, to the best
of the Depositor's knowledge, threatened against the Depositor which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Transaction Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties or might have
consequences that would materially and adversely affect the validity or
enforceability of the Home Equity Loans or the Depositor's performance hereunder
and under the other Transaction Documents to which the Depositor is a party.
(f) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the
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Transaction Documents or which are attributed to the Depositor therein are
true and correct in all material respects, and the Registration Statement
does not contain any untrue statement of a material fact with respect to the
Depositor or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein with respect to
the Depositor not misleading.
(g) Immediately prior to the sale and assignment by the Depositor
to the Indenture on behalf of the Trust of each Home Equity Loan, the Depositor
had good and equitable title to each Home Equity Loan (insofar as such title was
conveyed to it by the Seller) subject to no prior lien, claim, participation
interest, mortgage, security interest, pledge, charge or other encumbrance or
other interest of any nature.
(h) As of the Startup Day, the Depositor has transferred all
right, title and interest in the Home Equity Loans to the Indenture on behalf of
the Trust.
(i) The Depositor has not transferred the Home Equity Loans to the
Indenture on behalf of the Trust with any intent to hinder, delay or defraud any
of its creditors.
(j) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Depositor makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Notes and the execution and delivery by the
Depositor of the Transaction Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Transaction Documents on the part of the Depositor and the
performance by the Depositor of its obligations under this Agreement and such of
the other Transaction Documents to which it is a party.
Section 2.03. REPRESENTATIONS AND WARRANTIES OF THE SERVICER.
The Servicer hereby represents, warrants and covenants to the
Depositor, the Indenture, the Insurer and the Owners that as of the Startup Day:
(a) The Servicer is a corporation duly formed and validly existing
under the laws governing its creation and existence, is in compliance with the
laws of each state in which any Property is located to the extent necessary to
enable it to perform its obligations hereunder and is in good standing in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Servicer has all requisite
corporate power and authority to own and operate its or their properties, to
carry out its or their business as
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presently conducted and as proposed to be conducted and to enter into and
discharge its or their obligations under this Agreement and the other
Transaction Documents to which the Servicer is a party.
(b) The execution and delivery of this Agreement and any other
Transaction Document to which it is a party by the Servicer and its performance
and compliance with the terms hereof and thereof have been duly authorized by
all necessary action on the part of the Servicer and will not violate the
Servicer's Articles of Incorporation or By-laws or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material contract, agreement or other
instrument to which the Servicer is a party or by which the Servicer is bound or
violate any statute or any order, rule or regulation of any court, governmental
agency or body or other tribunal having jurisdiction over the Servicer or any of
its properties.
(c) This Agreement and the Transaction Documents to which the
Servicer is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Servicer, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which might have consequences that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect its performance hereunder or under the
other Transaction Documents to which the Servicer is a party.
(e) No litigation, proceeding or investigation is pending with
respect to which the Servicer has received service of process or, to the best of
the Servicer's knowledge, threatened against the Servicer which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Transaction Document or that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect the validity or the enforceability of the
Home Equity Loans or its performance hereunder and the other Transaction
Documents to which the Servicer is a party.
(f) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Transaction Documents or which are attributed
to the Servicer therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein with
respect to the Servicer not misleading.
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(g) The Servicing Fee is a "current (normal) servicing fee rate"
as that term is used in Statement of Financial Accounting Standards No. 65
issued by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Servicer makes no such
representation or warranty), that are necessary or advisable in connection with
the execution and delivery by the Servicer of the Transaction Documents to which
it is a party, have been duly taken, given or obtained, as the case may be, are
in full force and effect on the date hereof, are not subject to any pending
proceedings or appeals (administrative, judicial or otherwise) and either the
time within which any appeal therefrom may be taken or review thereof may be
obtained has expired or no review thereof may be obtained or appeal therefrom
taken, and are adequate to authorize the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents on the part
of the Servicer and the performance by the Servicer of its obligations under
this Agreement and such of the other Transaction Documents to which it is a
party.
(i) The collection practices used by the Servicer with respect to
the Home Equity Loans have been, in all material respects, legal, proper,
prudent and customary in the home equity mortgage servicing business.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer.
(k) The Servicer is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Servicer or legal
documents associated with the transaction contemplated by this Agreement.
(l) There are no Subservicers as of the Startup Day.
(m) The Servicer covenants that it will terminate any Subservicer
within ninety (90) days after being directed by the Insurer to do so.
(n) The Servicer represents and warrants that its computer and
other systems used in servicing the Home Equity Loans currently are capable of
operating in a manner so that on and after ________ ___, ____ (i) the Servicer
can service the Home Equity Loans in accordance with the terms of this Agreement
and (ii) the Servicer can operate its business in the same manner as it is
operating on the date hereof.
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It is understood and agreed that the representations and warranties set
forth in this Section 2.03 shall survive delivery of the Home Equity Loans to
the Indenture.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Custodian, any Subservicer, the Insurer, any Owner or the Indenture (each, for
purposes of this paragraph, a party) of a breach of any of the representations
and warranties set forth in this Section 2.03 which materially and adversely
affects the interests of the Owners or of the Insurer, the party discovering
such breach shall give prompt written notice to the other parties. As promptly
as practicable, but in any event, within 60 days of its discovery or its receipt
of notice of breach, the Servicer shall cure such breach in all material
respects and, upon the Servicer's continued failure to cure such breach, may
thereafter be removed by the Insurer or by the Indenture with the written
consent of the Insurer pursuant to Section 7.01 hereof; PROVIDED, HOWEVER, that
if the Servicer can establish to the reasonable satisfaction of the Insurer that
it is diligently pursuing remedial action, then the cure period may be extended
for an additional 90 days with the written approval of the Insurer.
Section 2.04. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby represents, warrants and covenants to the Depositor,
the Indenture, the Insurer and the Owners that as of the Startup Day:
(a) The Seller is a corporation duly formed and validly existing
under the laws governing its creation and existence, is in compliance with the
laws of each state in which any Property or the Seller is located or doing
business and is in good standing in each jurisdiction in which the nature of its
business, or the properties owned or leased by it make such qualification
necessary. The Seller has all requisite authority to own and operate its
properties, to carry out its business as presently conducted and as proposed to
be conducted and to enter into and discharge its obligations under this
Agreement and the other Transaction Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Transaction Documents to which it is a party by the Seller and its performance
and compliance with the terms of this Agreement and the other Transaction
Documents to which it is a party have been duly authorized by all necessary
corporate action on the part of the Seller and will not violate the Seller's
Articles of Incorporation or By-laws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
result in a breach of, any material contract, agreement or other instrument to
which the Seller is a party or by which the Seller is bound or violate any
statute or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over the Seller or any of its
properties.
(c) This Agreement and the other Transaction Documents to which
the Seller is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Seller, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting
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creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default could materially and adversely
affect the condition (financial or other) or operations of the Seller or its
properties or the consequences of which could materially and adversely affect
its performance hereunder and under the other Transaction Documents to which the
Seller is a party.
(e) No litigation, proceeding or investigation is pending with
respect to which the Seller has received service of process or, to the best of
the Seller's knowledge, threatened against the Seller which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Transaction Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Seller or its properties or might have
consequences that would materially and adversely affect the validity or
enforceability of the Home Equity Loans or the Seller's performance hereunder
and under the other Transaction Documents to which the Seller is a party.
(f) The statements contained in the Registration Statement which
describe the Seller or matters or activities for which the Seller is responsible
in accordance with the Transaction Documents or which are attributed to the
Seller therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Seller or omit to state a material fact required to be
stated therein or necessary in order to make the statements contained therein
with respect to the Seller not misleading.
(g) Upon the receipt of each Home Equity Loan (including the
related Note) and other items of the Trust Estate by the Indenture under this
Agreement, the Trust will have good title to such Home Equity Loan (including
the related Note) and such other items of the Trust Estate free and clear of any
lien, charge, mortgage, encumbrance or rights of others, except as set forth in
Section 2.05 (b) (ix) (other than liens which will be simultaneously released).
(h) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and licenses
required to be taken, given or obtained, as the case may be, by or from any
federal, state or other governmental authority or agency (other than any such
actions, approvals, etc. under any state securities laws, real estate
syndication or "Blue Sky" statutes, as to which the Seller makes no such
representation or warranty), that are necessary or advisable in connection with
the purchase and sale of the Notes and the execution and delivery by the Seller
of the Transaction Documents to which it is a party, have been duly taken, given
or obtained, as the case may be, are in full force and effect on the date
hereof, are not subject to any pending proceedings or appeals (administrative,
judicial or otherwise) and either the time within which any appeal therefrom may
be taken or review thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to authorize the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents on the part of the Seller and the performance by the
Seller of its
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obligations under this Agreement and such of the other Transaction Documents
to which it is a party.
(i) The origination practices used by the Seller with respect to
the Home Equity Loans have been, in all material respects, legal, proper,
prudent and customary in the mortgage lending business.
(j) The transactions contemplated by this Agreement are in the
ordinary course of business of the Seller.
(k) Neither the Indenture nor the Seller has any obligation to
register the Trust and the Trust has no obligation to register as an investment
company under the Investment Company Act of 1940, as amended.
(l) The Seller is not insolvent, nor will it be made insolvent by
the transfer of the Home Equity Loans, nor is the Seller aware of any pending
insolvency.
(m) The Seller received fair consideration and reasonably
equivalent value in exchange for the sale of the interests in the Home Equity
Loans.
(n) The Seller did not sell any interest in any Home Equity Loan
with any intent to hinder, delay or defraud any of its creditors.
(o) No material adverse change affecting any security for the
Notes has occurred prior to delivery of and payment for the Notes.
(p) The Seller is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Seller or legal
documents associated with the transaction contemplated by this Agreement.
(q) To the best of the knowledge of the Seller, there has been no
material adverse change in any information submitted by the Seller in writing to
the Insurer with respect to the transactions contemplated by this Agreement
(unless such information was subsequently supplemented in writing to the
Insurer).
(r) The sale, transfer, assignment and conveyance of Home Equity
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 Seller, the
Depositor or the Indenture to any federal, state or local government ("Transfer
Taxes") other than Transfer Taxes which have or will be paid by the Seller as
due. The Seller shall pay, and otherwise indemnify and hold the Insurer
harmless, on an after-tax basis, from and against any and all such Transfer
Taxes (it being understood that the Insurer shall have no obligation to pay such
Transfer Taxes).
(s) No certificate of an officer, statement furnished in writing
or report delivered pursuant to the terms hereof by the Seller contains any
untrue statement of a material fact or
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omits to state any material fact necessary to make the certificate, statement
or report not misleading.
It is understood and agreed that the representations and warranties set
forth in this Section 2.04 shall survive delivery of the respective Home Equity
Loans to the Indenture.
Upon discovery by any of the Depositor, the Servicer, the Custodian,
any Subservicer, any Owner, the Seller, the Insurer or the Indenture Trustee
(each, for purposes of this paragraph, a "party") of a breach of any of the
representations and warranties set forth in this Section 2.04 which materially
and adversely affects the interests of the Owners or the interests of the
Insurer, the party discovering such breach shall give prompt written notice to
the other parties. The Seller hereby covenants and agrees that within 60 days of
its discovery or its receipt of notice of breach, it shall cure such breach in
all material respects or, with respect to a breach of clause (g) above, the
Seller may (or may cause an affiliate of the Seller to) on or prior to the
second Monthly Remittance Date next succeeding such discovery or receipt of
notice (i) substitute in lieu of any Home Equity Loan not in compliance with
clause (g) above a Qualified Replacement Mortgage and, if the outstanding
principal amount of such Qualified Replacement Mortgage as of the applicable
Replacement Cut-Off Date is less than the outstanding principal balance of such
Home Equity Loan as of such Replacement Cut-Off Date, deliver an amount (a
"Substitution Amount") equal to such difference together with the aggregate
amount of (A) all Delinquency Advances and Servicing Advances theretofore made
with respect to such Home Equity Loan and (B) all accrued and unpaid interest
with respect to such Home Equity Loan to the Servicer for deposit in the
Principal and Interest Account or (ii) purchase such Home Equity Loan from the
Trust at the Loan Purchase Price, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. The Seller shall
deliver an Officer's Certificate to the Indenture Trustee and the Insurer
concurrently with the delivery of a Qualified Replacement Mortgage pursuant to
Sections 2.04, 2.05 and 2.07(b) stating that such Home Equity Loan meets the
requirements of the definition of a Qualified Replacement Mortgage and that all
other conditions to the substitution thereof have been satisfied. Any Home
Equity Loan as to which repurchase or substitution was delayed pursuant to this
Section shall be repurchased or substituted for (subject to compliance with
Section 2.04, 2.05 or 2.07(b), as the case may be) upon the earlier of (a) the
occurrence of a default or imminent default with respect to such Home Equity
Loan and (b) receipt by the Indenture Trustee and the Insurer.
Section 2.05. COVENANTS OF SELLER TO TAKE CERTAIN ACTIONS WITH RESPECT
TO THE HOME EQUITY LOANS IN CERTAIN SITUATIONS.
(a) Upon the discovery by the Depositor, the Seller, the Servicer,
the Insurer, any Subservicer, any Owner, the Custodian or the Indenture Trustee
that the representations and warranties set forth in clause (b) below were
untrue in any material respect, without regard to any limitation set forth
therein concerning the knowledge of the Seller as to the facts stated therein as
of the Startup Day (or in the case of a Qualified Replacement Mortgage, as of
the respective replacement date) with the result that the interests of the
Owners or of the Insurer in the related Home Equity Loan are, or may be,
materially and adversely affected, the party discovering such breach shall give
prompt written notice to the other parties. Upon the earliest to occur of the
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Seller's discovery, its receipt of notice of breach from any one of the other
parties or such time as a situation resulting from an existing statement which
is untrue materially and adversely affects the interests of the Owners or of the
Insurer, without regard to any limitation set forth therein concerning the
knowledge of the Seller as to the facts stated therein, the Seller hereby
covenants and warrants that it shall promptly cure such breach in all material
respects or subject to the last three sentences of Section 2.04 it shall on or
before the second Monthly Remittance Date next succeeding such discovery,
receipt of notice or such time (i) substitute in lieu of each Home Equity Loan
which has given rise to the requirement for action by the Seller a Qualified
Replacement Mortgage and deliver the Substitution Amount to the Servicer for
deposit in the Principal and Interest Account or (ii) purchase such Home Equity
Loan from the Trust at a purchase price equal to the Loan Purchase Price
thereof, which purchase price shall be delivered to the Servicer for deposit in
the Principal and Interest Account; PROVIDED, HOWEVER, that if the Seller can
establish to the reasonable satisfaction of the Insurer that it is diligently
pursuing remedial action, the period of time in which the Seller must substitute
a Qualified Replacement Mortgage or purchase such Home Equity Loan may be
extended with the written approval of the Insurer. It is understood and agreed
that the obligation of the Seller so to substitute or purchase any Home Equity
Loan as to which such a statement set forth below is untrue in any material
respect and has not been remedied shall constitute the sole remedy respecting a
discovery of any such statement which is untrue in any material respect in this
Section 2.05 available to the Owners and the Indenture Trustee on behalf of the
Owners.
(b) The Seller hereby represents, warrants and covenants to the
Indenture Trustee, the Depositor, the Servicer, the Insurer and the Owners that
as of the Startup Day (or the Replacement Cut-off Date, with respect to a
Qualified Replacement Mortgage):
(i) The information with respect to each Home Equity Loan set
forth in the related Schedule of Home Equity Loans is true and correct
as of the Cut-Off Date;
(ii) All the original or certified documentation set forth in
Section 2.06 (including all material documents related thereto) with
respect to each Home Equity Loan has been or will be delivered to the
Custodian on behalf of the Indenture Trustee on the Startup Day or as
otherwise provided in Section 2.06. To the Seller's best knowledge, no
documentation contains any untrue statement of a material fact or omits
to state a fact necessary to make the statements contained therein not
misleading.
(iii) Each Home Equity Loan being transferred to the Trust is
a Qualified Mortgage or Qualified Replacement Mortgage and is a
Mortgage;
(iv) Each Property is a fee simple estate in a single parcel
of real property improved by a single family residential dwelling
(except for ___ and ___ Home Equity Loans in the amount of
$______________ and $_____________, respectively, that are
condominiums, townhouses, manufactured housing, two-to-four family
residential dwellings or PUDs), and no more than ____% and ____%,
respectively, of the Home Equity Loans are secured Properties that are
Manufactured Homes, each of which is considered to be real property
under the applicable local law;
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(v) As of the Cut-Off Date or Replacement Cut-Off Date, as
applicable, no Home Equity Loan has a combined Loan-to-Value Ratio in
excess of 99.99%
(vi) Each Home Equity Loan is being serviced by the Servicer
in accordance with the terms of this Agreement;
(vii) The Note related to each Home Equity Loan in Group I
bears a current Coupon Rate of at least ___% per annum, the Note
related to each Home Equity Loan in Group II bears a current Coupon
Rate of at least ___% and the Note related to each Home Equity Loan in
Group III beas a current Coupon Rate of at least ___%;
(viii) Each Note with respect to the Home Equity Loans will
provide for a schedule of substantially level and equal Monthly
Payments (or periodic rate adjustments in the case of the Home Equity
Loans in Group III), which are sufficient to amortize fully the
principal balance of such Note on or before its maturity date, except
for ___ Home Equity Loans representing approximately ___% of the
aggregate Principal Balance of the Home Equity Loans in Group __ as of
the Cut-Off Date which may provide for a "balloon" payment due at the
end of the 15th year and no Home Equity Loan is a graduated payment
loan;
(ix) As of the Startup Day, each Mortgage is a valid and
enforceable first or second lien of record (or is in the process of
being recorded) on the Property subject in the case of any Second
Mortgage Loan only to a Senior Lien on such Property and subject in all
cases to the exceptions to title set forth in the title insurance
policy or attorney's opinion of title, with respect to the related Home
Equity Loan, which exceptions are generally acceptable to banking
institutions in connection with their regular mortgage lending
activities, and such other exceptions to which similar properties are
commonly subject and which do not individually, or in the aggregate,
materially and adversely affect the benefits of the security intended
to be provided by such Mortgage;
(x) Immediately prior to the transfer and assignment of the
Home Equity Loans by the Seller to the Depositor and by the Depositor
to the Indenture Trustee herein contemplated, the Seller and the
Depositor, as the case may be, held good and indefeasible title to, and
was the sole owner of, each Home Equity Loan (including the related
Note) conveyed by the Seller subject to no liens, charges, mortgages,
encumbrances or rights of others except as set forth in clause (ix) or
other liens which will be released simultaneously with such transfer
and assignment; and immediately upon the transfer and assignment herein
contemplated, the Indenture Trustee will hold good and indefeasible
title to, and be the sole owner of, each Home Equity Loan subject to no
liens, charges, mortgages, encumbrances or rights of others except as
set forth in paragraph (ix) or other liens which will be released
simultaneously with such transfer and assignment;
(xi) As of the Cut-Off Date, approximately ___% of the Home
Equity Loans are more than 30 days Delinquent (and none are more than
59 days Delinquent);
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(xii) To the best of the knowledge of the Seller, there is no
delinquent tax or assessment lien on any Property, and each Property is
free of substantial damage and is in good repair;
(xiii) To the best of the knowledge of the Seller, there is no
valid and enforceable right of offset, claim, defense or counterclaim
to any Note or Mortgage, including the obligation of the related
Mortgagor to pay the unpaid principal of or interest on such Note nor
has any such claim, defense, offset or counterclaim been asserted;
(xiv) To the best of the knowledge of the Seller, there is no
mechanics' lien or claim for work, labor or material affecting any
Property which is or may be a lien prior to, or equal with, the lien of
the related Mortgage except those which are insured against by any
title insurance policy referred to in paragraph (xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act (as amended by the ▇▇▇▇▇▇ Community Development
and Regulatory Improvement Act of 1994) and other consumer protection
laws, usury, equal credit opportunity, disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) if a
title insurance policy is not available in the applicable state, an
attorney's opinion of title has been obtained but no title policy has
been obtained, or (b) a lender's title insurance policy, issued in
standard American Land Title Association form by a title insurance
company authorized to transact business in the state in which the
related Property is situated, in an amount at least equal to the
original balance of such Home Equity Loan together, in the case of a
Second Mortgage Loan, with the then-original principal amount of the
mortgage note relating to the Senior Lien, insuring the mortgagee's
interest under the related Home Equity Loan as the holder of a valid
first or second mortgage lien of record on the real Property described
in the related Mortgage, as the case may be, subject only to exceptions
of the character referred to in paragraph (ix) above, was effective on
the date of the origination of such Home Equity Loan, and, as of the
Startup Day, such policy is valid and thereafter such policy shall
continue in full force and effect;
(xvii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Servicer that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan (together, in the
case of a Second Mortgage Loan, with the outstanding principal balance
of the Senior Lien), (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis or (C) the full insurable
value of the Property;
(xviii) If any 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
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Insurance Administration is in effect with respect to such Property
with a carrier generally acceptable to the Servicer in an amount
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan (together, in the
case of a Second Mortgage Loan, with the outstanding principal balance
of the Senior Lien), (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis or (C) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of
1973;
(xix) Each Mortgage and Mortgage Note are the legal, valid and
binding obligation of the maker thereof and are enforceable in
accordance with their terms, except only as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and by general principles of equity (whether considered in a proceeding
or action in equity or at law), and all parties to each Home Equity
Loan had full legal capacity to execute all documents relating to such
Home Equity Loan and convey the estate therein purported to be
conveyed;
(xx) The Seller has caused and will cause to be performed any
and all acts required to be performed to preserve the rights and
remedies of the Indenture Trustee in any Insurance Policies applicable
to any Home Equity Loans delivered by the Seller including, without
limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured, joint
loss payee and mortgagee rights in favor of the Indenture Trustee;
(xxi) As of the Startup Day, no more than ___% of the
aggregate Principal Balance of the Home Equity Loans in any Home Equity
Group will be secured by Properties located within any single zip code
area;
(xxii) Each original Mortgage was recorded or is in the
process of being recorded, and all subsequent assignments of the
original Mortgage have been delivered for recordation or have been
recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of or
purchasers from the Seller (or, subject to Section 2.06 hereof, are in
the process of being recorded); each Mortgage and assignment of
Mortgage is in recordable form and is acceptable for recording under
the laws of the jurisdiction in which the property securing such
Mortgage is located;
(xxiii) The terms of each Mortgage Note and each Mortgage have
not been impaired, waived, altered or modified in any respect, except
by a written instrument which has been recorded, if necessary, to
protect the interest of the Owners and the Insurer and which has been
delivered to the Indenture Trustee. The substance of any such waiver,
alteration or modification is reflected on the related Schedule of Home
Equity Loans;
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(xxiv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. Any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making or closing or recording
such Home Equity Loans were paid and the Mortgagor is not entitled to
any refund of any amounts paid or due under the related Mortgage Note
or Mortgage;
(xxv) The related Mortgage Note is not and has not been
secured by any collateral, pledged account or other security except the
lien of the corresponding Mortgage;
(xxvi) No Home Equity Loan has a shared appreciation feature,
or other contingent interest feature;
(xxvii) Each Property is located in the state identified in
the respective Schedule of Home Equity Loans and consists of one or
more parcels of real property with a residential dwelling erected
thereon;
(xxviii) Each Mortgage contains a provision for the
acceleration of the payment of the unpaid principal balance of the
related Home Equity Loan in the event the related Property is sold
without the prior consent of the mortgagee thereunder;
(xxix) Any advances made after the date of origination of a
Home Equity Loan but prior to the Cut-Off Date have been consolidated
with the outstanding principal amount secured by the related Mortgage,
and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the respective
Schedule of Home Equity Loans. The consolidated principal amount does
not exceed the original principal amount of the related Home Equity
Loan. No Mortgage Note permits or obligates the Servicer to make future
advances to the related Mortgagor at the option of the Mortgagor;
(xxx) To the best of the knowledge of the Seller, there is no
proceeding pending or threatened for the total or partial condemnation
of any Property, nor is such a proceeding currently occurring, and each
Property is undamaged by waste, fire, water, flood, earthquake, earth
movement or other casualty;
(xxxi) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such
Property, and are stated in the title insurance policy and
affirmatively insured;
(xxxii) To the best of the knowledge of the Seller, no
improvement located on or being part of any Property is in violation of
any applicable zoning law or regulation. All
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inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of each Property and, with
respect to the use and occupancy of the same, including but not
limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and such Property is lawfully occupied under the
applicable law;
(xxxiii) With respect to each Mortgage constituting a deed of
trust, 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, and no fees or expenses are or will become payable by
the Owners or the Trust to the trustee under the deed of trust, except
in connection with a trustee's sale after default by the related
Mortgagor;
(xxxiv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Property of the
benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. There is no homestead or other exemption other
than any applicable Mortgagor redemption rights available to the
related Mortgagor which would materially interfere with the right to
sell the related Property at a trustee's sale or the right to foreclose
the related Mortgage;
(xxxv) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related Note and no
event which, with the passage of time or with notice and the expiration
of any grace or cure period, would constitute a default, breach,
violation or event of acceleration; and neither the Servicer nor the
Seller has waived any default, breach, violation or event of
acceleration or advanced funds, directly or indirectly for the payment
of any amount required under any Home Equity Loan;
(xxxvi) No instrument of release or waiver has been executed
in connection with any Home Equity Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption
agreement which has been approved by the primary mortgage guaranty
insurer, if any, and which has been delivered to the Indenture Trustee;
(xxxvii) [Reserved]
(xxxviii) Each Home Equity Loan was underwritten in accordance
with the credit underwriting guidelines of the Seller as set forth in
the Seller's Policies and Procedures Manual, as in effect on the date
hereof and such Manual conforms in all material respects to the
description thereof set forth in the Registration Statement;
(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject
property;
(xl) The Home Equity Loans were not selected for inclusion
in the Trust by the Seller on any basis intended to adversely affect
the Trust or the Insurer;
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(xli) No more than ___% and ___% of the aggregate Principal
Balance of the Home Equity Loans in Group I, Group II and Group III,
respectively, are secured by Properties that are non-owner occupied
Properties (I.E., investor-owned and vacation);
(xlii) The Seller has no actual knowledge that there exist any
hazardous substances, hazardous wastes or solid wastes, as such terms
are defined in the Comprehensive Environmental Response Compensation
and Liability Act, the Resource Conservation and Recovery Act of 1976,
or other federal, state or local environmental legislation on any
Property, and no violations of any local, state or federal
environmental law, rule or regulation exist with respect to any
Property;
(xliii) The Seller (and the originator, if not the Seller) was
properly licensed or otherwise authorized, to the extent required by
applicable law, to originate or purchase each Home Equity Loan; and the
consummation of the transactions herein contemplated, including,
without limitation, the receipt of interest by the Owners and the
ownership of the Home Equity Loans by the Indenture Trustee as trustee
of the Trust will not involve the violation of such laws;
(xliv) With respect to each Property subject to a ground lease
(i) the current ground lessor has been identified and all ground rents
which have previously become due and owing have been paid; (ii) the
ground lease term extends, or is automatically renewable, for at least
five years beyond the maturity date of the related Home Equity Loan;
(iii) the ground lease has been duly executed and recorded; (iv) the
amount of the ground rent and any increases therein are clearly
identified in the lease and are for predetermined amounts at
predetermined times; (v) the ground rent payment is included in the
borrower's monthly payment as an expense item in determining the
qualification of the borrower for such Home Equity Loan; (vi) the Trust
has the right to cure defaults on the ground lease; and (vii) the terms
and conditions of the leasehold do not prevent the free and absolute
marketability of the Property. As of the Cut-Off Date, the Principal
Balance of the Home Equity Loans with related Properties subject to
ground leases does not exceed ___% of the Original Aggregate Principal
Balance;
(xlv) As of the Startup Day, with respect to any Second
Mortgage Loan, the Seller has not received a notice of default of any
Senior Lien secured by any Property which has not been cured by a party
other than the Seller;
(xlvi) No Home Equity Loan is subject to a rate reduction
pursuant to a buydown program;
(xlvii) Reserved;
(xlviii) The Coupon Rate on each Home Equity Loan is
calculated on the basis of a year of 360 days with twelve 30-day
months;
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(xlix) Each Home Equity Loan was originated by the Seller, an
affiliate of the Seller or a broker for simultaneous assignment to the
Seller;
(l) Neither the operation of any of the terms of each Note and
each Mortgage nor the exercise of any right thereunder will render
either the Note or the Mortgage unenforceable, in whole or in part, nor
subject it to any right of rescission, claim set-off, counterclaim or
defense, including, without limitation, the defense of usury;
(li) Any adjustment to the Coupon Rate on a Home Equity Loan
in Group III has been legal, proper and in accordance with the terms of
the related Note;
(lii) No Home Equity Loan in Group III is subject to
negative amortization;
(liii) As of the Cut-Off Date, the FTC holder regulation
provided in 16 C.F.R. Part 433 applies to none of the Home Equity
Loans;
(liv) As of the Cut-Off Date with respect to the Home Equity
Loans or the Replacement Cut-Off Date with respect to the Qualified
Replacement Mortgages, a portion of the Home Equity Loans are
"mortgages" as defined in 15 U.S.C. 1602(aa), and with respect to each
such Home Equity Loan, no Mortgagor has or will have a claim or defense
under such Home Equity Loan;
(lv) Reserved;
(lvi) The rights with respect to each Home Equity Loan are
assignable by the Seller without the consent of any Person other than
consents which will have been obtained on or before the Startup Day;
(lvii) The Seller has duly fulfilled all obligations to be
fulfilled on the lender's part under or in connection with the
origination, acquisition and assignment of the Home Equity Loans and
the related Mortgage and Note, and has done nothing to impair the
rights of the Indenture Trustee, the Insurer or the Owners in payments
with respect thereto;
(lviii) To the Seller's knowledge, the documents, instruments
and agreements submitted by each Mortgagor for loan underwriting were
not falsified and contain no untrue statement of a material fact and do
not omit to state a material fact required to be stated therein or
necessary to make the information and statements contained therein not
misleading.
(lix) No Home Equity Loan matures later than _____________.
(lx) The first date on which the applicable Mortgagor must
make a payment on each Home Equity Loan is no later than _____________,
except with respect to ___ Home Equity Loans, which represent ___% of
the Original Aggregate Principal Balance as of the Cut-Off Date, that
provide for a first payment on or after _________________.
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(lxi) With respect to each Home Equity Loan that is a Second
Mortgage Loan:
(a) The related Senior Lien does not provide for
negative amortization.
(b) The Seller has not received, and is not aware of,
a notice of default of any Senior Lien which has not been
cured.
(c) To the best of the knowledge of the Seller, no
funds provided to the Mortgagor from a Second Mortgage Loan
were concurrently used as a down payment for the Senior Lien.
c) In the event that any Qualified Replacement Mortgage is
delivered by the Seller to the Trust pursuant to Section 2.04, Section 2.05 or
Section 2.07 hereof, the Seller shall be obligated to take the actions described
in Section 2.05(a) with respect to such Qualified Replacement Mortgage upon the
discovery by any of the Owners, the Seller, the Servicer, the Insurer, any
Subservicer, the Custodian or the Indenture Trustee that the statements set
forth in subsection (b) above are untrue in any material respect, without regard
to any limitation set forth therein concerning the knowledge of the Seller as to
facts stated therein, on the date such Qualified Replacement Mortgage is
conveyed to the Trust such that the interests of the Owners or the Insurer in
the related Qualified Replacement Mortgage are, or may be, materially and
adversely affected; PROVIDED, HOWEVER, that for the purposes of this subsection
(c) the statements in subsection (b) above referring to items "as of the Cut-Off
Date" or "as of the Startup Day" shall be deemed to refer to such items as of
the date such Qualified Replacement Mortgage is conveyed to the Trust.
Notwithstanding the fact that a representation contained in subsection (b) above
may be limited to the Seller's knowledge, such limitation shall not relieve the
Seller of its repurchase obligation under this Section and Section 2.06 hereof.
(d) It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05 shall survive delivery
of the respective Home Equity Loans (including Qualified Replacement Mortgage)
to the Indenture Trustee or the Custodian, on behalf of the Indenture Trustee.
(e) The Indenture Trustee shall have no duty to conduct any
affirmative investigation other than as specifically set forth in this Agreement
as to the occurrence of any condition requiring the repurchase or substitution
of any Home Equity Loan pursuant to this Article II or the eligibility of any
Home Equity Loan for the purpose of this Agreement.
Section 2.06. SALE TREATMENT OF THE HOME EQUITY LOANS AND QUALIFIED
REPLACEMENT MORTGAGES.
(a) The transfer by the Seller and the Depositor of the Home
Equity Loans set forth on the Schedule of Home Equity Loans to the Indenture
Trustee is absolute and is intended by the Owners and all parties hereto to be
treated as a sale by the Seller and the Depositor.
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(b) In connection with the transfer and assignment of the Home
Equity Loans, the Depositor agrees to:
(i) deliver without recourse to the Custodian, on behalf of
the Indenture Trustee, on the Startup Day with, (A) the original Notes
endorsed in blank or to the order of the Indenture Trustee ("Pay to the
order of __________________, as Indenture Trustee in trust for the
registered holders of Centex Home Equity Loan Asset-Backed Notes Series
2000-__, without recourse") and signed by manual signature of the
Seller, (B) (I) if the original title insurance policy is not
available, the original title insurance commitment or a copy thereof
certified as a true copy by the closing agent or the Seller, and when
available, the original title insurance policy or a copy certified by
the issuer of the title insurance policy or (II) if title insurance is
not available in the applicable state, the attorney's opinion of title,
(C) originals or copies of all intervening assignments certified as
true copies by the closing agent or the Seller, showing a complete
chain of title from origination to the Indenture Trustee, if any,
including warehousing assignments, if recorded, (D) originals of all
assumption and modification agreements, if any, (E) either: (1) the
original Mortgage, with evidence of recording thereon (if such original
Mortgage has been returned to the Seller from the applicable recording
office) or a copy of the Mortgage certified as a true copy by the
closing attorney or an Authorized Officer of the Seller, or (2) a copy
of the Mortgage certified by the public recording office in those
instances where the original recorded Mortgage has been lost and (F)
the original assignments of Mortgages (as described in clause (b)(ii))
in recordable form and acceptable for recording in the state or other
jurisdiction where the Property is located;
(ii) cause, within 60 days following the Startup Day,
assignments of the Mortgages to "_____________, as Indenture Trustee
in trust for the registered holders of Centex Home Equity Loan
Asset-Backed Notes Series 2000-__ under the Indenture dated as of
_________") to be submitted for recording in the appropriate
jurisdictions; PROVIDED, FURTHER, that the Seller shall not be required
to record an assignment of a Mortgage if the Seller furnishes to the
Indenture Trustee and the Insurer, on or before the Startup Day, at
the Seller's expense, an Opinion of Counsel with respect to the
relevant jurisdiction that such recording is not necessary to perfect
the Indenture Trustee's interest in the related Home Equity Loans (in
form and substance satisfactory to the Indenture Trustee, the Insurer
and the Rating Agencies); PROVIDED FURTHER, HOWEVER, notwithstanding
the delivery of any legal opinions, each assignment of Mortgage shall
be recorded by the Indenture Trustee or the Custodian on behalf of the
Indenture Trustee upon the earliest to occur of: (i) reasonable
direction by the Insurer, (ii) the occurrence of a Servicer Termination
Event, (iii) if the Seller is not Servicer and with respect to any one
assignment of Mortgage, the occurrence of a bankruptcy, insolvency or
foreclosure relating to the Mortgagor under the related Mortgage, or
(iv) the occurrence of a bankruptcy, insolvency or foreclosure relating
to the Seller;
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(iii) deliver the title insurance policy or title searches,
the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments
(other than unrecorded warehouse assignments), to the Custodian, on
behalf of the Indenture Trustee, within 15 days of receipt thereof by
the Seller (but in any event, with respect to any Mortgage as to which
original recording information has been made available to the Seller,
within one year after the Startup Day; and
(iv) furnish to the Indenture Trustee, the Insurer and the
Rating Agencies at the Seller's expense, an Opinion of Counsel with
respect to the sale and perfection of the Home Equity Loans delivered
to the Trust in form and substance satisfactory to the Insurer.
In instances where the original recorded Mortgage cannot be delivered
by the Seller to the Custodian on behalf of the Indenture Trustee prior to or
concurrently with the execution and delivery of this Agreement due to a delay in
connection with recording, the Seller may in lieu of delivering such original
recorded Mortgage, deliver to the Custodian on behalf of the Indenture Trustee a
copy thereof, provided that the Seller certifies that the original Mortgage has
been delivered to a title insurance company for recordation after receipt of its
policy of title insurance or binder therefor. In all such instances, the Seller
will deliver or cause to be delivered the original recorded Mortgage to the
Custodian on behalf of the Indenture Trustee promptly upon receipt of the
original recorded Mortgage but in no event later than one year after the Startup
Day.
The Seller hereby confirms to the Indenture Trustee that it has made
the appropriate entries in its general accounting records, to indicate that such
Home Equity Loans have been transferred to the Indenture Trustee and constitute
part of the Trust in accordance with the terms of the trust created hereunder.
Notwithstanding anything to the contrary contained in this Section
2.06, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor and Seller shall be deemed to
have satisfied its obligations hereunder upon delivery to the Custodian, on
behalf of the Indenture Trustee of a copy of such Mortgage, such assignment or
assignments of Mortgage certified by the public recording office to be a true
copy of the recorded original thereof.
Not later than ten days following the end of the 60-day period referred
in clause (b)(ii) above, the Seller shall deliver to the Custodian, on behalf of
the Indenture Trustee, a list of all Mortgages for which no Mortgage assignment
has yet been submitted for recording by the Seller, which list shall state the
reason why the Seller has not yet submitted such Mortgage assignments for
recording. With respect to any Mortgage assignment disclosed on such list as not
yet submitted for recording for a reason other than a lack of original recording
information, the Custodian, on behalf of the Indenture Trustee, shall make an
immediate demand on the Seller to prepare such Mortgage assignments, and shall
inform the Insurer, in writing, of the Seller's failure to prepare such Mortgage
assignments. Thereafter, the Custodian, on behalf of the
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Indenture Trustee, shall cooperate in executing any documents prepared by the
Insurer and submitted to the Custodian, on behalf of the Indenture Trustee in
connection with this provision. Following the expiration of the 60-day period
referred to in clause (b)(ii) above, the Seller shall promptly prepare a
Mortgage assignment for any Mortgage for which original recording information
is subsequently received by the Seller, and shall promptly deliver a copy of
such Mortgage assignment to the Custodian, on behalf of the Indenture
Trustee. The Seller agrees that it will follow its normal servicing
procedures and attempt to obtain the original recording information necessary
to complete a Mortgage assignment. In the event that the Seller is unable to
obtain such recording information with respect to any Mortgage prior to the
end of the 18th calendar month following the Startup Day and has not provided
to the Custodian, on behalf of the Indenture Trustee a Mortgage assignment
with evidence of recording thereon relating to the assignment of such
Mortgage to the Indenture Trustee, the Custodian, on behalf of the Indenture
Trustee shall notify the Seller of the Seller's obligation to provide a
completed assignment (with evidence of recording thereon) on or before the
end of the 20th calendar month following the Startup Day. A copy of such
notice shall be sent by the Custodian, on behalf of the Indenture Trustee to
the Insurer. If no such completed assignment (with evidence of recording
thereon) is provided before the end of such 20th calendar month, the related
Home Equity Loan shall be deemed to have breached the representation
contained in clause (xxii) of Section 2.05(b) hereof; PROVIDED, HOWEVER, that
if as of the end of such 20th calendar month the Seller demonstrates to the
satisfaction of the Insurer that it is exercising its best efforts to obtain
such completed assignment and, during each month thereafter until such
completed assignment is delivered to the Custodian, on behalf of the
Indenture Trustee, the Seller continues to demonstrate to the satisfaction of
the Insurer that it is exercising its best efforts to obtain such completed
assignment, the related Home Equity Loan will not be deemed to have breached
such representation. The requirement to deliver a completed assignment with
evidence of recording thereon will be deemed satisfied upon delivery of a
copy of the completed assignment certified by the applicable public recording
office.
Copies of all Mortgage assignments received by the Custodian on behalf
of the Indenture Trustee shall be retained in the related Mortgage File.
All recording required pursuant to this Section 2.06 shall be
accomplished at the expense of the Seller.
(c) In the case of Home Equity Loans which have been prepaid in
full on or after the Cut-Off Date and prior to the Startup Day, the Seller, in
lieu of the foregoing, will deliver within six (6) days after the Startup Day to
the Indenture Trustee a certification of an Authorized Officer in the form set
forth in Exhibit __.
(d) The Seller shall transfer, assign, set over and otherwise
convey without recourse, to the Indenture Trustee all right, title and interest
of the Seller in and to any Qualified Replacement Mortgage delivered to the
Custodian, on behalf of the Indenture Trustee on behalf of the Trust by the
Seller pursuant to Section 2.04, 2.05 or 2.07 hereof and all its right, title
and interest to principal and interest due on such Qualified Replacement
Mortgage on and after the applicable Replacement Cut-Off Date; PROVIDED,
HOWEVER, that the Seller shall reserve and retain
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all right, title and interest in and to payments of principal and interest
due on such Qualified Replacement Mortgage prior to the applicable
Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in
connection with a repurchase or the conveyance of a Qualified Replacement
Mortgage therefor, the Indenture Trustee will transfer, assign, set over and
otherwise convey without recourse or representation, on the Seller's order, all
of its right, title and interest in and to such released Home Equity Loan and
all the Trust's right, title and interest to principal and interest due on such
released Home Equity Loan after the applicable Replacement Cut-Off Date, as the
case may be; PROVIDED, HOWEVER, that the Trust shall reserve and or and retain
all right, title and interest in and to payments of principal and interest due
on such released Home Equity Loan prior to such repurchase or the applicable
Replacement Cut-Off Date, as the case may be.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Indenture Trustee on behalf of the Trust, the Seller
agrees to (i) deliver without recourse to the Custodian, on behalf of the
Indenture Trustee on the date of delivery of such Qualified Replacement Mortgage
the original Note relating thereto, endorsed in blank or to the order of the
Indenture Trustee, (ii) cause promptly to be recorded an assignment in the
appropriate jurisdictions, (iii) deliver the original Qualified Replacement
Mortgage and such recorded assignment, together with original or duly certified
copies of any and all prior assignments, to the Custodian, on behalf of the
Indenture Trustee within 15 days of receipt thereof by the Seller (but in any
event within 120 days after the date of conveyance of such Qualified Replacement
Mortgage) and (iv) deliver the title insurance policy, or where no such policy
is required to be provided under Section 2.06(b)(i)(B), the other evidence of
title required in Section 2.06(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in
connection with a repurchase or the conveyance of a Qualified Replacement
Mortgage the Custodian, on behalf of the Indenture Trustee shall deliver on the
date of such repurchase or conveyance of such Qualified Replacement Mortgage and
on the order of the Seller (i) the original Note relating thereto, endorsed
without recourse or representation, in blank or to the order of, to the Seller,
(ii) the original Mortgage so released and all assignments relating thereto and
(iii) such other documents as constituted the Mortgage File with respect
thereto.
(h) If a Mortgage assignment is lost during the process of
recording, or is returned from the recorder's office unrecorded due to a defect
therein, the Seller shall prepare a substitute assignment or cure such defect,
as the case may be, and thereafter cause each such assignment to be duly
recorded.
Section 2.07. ACCEPTANCE BY INDENTURE TRUSTEE; CERTAIN SUBSTITUTIONS OF
HOME EQUITY LOANS; CERTIFICATION BY INDENTURE TRUSTEE.
(a) The Indenture Trustee agrees to execute and deliver and to
cause the Custodian to execute and deliver on the Startup Day an acknowledgment
of receipt of the items delivered by the Seller in the forms attached as Exhibit
__ hereto, and declares through the Custodian that it
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will hold such documents and any amendments, replacement or supplements
thereto, as well as any other assets included in the definition of Trust
Estate and delivered to the Custodian, in trust upon and subject to the
conditions set forth herein for the benefit of the Owners and the Insurer.
The Indenture Trustee agrees, for the benefit of the Owners and the Insurer,
to cause the Custodian to review such items within 45 days after the Startup
Day (or, with respect to any document delivered after the Startup Day, within
45 days of receipt and with respect to any Qualified Replacement Mortgage,
within 45 days after the assignment thereof) and to deliver to the Depositor,
the Seller, the Servicer and the Insurer a certification in the form attached
hereto as Exhibit __ (a "Pool Certification") to the effect that, as to each
Home Equity Loan listed in the Schedule of Home Equity Loans (other than any
Home Equity Loan paid in full or any Home Equity Loan specifically identified
in such Pool Certification as not covered by such Pool Certification), (i)
all documents required to be delivered to it pursuant to Section 2.06(b)(i)
of this Agreement have been executed and are in its possession and that the
Notes have been endorsed as set forth in Section 2.06(b)(i) hereof, (ii) such
documents have been reviewed by it and have not been mutilated, damaged or
torn and relate to such Home Equity Loan and (iii) based on its examination
and only as to the foregoing documents, the information set forth on the
Schedule of Home Equity Loans accurately reflects the information set forth
in the Mortgage File. The Indenture Trustee shall have no responsibility for
reviewing any Mortgage File except as expressly provided in this subsection
2.07(a). Without limiting the effect of the preceding sentence, in reviewing
any Mortgage File, the Indenture Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of
any assignment is in proper form (except to determine if the Indenture
Trustee is the assignee), whether any document has been recorded in
accordance with the requirements of any applicable jurisdiction or whether a
blanket assignment is permitted in any applicable jurisdiction, but shall
only be required to determine whether a document has been executed, that it
appears to be what it purports to be, and, where applicable, that it purports
to be recorded. The Indenture Trustee shall be under no duty or obligation to
inspect, review or examine any such documents, instruments, certificates or
other papers to determine that they are genuine, enforceable, or appropriate
for the represented purpose or that they are other than what they purport to
be on their face, nor shall the Indenture Trustee be under any duty to
determine independently whether there are any intervening assignments or
assumption or modification agreements with respect to any Home Equity Loan.
(b) If the Custodian, on behalf of the Indenture Trustee during
such 45-day period finds any document constituting a part of a Mortgage File
which is not executed, has not been received, or is unrelated to the Home Equity
Loans identified in the Schedule of Home Equity Loans, or that any Home Equity
Loan does not conform to the description thereof as set forth in the Schedule of
Home Equity Loans, the Custodian, on behalf of the Indenture Trustee shall
promptly so notify the Depositor, the Seller, the Owners and the Insurer. In
performing any such review, the Custodian, on behalf of the Indenture Trustee
may conclusively rely on the Seller as to the purported genuineness of any such
document and any signature thereon. It is understood that the scope of the
review of the items delivered by the Seller pursuant to Section 2.06(b)(i) is
limited solely to confirming that the documents listed in Section 2.06(b)(i)
have been executed and received, relate to the Mortgage Files identified in the
Schedule of Home Equity Loans and conform to the description thereof in the
Schedule of Home Equity Loans. The Seller agrees to
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use reasonable efforts to remedy a material defect in a document constituting
part of a Mortgage File of which it is so notified by the Custodian, on
behalf of the Indenture Trustee. If, however, within 90 days after such
notice to it respecting such defect the Seller has not remedied the defect
and the defect materially and adversely affects the interest in the related
Home Equity Loan of the Owners or the Insurer, the Seller will (or will cause
an affiliate of the Seller to) on the next succeeding Monthly Remittance Date
(i) substitute in lieu of such Home Equity Loan a Qualified Replacement
Mortgage and deliver the Substitution Amount to the Servicer for deposit in
the Principal and Interest Account or (ii) purchase such Home Equity Loan at
a purchase price equal to the Loan Purchase Price thereof, which purchase
price shall be delivered to the Servicer for deposit in the Principal and
Interest Account.
(c) In addition to the foregoing, the Custodian, on behalf of the
Indenture Trustee also agrees to make a review during the 12th month after the
Startup Day indicating the current status of the exceptions previously indicated
on the Pool Certification (the "Final Certification"). After delivery of the
Final Certification, the Custodian, on behalf of the Indenture Trustee and the
Servicer shall provide to the Insurer no less frequently than monthly updated
certifications indicating the then current status of exceptions, until all such
exceptions have been eliminated.
Section 2.08. CUSTODIAN.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Indenture Trustee with respect to
the custody, acceptance, inspection and release of the Mortgage Files pursuant
to Sections 2.06, 2.07 and 3.11 and the related Pool Certification and Final
Certification shall be performed by the Custodian on the Indenture Trustee's
behalf pursuant to the Custodial Agreement; provided, however, the Indenture
Trustee shall remain primarily liable for such obligations. The fees and
expenses of the Custodian will be paid by the Servicer.
If, pursuant to Section ____ of the Custodial Agreement, the Custodian
shall request written instructions from the Indenture Trustee, the Indenture
Trustee hereby agrees to promptly provide such instructions.
Section 2.09. COOPERATION PROCEDURES. The Seller shall, in connection
with the delivery of each Qualified Replacement Mortgage to the Custodian, on
behalf of the Indenture Trustee, provide the Indenture Trustee with information
set forth in the Schedules of Home Equity Loans with respect to such Qualified
Replacement Mortgage.
(a) The Seller, the Depositor, the Servicer and the Indenture
Trustee covenant to provide each other with all data and information required to
be provided by them hereunder at the times required hereunder, and additionally
covenant reasonably to cooperate with each other in providing any additional
information required to be obtained by any of them in connection with their
respective duties hereunder.
(b) The Servicer shall maintain such accurate and complete
accounts, records and computer systems pertaining to each Mortgage File as shall
enable it and the Indenture Trustee to
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comply with this Agreement. In performing its recordkeeping duties the
Servicer shall act in accordance with the servicing standards set forth in
this Agreement. The Servicer shall conduct, or cause to be conducted,
periodic audits of its accounts, records and computer systems as set forth in
Sections 3.13 and 3.14 hereof. The Servicer shall promptly report to the
Indenture Trustee any failure on its part to maintain its accounts, records
and computer systems herein provided and promptly take appropriate action to
remedy any such failure.
(c) The Seller further confirms to the Indenture Trustee that it
has caused the portions of the electronic ledger relating to the Home Equity
Loans to be clearly and unambiguously marked to indicate that such Home Equity
Loans have been sold, transferred, assigned and conveyed through the Depositor
to the Indenture Trustee and constitute part of the Trust Estate in accordance
with the terms of the trust created hereunder and that the Seller will treat the
transaction contemplated by such sale, transfer, assignment and conveyance as a
sale for accounting purposes.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Indenture Trustee with respect to
the custody, acceptance, inspection and release of the Mortgage Files pursuant
to Sections 2.06, 2.07 and 3.11 and the related Pool Certification and Final
Certification shall be performed by the Custodian pursuant to the Custodial
Agreement. The fees and expenses of the Custodian will be paid by the Servicer.
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ARTICLE III
ADMINISTRATION AND SERVICING OF HOME EQUITY LOANS
Section 3.01 THE SERVICER.
(a) The Servicer, as independent contract servicer, shall service
and administer the Home Equity Loans and shall have full power and authority,
acting alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Home Equity Loans with any
institution which (i) is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement, (ii) (x)
has been designated an approved Seller-Servicer by the Federal Home Loan
Mortgage Corporation ("FHLMC") or the Federal National Mortgage Association
("FNMA") for first and second home equity loans or (y) is an affiliate of the
Servicer or (z) is otherwise approved by the Insurer. The Servicer shall give
written notice to the Insurer, and the Indenture Trustee prior to the
appointment of any Subservicer. Any such Subservicing Agreement shall be
consistent with and not violate the provisions of this Agreement and shall be in
form and substance acceptable to the Insurer and the Indenture Trustee. The
Servicer shall be entitled to terminate any Subservicing Agreement in accordance
with the terms and conditions of such Subservicing Agreement and either itself
directly service the related Home Equity Loans or enter into a Subservicing
Agreement with a successor subservicer which qualifies hereunder.
(b) Notwithstanding any Subservicing Agreement or any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Subservicer or reference to actions taken through a Subservicer
or otherwise, the Servicer shall remain obligated and primarily liable for the
servicing and administering of the Home Equity Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Home Equity Loans. For purposes of this Agreement, the Servicer shall be
deemed to have received payments on Home Equity Loans when the Subservicer has
received such payments. The Servicer shall be entitled to enter into any
agreement with a Subservicer for indemnification of the Servicer by such
Subservicer, and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
(c) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Home Equity Loans involving a
Subservicer in its capacity as such and not as an originator shall be deemed to
be between the Subservicer and the Servicer alone, and the Indenture Trustee,
the Owner Trustee and Noteholders and the Transferor in respect of the Ownership
Interest shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in
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Section 3.01(d) herein. The Servicer shall be solely liable for all fees owed
by it to any Subservicer irrespective of whether the Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.
(d) In the event the Servicer shall for any reason no longer be
the Servicer (including by reason of an Event of Servicing Termination), the
Indenture Trustee or its designee approved by the Insurer shall thereupon assume
all of the rights and obligations of the Servicer under each Subservicing
Agreement that the Servicer may have entered into, unless the Indenture Trustee
or designee approved by the Insurer elects to terminate any Subservicing
Agreement in accordance with the terms of such Subservicing Agreement. Each
Subservicing Agreement shall include the provision that such agreement may be
immediately terminated by the Insurer or the Indenture Trustee in the event that
the Servicer shall, for any reason, no longer be the Servicer (including
termination due to an Event of Servicing Termination). In no event shall any
Subservicing Agreement require the Insurer or the Indenture Trustee as Successor
Servicer to pay compensation to a Subservicer or order the termination of such
Subservicer. Any fee payable or expense incurred in connection with such a
termination will be payable by the outgoing Servicer. If the Indenture Trustee
does not terminate a Subservicing Agreement, the Indenture Trustee, its designee
or the successor servicer for the Indenture Trustee shall be deemed to have
assumed all of the Servicer's interest therein and to have replaced the Servicer
as a party to each Subservicing Agreement to the same extent as if the
Subservicing Agreements had been assigned to the assuming party, except that the
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreements with regard to events that occurred prior to the date
the Servicer ceased to be the Servicer hereunder. The Servicer, at its expense
and without right of reimbursement therefor, shall, upon the request of the
Indenture Trustee, deliver to the assuming party all documents and records
relating to each Subservicing Agreement and the Home Equity Loans then being
serviced and an accounting of amounts collected and held by it and otherwise use
its best efforts to effect the orderly and efficient transfer of the
Subservicing Agreements to the assuming party.
(e) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Home Equity Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's determination such waiver,
modification, postponement or indulgence is not materially adverse to the
interests of the Noteholders, the Transferor in respect of the Ownership
Interest and the Insurer, provided, however, that (unless (x) the Mortgagor is
in default with respect to the Home Equity Loan, or such default is, in the
judgment of the Servicer, imminent, (y) with respect to any modification
lowering the Coupon Rate or effecting the forgiveness of any amount owed under
the Mortgage Note, or extending the final maturity date on such Home Equity
Loan, the Insurer has consented to such modification and (z) such waiver,
modification, postponement or indulgence would not cause a tax to be imposed on
the Trust) the Servicer may not permit any modification with respect to any Home
Equity Loan that would change the Coupon Rate, defer or forgive the payment of
any principal or interest (unless in connection with the liquidation of the
related Home Equity Loan) or extend the final maturity date on the Home Equity
Loan. No costs incurred by the Servicer or any Subservicer in respect of
Servicing Advances shall, for the
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purposes of distributions to Noteholders, be added to the amount owing under
the related Home Equity Loan. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and
empowered to execute and deliver on behalf of the Indenture Trustee and each
Noteholder, all instruments of satisfaction or cancellation, or of partial or
full release, discharge and all other comparable instruments with respect to
the Home Equity Loans and with respect to the Mortgaged Properties. If
reasonably required by the Servicer and requested in writing, the Indenture
Trustee shall furnish the Servicer and, if directed by the Servicer, any
Subservicer with any powers of attorney and other documents necessary or
appropriate to enable the Servicer and any such Subservicer to carry out its
servicing and administrative duties under this Agreement.
Notwithstanding anything to the contrary contained herein, the
Servicer, in servicing and administering the Home Equity Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and REO
management procedures) and exercise the same care that it customarily employs
and exercises in servicing and administering home equity loans for its own
account, in accordance with accepted mortgage servicing practices of prudent
lending institutions servicing home equity loans similar to the Home Equity
Loans and giving due consideration to the Insurer's and the Trust's reliance on
the Servicer.
(f) On and after such time as the Indenture Trustee receives the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, the Indenture Trustee, if it so elects, and
with the consent of the Insurer, shall assume all of the rights and obligations
of the Servicer, subject to Section 7.02 herein. The Servicer shall, upon
request of the Indenture Trustee, but at the expense of the Servicer, deliver to
the Indenture Trustee, all documents and records relating to the Home Equity
Loans and an accounting of amounts collected and held by the Servicer and
otherwise use its best efforts to effect the orderly and efficient transfer of
servicing rights and obligations to the assuming party.
(g) The Servicer shall deliver a list of Servicing Officers to the
Indenture Trustee and the Insurer on or before the Closing Date and shall revise
such list from time to time, as appropriate, and shall deliver all revisions
promptly to the Indenture Trustee and the Insurer.
(h) Consistent with the terms of this Agreement, the Servicer may
consent to the placing of a lien senior to that of the Mortgage on the related
Mortgaged Property; PROVIDED that such senior lien secures a home equity loan
that refinances a First Lien and the combined loan-to-value ratio of the related
Home Equity Loan immediately following the refinancing (based on the outstanding
principal balance of the Home Equity Loan and the original principal balance of
such refinanced home equity loan) is not greater than the Combined Loan-to-Value
Ratio of such Home Equity Loan as of the related Cut-Off Date.
Section 3.02 COLLECTION OF CERTAIN HOME EQUITY LOAN PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be
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consistent with this Agreement and the terms and provisions of any applicable
Insurance Policy, follow collection procedures for all Home Equity Loans as
it follows with respect to home equity loans in its servicing portfolio
comparable to the Home Equity Loans. Consistent with the foregoing, the
Servicer may in its discretion waive or permit to be waived any late payment
charge, prepayment charge, assumption fee or any penalty interest in
connection with the prepayment of a Home Equity Loan or any other fee or
charge which the Servicer would be entitled to retain hereunder as servicing
compensation. In the event the Servicer shall consent to the deferment of the
due dates for payments due on a Note, the Servicer shall nonetheless make
payment of any required Delinquency Advance with respect to the payments so
extended to the same extent as if such installment were due, owing and
Delinquent and had not been deferred, and shall be entitled to reimbursement
therefor in accordance with Section 3.04 hereof.
Section 3.03 Principal and Interest Account.
(a) The Servicer shall establish an account, which includes three
separate subaccounts into which amounts in respect of each Group will be
separately deposited and maintained (the "Principal and Interest Account"). The
Principal and Interest Account shall be an Eligible Account. The Principal and
Interest Account shall be titled: "________________, as Indenture Trustee in
trust for the registered holders of Centex Home Equity Loan Asset-Backed Notes
and the Insurer, and as Paying Agent for the Transferor in respect of the
Ownership Interest, as their interests may appear, Series 2000-__ Principal and
Interest Account." If the institution at any time holding the Principal and
Interest Account ceases to be eligible as a Designated Depository Institution
hereunder, then the Servicer shall immediately be required to name a successor
institution meeting the requirements for a Designated Depository Institution
hereunder. If the Servicer fails to name such a successor institution, then the
Principal and Interest Account shall thenceforth be held as a trust account with
a qualifying Designated Depository Institution selected by the Indenture
Trustee. The Servicer shall notify the Indenture Trustee, the Insurer and the
Owners if there is a change in the name, account number or institution holding
the Principal and Interest Account.
(b) Subject to Subsection (c) below, the Servicer shall deposit
all receipts required pursuant to Subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the second Business Day after receipt). All funds in the Principal
and Interest Account shall be held and invested as set forth in Section 5.06
hereof.
(c) The Servicer shall deposit to the Principal and Interest
Account no later than the second Business Day after receipt, all principal
collected and interest due on the Home Equity Loans (net of the Servicing Fee
related to such Home Equity Loans) on and after the Cut-Off Date and the
Replacement Cut-Off Date, as applicable, including any Prepayments and Net
Liquidation Proceeds, other recoveries or amounts related to the Home Equity
Loans received by the Servicer and any income from REO Properties, but net of
(i) Net Liquidation Proceeds to the extent such Net Liquidation Proceeds exceed
the sum of (a) the Principal Balance of the related Home Equity Loan immediately
prior to liquidation, plus (b) accrued and unpaid interest on such
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Home Equity Loan (net of the related Servicing Fee) and (c) any unrecovered
Cram Down Losses, (ii) reimbursements for unreimbursed Delinquency Advances
(but solely from amounts received on the related Home Equity Loan) and (iii)
reimbursements for amounts deposited in the Principal and Interest Account
representing payments of principal and/or interest on a Note by a Mortgagor
which are subsequently returned by a depository institution as unpaid.
(d) The Servicer may make withdrawals from the Principal and
Interest Account, with respect to each Home Equity Group, only in the following
priority and for the following purposes:
(A) on each Monthly Remittance Date, to pay itself the related
Servicing Fees to the extent such Servicing Fees are not retained by
the Servicer;
(B) to withdraw investment earnings on amounts on deposit in
the Principal and Interest Account;
(C) to withdraw amounts that have been deposited to the
Principal and Interest Account in error;
(D) to reimburse itself pursuant to Section 3.04 for
unrecovered Delinquency Advances and unrecovered Servicing Advances (in
each case, solely from amounts recovered on the related Home Equity
Loan);
(E) Nonrecoverable Advances; and
(F) to clear and terminate the Principal and Interest
Account following the termination of the Trust
pursuant to Article IX;
(i) The Servicer shall (a) remit to the Indenture Trustee for
deposit in the Distribution Account by wire transfer, or otherwise make
funds available in immediately available funds, without duplication,
the Monthly Remittance Amount allocable to a Remittance Period not
later than the related Monthly Remittance Date, and (b) on each Monthly
Remittance Date, deliver to the Indenture Trustee, the Depositor and
the Insurer, a monthly servicing report, with respect to each Home
Equity Group, containing (without limitation) the following
information: principal and interest collected in respect of the Home
Equity Loans, scheduled principal and interest that was due on the Home
Equity Loans, relevant information with respect to Liquidated Loans, if
any, summary and detailed delinquency reports, Liquidation Proceeds and
other similar information concerning the servicing of the Home Equity
Loans and any other information requested by the Insurer (including,
without limitation, a liquidation report with respect to each
Liquidated Loan). In addition, the Servicer shall inform the Indenture
Trustee and the Insurer on each Monthly Remittance Date, with respect
to each Home Equity Group, of the amounts of any Loan Purchase Prices
or Substitution Amounts so remitted during the
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related Remittance Period, and of the Principal Balance of the Home
Equity Loan having the largest Principal Balance as of such date.
(ii) The Servicer shall provide to the Indenture Trustee the
information described in Section 3.03(d)(i)(b) and in Section 5.03 to
enable the Indenture Trustee to perform its reporting requirements
under Section 5.03 and to make the allocations and disbursements set
forth in Sections 5.01 and 5.04.
Section 3.04 Delinquency Advances and Servicing Advances.
(a) On or before each Monthly Remittance Date, the Servicer shall
be required to remit to the Indenture Trustee for deposit to the Distribution
Account out of the Servicer's own funds or from collections on any Home Equity
Loans that are not required to be distributed on the Distribution Date occurring
during the month in which such remittance is made (all or any portion of such
amount to be replaced on future Monthly Remittance Dates to the extent required
for distribution) any Delinquent payment of interest with respect to each
Delinquent Home Equity Loan, which payment was not received on or prior to the
last day of the related Remittance Period. Such amounts of the Servicer's own
funds so deposited are "Delinquency Advances".
The Servicer shall be permitted to reimburse itself on any Business Day
for any Delinquency Advances paid from the Servicer's own funds, from late
collections on the related Home Equity Loan or as provided in Section 5.01.
Notwithstanding the foregoing, in the event that the Servicer
determines in its reasonable business judgment in accordance with the servicing
standards set out herein that any proposed Delinquency Advance would not be
recoverable, the Servicer shall not be required to make Delinquency Advances
with respect to such Home Equity Loan. To the extent that the Servicer
previously has made Delinquency Advances with respect to a Home Equity Loan that
the Servicer subsequently determines is a Nonrecoverable Advance, the Servicer
shall be entitled to reimbursement for such aggregate Nonrecoverable Advances
from collections on any Home Equity Loan on deposit in the Principal and
Interest Account. The Servicer shall give written notice of such determination
as to why such amount would not be recoverable to the Indenture Trustee and the
Insurer; the Indenture Trustee shall promptly furnish a copy of such notice to
the Transferor with respect to the Transferor Interest; PROVIDED, FURTHER, that
the Servicer shall be entitled to recover any unreimbursed Delinquency Advances
from Liquidation Proceeds for the related Home Equity Loan.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, (i) Preservation Expenses, (ii) the cost of any enforcement or
judicial proceedings, including foreclosures, (iii) the cost of the management
and liquidation of REO Property, (iv) advances required by Section 3.10, except
to the extent that such amounts are determined by the Servicer in its reasonable
business judgment not to be recoverable and (v) expenses incurred pursuant to
Section 7.01. Such costs
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will constitute "Servicing Advances". The Servicer may recover a Servicing
Advance (x) from the Mortgagors to the extent permitted by the Home Equity
Loans or, if not theretofore recovered from the Mortgagor on whose behalf
such Servicing Advance was made, from Liquidation Proceeds realized upon the
liquidation of the related Home Equity Loan and (y) as provided in Section
5.01. The Servicer shall be entitled to recover the Servicing Advances from
the Liquidation Proceeds on the related Home Equity Loan prior to the payment
of the Liquidation Proceeds to any other party to this Agreement. In no case
may the Servicer recover Servicing Advances from the principal and interest
payments on any other Home Equity Loan except as provided in Section 5.01.
Section 3.05 Compensating Interest; Repurchase of Home Equity Loans.
(a) If a Prepayment in full of a Home Equity Loan or a Prepayment
of at least six times a Mortgagor's Monthly Payment occurs during any calendar
month, any shortfall between (x) the interest collected from the Mortgagor in
connection with such payoff, and (y) the full months interest at the Coupon Rate
that would be due on the related Due Date for such Home Equity Loan
("Compensating Interest") (but not in excess of the aggregate Servicing Fee for
the related Remittance Period) shall be deposited by the Servicer to the
Principal and Interest Account (or if such difference is an excess, the Servicer
shall retain such excess) on the next succeeding Monthly Remittance Date and
shall be included in the Monthly Remittance Amount to be made available to the
Indenture Trustee on such Monthly Remittance Date. The Servicer may recover any
unreimbursed payments of Compensating Interest as provided in Section 5.01.
(b) Subject to the clause (c) below, the Servicer has the right
and the option, but not the obligation, to purchase for its own account any Home
Equity Loan which becomes a 60-Day Delinquent Loan, or any Home Equity Loan as
to which enforcement proceedings have been brought by the Servicer pursuant to
Section 3.10. Any such Home Equity Loan so purchased shall be purchased by the
Servicer on or prior to a Monthly Remittance Date at a purchase price equal to
the Loan Purchase Price thereof, which purchase price shall be deposited in the
Principal and Interest Account.
(c) If a Home Equity Loan to be purchased by the Servicer pursuant
to clause (b) above, is the greatest number of days Delinquent of all then
Delinquent Home Equity Loans (including Home Equity Loans relating to REO
Property), the Servicer may purchase such Home Equity Loan without having first
notified the Insurer of such purchase. In all other cases, the Servicer must
notify the Insurer and the Indenture Trustee, in writing, of its intent to
purchase a Home Equity Loan and the Servicer may not purchase such Home Equity
Loan without the written consent of the Insurer.
(d) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Indenture Trustee as part of the Monthly Remittance Amount remitted by
the Servicer to the Indenture Trustee.
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Section 3.06 MAINTENANCE OF INSURANCE.
(a) The Servicer shall cause to be maintained with respect to each
Home Equity Loan a hazard insurance policy with a carrier generally acceptable
to the Servicer that provides for fire and extended coverage, and which provides
for a recovery by the Trust of insurance proceeds relating to such Home Equity
Loan in an amount not less than the least of (i) the outstanding principal
balance of the Home Equity Loan (plus the related senior lien loan, if any),
(ii) the minimum amount required to compensate for damage or loss on a
replacement cost basis and (iii) the full insurable value of the premises. The
Servicer shall maintain the insurance policies required hereunder in the name of
the mortgagee, its successors and assigns, and shall be named as loss payee. The
policies shall require the insurer to provide the mortgagee with 30 days' notice
prior to any cancellation or as otherwise required by law. As an alternative to
maintaining a hazard insurance policy with respect to each Home Equity Loan, the
Servicer may maintain a blanket hazard insurance policy or policies if the
insurer or insurers of such policies are rated investment grade by ▇▇▇▇▇'▇ and
Standard & Poor's.
(b) If the Home Equity Loan at the time of origination (or if
required by federal law, at any time thereafter) relates to a Mortgaged Property
in an area identified in the Federal Register by the Federal Emergency
Management Agency as having special flood hazards, the Servicer will cause to be
maintained with respect thereto a flood insurance policy in a form meeting the
requirements of the then current guidelines of the Federal Insurance
Administration with a carrier generally acceptable to the Servicer in an amount
representing coverage, and which provides for a recovery by the Trust of
insurance proceeds relating to such Home Equity Loan of not less than the least
of (i) the outstanding principal balance of the Home Equity Loan (plus the
related senior lien loan, if any), (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973. The Servicer shall indemnify the Trust and the Insurer out of the
Servicer's own funds for any loss to the Trust or the Insurer resulting from the
Servicer's failure to advance premiums for such insurance required by this
Section when so permitted by the terms of the Mortgage as to which such loss
relates.
(c) Amounts collected by the Servicer under any Insurance Policies
shall be deposited into the Principal and Interest Account.
Section 3.07 RESERVED.
Section 3.08 RESERVED.
Section 3.09 DUE-ON-SALE CLAUSES; ASSUMPTION AND SUBSTITUTION
AGREEMENTS.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall (except as provided below), to the extent it has
knowledge of such conveyance or prospective conveyance, exercise its rights to
accelerate the maturity of the related Home Equity Loan under any "due-on-sale"
clause contained in the related Mortgage or Note; PROVIDED,
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HOWEVER, that the Servicer shall not exercise any such right if the
"due-on-sale" clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law, or the Servicer, in a manner consistent
with reasonable commercial practice, and only if the Servicer reasonably
believes assumption by the purchaser would not materially and adversely
affect the interests of the Owners or of the Insurer, permits the purchaser
of the related Mortgaged Property to assume such Home Equity Loan. An Opinion
of Counsel, provided at the expense of the Servicer, to the foregoing effect
shall conclusively establish the reasonableness of such belief. In such
event, the Servicer shall enter into an assumption and modification agreement
with the person to whom such property has been or is about to be conveyed,
pursuant to which such person becomes liable under the Note and, unless
prohibited by applicable law or the Mortgage documents, the Mortgagor remains
liable thereon. If the foregoing is not permitted under applicable law, the
Servicer is authorized to enter into a substitution of liability agreement
with such person, pursuant to which the original Mortgagor is released from
liability and such person is substituted as Mortgagor and becomes liable
under the Note; PROVIDED, HOWEVER, that to the extent any such substitution
of liability agreement would be delivered by the Servicer outside of its
usual procedures for home equity loans held in its own portfolio the Servicer
shall, prior to executing and delivering such agreement, obtain the prior
written consent of the Insurer. The Home Equity Loan, as assumed, shall
conform in all material respects to the requirements, representations and
warranties of this Agreement. The Servicer shall notify the Indenture Trustee
that any such assumption or substitution agreement has been completed by
forwarding to the Indenture Trustee or to the Custodian on the Indenture
Trustee's behalf the original copy of such assumption or substitution
agreement (indicating the Mortgage File to which it relates) which copy shall
be added by the Indenture Trustee or by the Custodian on the Indenture
Trustee's behalf to the related Mortgage File and which shall, for all
purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof. The Servicer
shall be responsible for recording any such assumption or substitution
agreements. In connection with any such assumption or substitution agreement,
no material term of the Home Equity Loan (including, without limitation, the
required monthly payment on the related Home Equity Loan, the stated
maturity, the outstanding principal amount or the Coupon Rate) shall be
changed nor shall any required monthly payments of principal or interest be
deferred or forgiven. Any fee collected by the Servicer or the Subservicer
for consenting to any such conveyance or entering into an assumption or
substitution agreement shall be retained by or paid to the Servicer as
additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
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Section 3.10 REALIZATION UPON DEFAULTED HOME EQUITY LOANS; WORKOUT OF
HOME EQUITY LOANS.
(a) The Servicer shall foreclose upon or otherwise comparably
effect the ownership in the name of the Indenture Trustee on behalf of the Trust
of Properties relating to defaulted Home Equity Loans as to which no
satisfactory arrangements can be made for collection of Delinquent payments and
which the Servicer has not purchased pursuant to Section 3.05. In connection
with such foreclosure or other conversion, the Servicer shall exercise such of
the rights and powers vested in it hereunder, and use the same degree of care
and skill in their exercise or use, as prudent mortgage lenders would exercise
or use under the circumstances in the conduct of their own affairs and
consistent with its servicing standards, including, but not limited to,
advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 3.04 hereof. Pursuant to its
efforts to sell such REO Property, the Servicer shall either itself or through
an agent selected by the Servicer protect and conserve such REO Property in the
same manner and to such extent as is customary in the locality where such REO
Property is located and may, incident to its conservation and protection of the
interests of the Owners, rent the same, or any part thereof, as the Servicer
deems to be in the best interest of the Owners for the period prior to the sale
of such REO Property. The Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resource Conservation and Recovery Act of 1976, or other federal, state
or local environmental legislation, on a Mortgaged Property in determining
whether to foreclose upon or otherwise comparably convert the ownership of such
Mortgaged Property. If the Servicer has actual knowledge of any environmental or
hazardous waste risk with respect to the Mortgaged Property that the Servicer is
contemplating acquiring in foreclosure or deed in lieu of foreclosure, the
Servicer will cause an environmental inspection of the Mortgaged Property in
accordance with the servicing standards set forth in this Agreement. The
Servicer shall not take any such action with respect to any Mortgaged Property
known by the Servicer to contain such wastes or substances or to be within one
mile of the site of such wastes or substances, without the prior written consent
of the Insurer.
(b) The Servicer shall determine, with respect to each defaulted
Home Equity Loan, when it has recovered, whether through Indenture Trustee's
sale, foreclosure sale or otherwise, all amounts it expects to recover from or
on account of such defaulted Home Equity Loan, whereupon such Home Equity Loan
shall become a "Liquidated Loan" and the Servicer shall promptly submit a
liquidation report to the Insurer in form acceptable to the Insurer.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and only in the event of a payment default with respect to such Home Equity Loan
or in the event that a payment default with respect to such Home Equity Loan is
reasonably foreseeable by the Servicer; PROVIDED, HOWEVER, that no
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such modification, waiver or amendment shall extend the maturity date of such
Home Equity Loan beyond the Remittance Period related to the Final
Distribution Date. Notwithstanding anything set out in this Section 3.10(c)
or elsewhere in this Agreement to the contrary, the Servicer shall be
permitted to modify, waive or amend any provision of a Home Equity Loan if
required by statute or a court of competent jurisdiction to do so.
(d) The Servicer has no intent to foreclose on any Mortgage based
on the delinquency characteristics as of the Startup Day; provided, that the
foregoing does not prevent the Servicer from initiating foreclosure proceedings
on any date hereafter if the facts and circumstances of such Mortgage including
delinquency characteristics in the Servicer's discretion so warrant such action.
Section 3.11 INDENTURE TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES.
(a) Upon the payment in full of any Home Equity Loan (including
any liquidation of such Home Equity Loan through foreclosure or otherwise), or
the receipt by the Servicer of a notification that payment in full will be
escrowed in a manner customary for such purposes, the Servicer shall deliver to
the Custodian, on behalf of the Indenture Trustee, a written request of the
Servicer signed by an Authorized Officer which states the purpose of the release
of a Mortgage File. Upon receipt of such written request, the Custodian, on
behalf of the Indenture Trustee shall promptly release the related Mortgage
File, in trust, in its reasonable discretion to (i) the Servicer, (ii) an escrow
agent or (iii) any employee, agent or attorney of the Indenture Trustee. Upon
any such payment in full, or the receipt of such notification that such funds
have been placed in escrow, the Servicer is authorized to give, as
attorney-in-fact for the Indenture Trustee and the mortgagee under the Mortgage
which secured the Note, an instrument of satisfaction (or assignment of Mortgage
without recourse) regarding the Mortgaged Property relating to such Mortgage,
which instrument of satisfaction or assignment, as the case may be, shall be
delivered to the Person or Persons entitled thereto against receipt therefor of
payment in full, it being understood and agreed that no expense incurred in
connection with such instrument of satisfaction or assignment, as the case may
be, shall be chargeable to the Principal and Interest Account or to the
Indenture Trustee. In lieu of executing any such satisfaction or assignment, as
the case may be, the Servicer may prepare and submit to the Custodian, on behalf
of the Indenture Trustee, a satisfaction (or assignment without recourse, if
requested by the Person or Persons entitled thereto) in form for execution by
the Indenture Trustee with all requisite information completed by the Servicer;
in such event, the Custodian, on behalf of the Indenture Trustee shall execute
and acknowledge such satisfaction or assignment, as the case may be, and deliver
the same with the related Mortgage File, as aforesaid.
(b) The Servicer shall have the right (upon receiving the prior
written consent of the Insurer) to accept applications of Mortgagors for
consent to (i) partial releases of Mortgages, (ii) alterations and (iii)
removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio and debt-to-income ratio after any release does not
exceed the Loan-to-Value Ratio and debt-to-income ratio
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of such Note on the Cut-Off Date or Replacement Cut-Off Date, as applicable,
and any increase in the Loan-to-Value Ratio shall not exceed ___% unless
approved in writing by the Insurer; and (z) the lien priority of the related
Mortgage is not affected. Upon receipt by the Indenture Trustee of an
Officer's Certificate executed on behalf of the Servicer setting forth the
action proposed to be taken in respect of a particular Home Equity Loan and
certifying that the criteria set forth in the immediately preceding sentence
have been satisfied, the Indenture Trustee shall execute and deliver to the
Servicer the consent or partial release so requested by the Servicer. A
proposed form of consent or partial release, as the case may be, shall
accompany any Officer's Certificate delivered by the Servicer pursuant to
this paragraph. The Servicer shall notify the Insurer and the Rating Agencies
if an application is approved under clause (y) above without approval in
writing by the Insurer.
(c) From time to time and as appropriate in the servicing of any
Home Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Home Equity
Loan Insurance Policy, the Indenture Trustee shall release the related Mortgage
File to the Servicer, promptly upon a written request of the Servicer signed by
an Authorized Officer, which states the purpose of the release of a Mortgage
File; provided, however, that no more than ___% of the outstanding Home Equity
Loans (by number) shall be released to the Servicer at any time. Such receipt
shall obligate the Servicer to return the Mortgage File to the Indenture Trustee
when the need therefore by the Servicer no longer exists.
(d) In all cases where the Servicer needs the Indenture Trustee to
sign any document or to release a Mortgage File within a particular period of
time, the Servicer shall notify an Authorized Officer of the Indenture Trustee
by telephone of such need and the Indenture Trustee shall thereon use its best
efforts to comply with the Servicer's needs, but in any event will comply within
two Business Days of such request.
(e) No costs associated with the procedures described in this
Section 3.11 shall be an expense of the Trust.
Section 3.12 SERVICING COMPENSATION.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the related Servicing Fee with respect to each
Home Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 3.03 and similar items may, to the extent collected from
Mortgagors, be retained by the Servicer, unless a successor Servicer is
appointed pursuant to Section 7.02 hereof, in which case the successor Servicer
shall be entitled to such fees as are agreed upon by the Indenture Trustee, the
Insurer and the successor Servicer.
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The right to receive the Servicing Fee may not be transferred in
whole or in part except in connection with the transfer of all of the
Servicer's responsibilities and obligations under this Agreement.
Section 3.13 ANNUAL STATEMENT AS TO COMPLIANCE.
The Servicer, at its own expense, will deliver to the Indenture
Trustee, the Insurer, the Depositor, and the Rating Agencies, on or before
________ ___ of each year, commencing in _____, an Officer's Certificate
stating, as to each signer thereof, that (i) a review of the activities of the
Servicer during such preceding calendar year and of performance under this
Agreement has been made under such officers' supervision, and (ii) to the best
of such officers' knowledge, based on such review, the Servicer has fulfilled
all its obligations under this Agreement for such year, or, if there has been a
default in the fulfillment of all such obligations, specifying each such default
known to such officers and the nature and status thereof including the steps
being taken by the Servicer to remedy such default.
The Servicer shall deliver to the Indenture Trustee, the Depositor, the
Insurer and the Rating Agencies, promptly after having obtained knowledge
thereof but in no event later than five Business Days thereafter, written notice
by means of an Officer's Certificate of any event which with the giving of
notice or the lapse of time would become a Servicer Termination Event.
Section 3.14 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORTS.
On or before ________ ___ of each year, commencing in _____, the
Servicer, at its own expense (or if the Indenture Trustee is then acting as
Servicer, at the expense of the Seller, which in no event shall exceed $_____
per annum), shall cause to be delivered to the Indenture Trustee, the Insurer,
the Depositor, and the Rating Agencies a letter or letters of a firm of
independent, nationally recognized certified public accountants reasonably
acceptable to the Insurer stating that such firm has examined the Servicer's
overall servicing operations in accordance with the requirements of the Uniform
Single Attestation Program for Mortgage Bankers, and stating such firm's
conclusions relating thereto.
Section 3.15 RESERVED.
Section 3.16 ASSIGNMENT OF AGREEMENT.
Other than with respect to entering into Subservicing Agreements
pursuant to Section 3.01 hereof, the Servicer may not assign its obligations
under this Agreement, in whole or in part, unless it shall have first obtained
the written consent of the Indenture Trustee and the Insurer, which such consent
shall not be unreasonably withheld; PROVIDED, HOWEVER, that any assignee must
meet the eligibility requirements set forth in Section 7.01 hereof for a
successor servicer.
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Section 3.17 INSPECTIONS BY INSURER; ERRORS AND OMISSIONS
INSURANCE.
(a) At any reasonable time and from time to time upon reasonable
notice, the Indenture Trustee, the Insurer, [the Transferor], or any agents
thereof may inspect the Servicer's servicing operations and discuss the
servicing operations of the Servicer during the Servicer's normal business hours
with any of its officers or directors; PROVIDED, HOWEVER, that the costs and
expenses incurred by the Servicer or its agents or representatives in connection
with any such examinations or discussions shall be paid by the Servicer.
(b) The Servicer (including the Indenture Trustee if it shall
become the Servicer hereunder) agrees to maintain errors and omissions coverage
and a fidelity bond, each at least to the extent required by Section 305 of Part
I of FNMA Guide or any successor provision thereof; PROVIDED, HOWEVER, that in
any event that the fidelity bond or the errors and omissions coverage is no
longer in effect, the Servicer shall notify the Indenture Trustee and the
Indenture Trustee shall promptly give such notice to the Insurer and the Owners.
Section 3.18 ADDITIONAL SERVICING RESPONSIBILITIES FOR SECOND MORTGAGE
LOANS.
The Servicer shall file (or cause to be filed) a request for notice of
any action by a superior lienholder under a superior lien for the protection of
the Indenture Trustee's interest, where permitted by local law and whenever
applicable state law does not require that a junior lienholder be named as a
party defendant in foreclosure proceedings in order to foreclose such junior
lienholder's equity of redemption.
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations under a First Mortgage
Loan, or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust, whatever actions are necessary to protect the interests of
the Owners and the Insurer, and/or to preserve the security of the related Home
Equity Loan. The Servicer shall advance the necessary funds to cure the default
or reinstate the lien securing a First Mortgage Loan, if such advance is in the
best interests of the Insurer and the Owners; PROVIDED, HOWEVER, that no such
additional advance need be made if such advance would be nonrecoverable from
Liquidation Proceeds on the related Home Equity Loan. The Servicer shall
thereafter take such action as is necessary to recover the amount so advanced.
Any expenses incurred by the Servicer pursuant to this Section 3.18 shall be
Servicing Advances.
Section 3.19 THE GROUP III HOME EQUITY LOANS.
The Servicer shall enforce each Home Equity Loan in Group III in
accordance with its terms and shall timely calculate, record, report and apply
all interest rate adjustments in accordance with the related Note. The
Servicer's records shall, at all times, reflect the then Coupon Rate and monthly
payment and the Servicer shall timely notify the Mortgagor of any changes to the
Coupon Rate or the Mortgagor's monthly payment. If the Servicer fails to make
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either a timely or accurate adjustment to the Coupon Rate or monthly payment or
to notify the Mortgagor of such adjustments, upon the Servicer's discovery of
such error and such continued failure, the Servicer shall pay from its own funds
any shortage. If the Servicer's continued failure after notice thereof to make a
scheduled change affects the Trust's rights to make future adjustments under the
terms of such Home Equity Loan, the Servicer shall repurchase such Home Equity
Loan in accordance with the provisions hereof. Any amounts paid by the Servicer
pursuant to this Section shall not be an advance and shall not be reimbursable
from the proceeds of any Home Equity Loan.
Section 3.20 RESERVED.
Section 3.21 NOTICES OF MATERIAL EVENTS. The Servicer shall give prompt
notice to the Insurer, the Indenture Trustee, Moody's and Standard & Poor's of
the occurrence of any of the following events:
(a) Any default or any fact or event of which the Servicer has
knowledge which results, or which with notice or the passage of time, or both,
would result in the occurrence of a default by the Seller, or the Servicer under
any Transaction Document or would constitute a material breach of a
representation, warranty or covenant under any Transaction Document;
(b) The submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Seller or the Servicer to which the Servicer has knowledge in any federal, state
or local court or before any governmental body or agency or before any
arbitration board or any such proceedings threatened by any governmental agency,
which, if adversely determined, would have a material adverse effect upon any of
the Seller's or the Servicer's ability to perform its obligations under any
Transaction Document;
(c) The commencement of any proceedings by or against the Seller
or the Servicer under any applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, trustee or other similar official shall have
been, or may be, appointed or requested for the Seller or the Servicer; and
(d) The receipt of notice from any agency or governmental body
having authority over the conduct of any of the Seller's or the Servicer's
business that the Seller or the Servicer is to cease or desist, or to undertake
any practice, program, procedure or policy employed by the Seller or the
Servicer in the conduct of the business of any of them, and such cessation or
undertaking will materially and adversely affect the conduct of the Seller's or
the Servicer's business or its ability to perform under the Transaction
Documents or materially and adversely affect the financial affairs of the Seller
or the Servicer.
Section 3.22 REPORTS ON FORECLOSURE AND ABANDONMENT OF PROPERTIES. On
or before _________ ____ of each year beginning in _____, the Servicer shall
file the reports of foreclosures and abandonments of any Property required by
Code Section 6050J with the Internal Revenue Service and provide a copy of such
filing to the Indenture Trustee. The reports from the
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Servicer shall be in a form and substance sufficient to meet the reporting
requirements imposed by such Section 6050J.
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ARTICLE IV
INSURER
Section 4.01 CLAIMS UPON THE INSURANCE POLICIES.
(a) As soon as possible, and in no event later than 10:00 a.m. New
York City time on the second Business Day immediately preceding the Distribution
Date, the Indenture Trustee shall furnish the Insurer, the Fiscal Agent and the
Servicer with a completed notice in the form set forth as Exhibit A to the
applicable Insurance Policy (the "Notice for Payment") in the event that the
relevant Insured Payment for such Distribution Date is equal to an amount
greater than zero. The Notice for Payment shall specify the amount of the
Insured Payment and the Class of Notes with respect to which such Insured
Payment is to be made, and shall constitute a claim for an Insured Payment
pursuant to the applicable Insurance Policy. Upon receipt of an Insured Payment
on behalf of the Holders of the Notes under the Insurance Policy, the Indenture
Trustee shall deposit such Insured Payment in the Distribution Account and shall
distribute such Insured Payments pursuant to Section 5.01.
(b) The Indenture Trustee shall keep a complete and accurate
record of the amount of interest and principal paid in respect of the Notes from
moneys received under each Insurance Policy. The Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon four
Business Day's prior written notice to the Indenture Trustee.
(c) If a payment to the Noteholders which is guaranteed pursuant
to an Insurance Policy is voided (a "Preference Event") under any applicable
bankruptcy, insolvency, receivership or similar law in an Insolvency Proceeding
(as defined in the applicable Insurance Policy), and, as a result of such a
Preference Event, the Indenture Trustee is required to return such voided
payment, or any portion of such voided payment, made in respect of the Notes (an
"Avoided Payment"), the Indenture Trustee shall furnish to the Insurer (w) a
certified copy of a final order of a court exercising jurisdiction in such
Insolvency Proceeding to the effect that the Indenture Trustee is required to
return any such payment or portion thereof during the term of the Insurance
Policy because such payment was voided under applicable law, with respect to
which order the appeal period has expired without an appeal having been filed
(the "Final Order"), (x) an Opinion of Counsel satisfactory to the Insurer that
such order is final and not subject to appeal, (y) an assignment, in form
reasonably satisfactory to the Insurer, irrevocably assigning to the Insurer all
rights and claims of the Indenture Trustee relating to or arising under such
Avoided Payment and (z) appropriate instruments to effect the appointment of the
Insurer as agent for the beneficiary in any legal proceeding related to such
preference payment. Such payment shall be disbursed to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Final
Order and not to the Indenture Trustee directly (unless a Noteholder has
previously paid such amount to the receiver, conservator, debtor-in-possession
or trustee in bankruptcy named in the Final Order in which case such payment
shall be disbursed to the beneficiary for distribution to such Noteholder upon
proof of such payment reasonably satisfactory to Insurer). The Indenture Trustee
is not permitted to make a claim on the Trust or
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on any Noteholder for payments made to any Noteholder which are characterized
as preference payments by any bankruptcy court having jurisdiction over any
bankrupt Mortgagor unless ordered to do so by such bankruptcy court.
(d) Any amounts received by the Indenture Trustee pursuant to any
Insurance Policy in respect of the Notes shall be deposited to the Distribution
Account.
Section 4.02 EFFECT OF PAYMENTS BY THE INSURER; SUBROGATION. Anything
herein to the contrary notwithstanding, any payment with respect to principal of
or interest on any of the Notes which are made with moneys received pursuant to
the terms of any Insurance Policy shall not be considered payment of such Notes,
as applicable, from the Trust and shall not result in the payment of or the
provision for the payment of the principal of or interest on such Notes, within
the meaning of Section 5.01 herein. The Seller, the Servicer and the Indenture
Trustee acknowledge, and each Holder by its acceptance of a Note agrees, that
without the need for any further action on the part of the Insurer, the Seller,
the Servicer, the Indenture Trustee or the Note Registrar (a) to the extent the
Insurer makes payments, directly or indirectly, on account of principal of or
interest on any Notes to the Holders of such Notes, the Insurer will be fully
subrogated to the rights of such Holders to receive such principal and interest,
as applicable, from the Trust and (b) the Insurer shall be paid such principal
and interest but only from the sources and in the manner provided herein and in
the Insurance Agreement for the payment of such principal and interest.
The Indenture Trustee and the Servicer shall cooperate in all respects
with any reasonable request by the Insurer for action to preserve or enforce the
Insurer's rights or interests under this Agreement without limiting the rights
or affecting the interests of the Holders of the Notes, as otherwise set forth
herein.
Section 4.03 REPLACEMENT INSURANCE POLICY. In the event of a default by
the Insurer under any Insurance Policy or if the claims paying ability rating of
the Insurer is downgraded and such downgrade results in a downgrading of the
then current rating of the Notes (in each case, a "Replacement Event"), the
Seller may, in accordance with and upon satisfaction of the conditions set forth
in the Insurance Policy and the Insurance Agreement and payment in full of all
amounts owed to the Insurer, but shall not be required to, substitute a new
insurance policy or insurance policies for the existing Insurance Policy, or may
arrange for any other form of credit enhancement; PROVIDED, HOWEVER, that in
each case the Notes shall be rated no lower than the rating assigned by each
Rating Agency to the Notes immediately prior to such Replacement Event. It shall
be a condition to substitution of any new credit enhancement that there be
delivered to the Indenture Trustee (i) a legal opinion, acceptable in form and
substance to the Indenture Trustee, from counsel to the provider of such new
credit enhancement with respect to the enforceability thereof and such other
matters as the Indenture Trustee may require and (ii) an Opinion of Counsel to
the effect that such substitution would not have a materially adverse tax effect
on the Trust. Upon receipt of the items referred to above and the taking of
physical possession of the new credit enhancement, the Indenture Trustee shall,
within five Business Days
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following receipt of such items and such taking of physical possession,
deliver the replaced Insurance Policy to the Insurer.
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ARTICLE V
PRIORITY OF DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS; RIGHTS OF
NOTEHOLDERS
Section 5.01 DISTRIBUTIONS.
(a) DISTRIBUTIONS OF INTEREST AND PRINCIPAL PROCEEDS. On each
Distribution Date, the Indenture Trustee, with respect to the Notes, and the
Paying Agent, with respect to the Ownership Interest, shall distribute out of
the Distribution Account, to the extent of Available Funds for each Group
(except that with respect to Cross-Collateralization Payments, such Payments
shall be applied only to cover shortfalls as a result of defaults and
delinquencies and (A) the portion thereof payable to the Noteholders in respect
of any Interest Deficiency shall be distributed solely pursuant to Section
5.01(a)(ii), (B) the portion thereof payable to the Insurer in respect of any
Insurer Reimbursement Deficiency shall be distributed solely pursuant to Section
5.01(a)(iv), and (C) the portion thereof payable in respect of any
Undercollateralization Amount shall be applied pursuant to Section
5.01(a)(iii)), the following amounts and in the following order of priority to
the following Persons (based on the information set forth in the Servicing
Certificate) in respect of the related Group:
(i) concurrently, to the Indenture Trustee, the Indenture
Trustee Fee and Transition Expenses for such Distribution Date, to the
Owner Trustee, the Owner Trustee Fee for such Distribution Date, and to
the Insurer (so long as no Insurer Default defined in clause (i) in the
definition thereof has occurred and is continuing), the Premium Amount,
in each case, in respect of such Group;
(ii) concurrently, to the holders of the related Class of
Notes, an amount equal to the related Interest Distribution for such
Class of Notes for such Distribution Date;
(iii) to the holders of the related Class of Notes, the
Principal Distribution for such Distribution Date and such Class (other
than the portion constituting Distributable Excess Spread);
(iv) to the Insurer (so long as no Insurer Default defined in
clause (i) in the definition thereof has occurred and is continuing),
the amount owing to the Insurer under the Insurance Agreement for
reimbursement for prior draws made on the applicable Insurance Policy,
including interest thereon, in respect of such Group;
(v) to the holders of the related Class of Notes, to the
extent of Available Funds in respect of such Group remaining, the
Distributable Excess Spread for such Distribution Date and such Group;
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(vi) to the Insurer (so long as no Insurer Default described
in clause (i) thereof has occurred and is continuing), any other
amounts owing to the Insurer in respect of such Group under the
Insurance Agreement;
(vii) to the other Group(s), for deposit in the related
subaccount(s) of the Distribution Account, any related
Cross-Collateralization Payment for such Distribution Date;
(viii) to the Holders of the Class A-3 Notes, the Interest
Index Carryover;
(ix) to the Indenture Trustee, reimbursement for all
reimbursable expenses incurred in connection with its duties and
obligations under this Agreement, to the extent not reimbursed as
Transition Expenses pursuant to clause (i) above;
(x) to the Servicer, any unreimbursed Delinquency Advances,
Servicing Advances and Compensating Interest;
(xi) to the Cross-Collateralization Reserve Account for such
Group, the Cross-Collateralization Reserve Deposit for such Group and
Distribution Date; and
(xii) to the Transferor in respect of the Transferor Interest,
the balance.
(b) METHOD OF DISTRIBUTION. The Indenture Trustee shall make
distributions in respect of a Distribution Date to each Noteholder of record on
the related Record Date (other than as provided in Section 8.01 respecting the
final distribution) by check or money order mailed to such Noteholder at the
address appearing in the Note Register, or upon written request by a Noteholder
delivered to the Indenture Trustee at least five Business Days prior to such
Record Date, by wire transfer (but only if such Noteholder is the Depository or
such Noteholder owns of record one or more Notes having principal denominations
aggregating at least $1,000,000), or by such other means of payment as such
Noteholder and the Indenture Trustee shall agree. Distributions among
Noteholders shall be made in proportion to the Percentage Interests evidenced by
the Notes held by such Noteholders.
(c) DISTRIBUTIONS ON BOOK-ENTRY NOTES. Each distribution with
respect to a Book-Entry Note shall be paid to the Depository, which shall credit
the amount of such distribution to the accounts of its Depository Participants
in accordance with its normal procedures. Each Depository Participant shall be
responsible for disbursing such distribution to the Note Owners that it
represents and to each indirect participating brokerage firm (a "brokerage firm"
or "indirect participating firm") for which it acts as agent. Each brokerage
firm shall be responsible for disbursing funds to the Note Owners that it
represents. All such credits and disbursements with respect to a Book-Entry Note
are to be made by the Depository and the Depository Participants in accordance
with the provisions of the Notes. None of the Indenture Trustee, the Paying
Agent, the Note Registrar, the Seller, the Insurer, the Trust or the Servicer
shall have any responsibility therefor except as otherwise provided by
applicable law.
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Section 5.02 CALCULATION OF THE NOTE RATE. With respect to the Class
A-3 Notes, on the second LIBOR Business Day immediately preceding each
Distribution Date (or as of the second LIBOR Business Day prior to the Closing
Date, in the case of the first Distribution Date), the Indenture Trustee shall
determine One-Month LIBOR for the Interest Period commencing on such
Distribution Date and inform the Servicer (at the facsimile number given to the
Indenture Trustee in writing) of such rates. On the second LIBOR Business Day
prior to each Distribution Date, the Indenture Trustee shall determine the
applicable Note Rate for the related Distribution Date.
Section 5.03 STATEMENTS TO NOTEHOLDERS.
(a) Not later than 12:00 noon, New York time, on each Monthly
Remittance Date, the Servicer shall deliver to the Indenture Trustee, the
Depositor and the Underwriter a computer tape (or such other report in a form
and format mutually agreeable to the Servicer and the Indenture Trustee) (the
"Servicing Certificate") containing the information set forth in Exhibit __
hereto with respect to the Home Equity Loans on an aggregate basis as of the end
of the preceding Remittance Period and such other information as the Indenture
Trustee shall reasonably require. Not later than 12:00 noon, New York time, on
the Business Day preceding the Distribution Date, the Indenture Trustee shall
deliver to the Depositor, the Servicer, the Transferor and to the Insurer, by
telecopy, with a hard copy thereof to be delivered on such Distribution Date, a
statement (the "Indenture Trustee's Statement to Noteholders") (based solely on
the information contained on the computer tape provided by the Servicer)
containing the information set forth below with respect to such Distribution
Date:
(i) The Available Funds for each Group and the Note Rate for
each Class of Notes for the related Distribution Date;
(ii) The Note Principal Balance for each Class of Notes, the
Pool Principal Balance and the Group Principal Balance for each Group,
each as reported in the prior Indenture Trustee's Statement to
Noteholders, or, in the case of the first Monthly Remittance Date, the
Original Note Principal Balance for each Class of Notes, the Cut-Off
Date Pool Principal Balance and the Group Cut-Off Date Principal
Balance for each Group;
(iii) The aggregate amount of collections received on the Home
Equity Loans on or prior to such Distribution Date in respect of the
preceding Remittance Period, separately stating the amounts received in
respect of principal and interest for each Group;
(iv) The number and Principal Balances of all Home Equity
Loans in each Group that were the subject of principal prepayments
during the related Remittance Period;
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(v) The amount of all Curtailments that were received during
the Remittance Period in respect of each Group;
(vi) The principal portion of all Monthly Payments received
during the Remittance Period in respect of each Group;
(vii) The interest portion of all Monthly Payments received
during the Remittance Period in respect of each Group;
(viii) The amount required to be paid by the Seller (reported
separately) in respect of each Group pursuant to Sections 2.04, 2.06
and 2.07;
(ix) The amount of the Delinquency Advances, Servicing
Advances and the Compensating Interest paid with respect to such
Distribution Date in respect of each Group;
(x) The Principal Distribution to be distributed on each Class
of Notes and the Interest Distribution to be distributed on each Class
of Notes on the related Distribution Date;
(xi) The amount, if any, of the Outstanding Interest Carryover
Shortfall for each Class of Notes after giving effect to the
distributions on the related Distribution Date;
(xii) The amount of the Insured Payments in respect of each
Group, if any, to be made on the related Distribution Date;
(xiii) The amount to be distributed to the Transferor in
respect of the Transferor Interest for the related Distribution Date
pursuant to Section 5.01(a)(xii);
(xiv) The Note Principal Balance of each Class of Notes after
giving effect to the distribution to be made on the related
Distribution Date;
(xv) The weighted average remaining term to maturity and the
weighted average Coupon Rate of the Home Equity Loans in each Group;
(xvi) With respect to each Group, the amounts to be paid to
the Insurer, separately stated, pursuant to Sections 5.01(a)(iv) and
5.01(a)(vi);
(xvii) The Premium Amount in respect of each Group to be paid
to the Insurer pursuant to Section 5.01;
(xviii) The amount of all payments or reimbursements to the
Servicer pursuant to Section 3.03 in respect of each Group;
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(xix) With respect to each Group, the related O/C Amount, O/C
Reduction Amount, Excess O/C Amount and Specified O/C Amount for the
Distribution Date and the related Excess Spread for such Distribution
Date;
(xx) The amount of Distributable Excess Spread to be
distributed to the Holders of each Class of Notes on such Distribution
Date pursuant to Section 5.01(a)(v) on such Distribution Date;
(xxi) The number of Home Equity Loans in each Group
outstanding at the beginning and at the end of the related Remittance
Period;
(xxii) The Pool Principal Balance and Group Principal Balance
of each Group as of the end of the Remittance Period related to such
Distribution Date;
(xxiii) The number and aggregate Principal Balances of Home
Equity Loans in each Group (w) as to which the Monthly Payment is
delinquent for 30-59 days, 60-89 days and 90 or more days,
respectively, (x) that have become REO Properties, in each case as of
the end of the preceding Remittance Period, (y) that are in foreclosure
and (z) the Mortgagor of which is the subject of any bankruptcy or
insolvency proceeding;
(xxiv) The unpaid principal amount of all Home Equity Loans in
each Group that became Liquidated Loans during such Remittance Period;
(xxv) The Net Liquidation Proceeds received during such
Remittance Period for each Group;
(xxvi) The cumulative losses on the Home Equity Loans in each
Group;
(xxvii) The book value of any real estate acquired through
foreclosure or grant of a deed in lieu of foreclosure;
(xxviii) Reserved;
(xxix) Reserved;
(xxx) The Delinquency Percentage for each Group in respect of
such Distribution Date; and
(xxxi) The amount of any Cross-Collateralization Payment,
Cross-Collateralization Reserve Deposit, Cross-Collateralization
Reserve Release Amount and the amount on deposit in the
Cross-Collateralization Reserve Account for each Group on such
Distribution Date.
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In the case of information furnished pursuant to clauses (ii), (x) and
(xiv) above, the amounts shall be expressed, in a separate section of the
report, as a dollar amount for each Note for each $1,000 original dollar amount
as of the Cut-Off Date.
In addition, the Indenture Trustee shall forward the Indenture
Trustee's Statement to Noteholders to each Noteholder, the Rating Agencies,
[Bloomberg (at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇
▇▇▇▇▇▇)] and [Intex Solutions (at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇)] on the related Distribution Date. The
Indenture Trustee may fully and conclusively rely upon and shall have no
liability with respect to information provided by the Servicer.
To the extent that there are inconsistencies between the telecopy of
the Indenture Trustee's Statement to Noteholders and the hard copy thereof, the
Servicer may rely upon the latter.
(b) The Indenture Trustee shall prepare or cause to be prepared
(in a manner consistent with the treatment of the Notes as indebtedness of the
Trust, or as may be otherwise required by Section 3.21 herein) Internal Revenue
Service Form 1099 (or any successor form) and any other tax forms required to be
filed or furnished to Noteholders in respect of distributions by the Indenture
Trustee (or the Paying Agent) on the Notes and shall file and distribute such
forms as required by law.
(c) The Servicer and the Indenture Trustee shall furnish to each
Noteholder and to the Insurer (if requested in writing), during the term of this
Agreement, such periodic, special or other reports or information, whether or
not provided for herein, as shall be necessary, reasonable or appropriate with
respect to the Noteholder or the Insurer, as the case may be, or otherwise with
respect to the purposes of this Agreement, all such reports or information to be
provided by and in accordance with such applicable instructions and directions
(if requested in writing) as the Noteholder or the Insurer, as the case may be,
may reasonably require; provided that the Servicer and the Indenture Trustee
shall be entitled to be reimbursed by such Noteholder or the Insurer, as the
case may be, for their respective fees and actual expenses associated with
providing such reports, if such reports are not generally produced in the
ordinary course of their respective businesses or readily obtainable.
(d) Reports and computer tapes furnished by the Servicer pursuant
to this Agreement shall be deemed confidential and of a proprietary nature, and
shall not be copied or distributed except to the extent provided in this
Agreement and to the extent required by law or to the Rating Agencies, the
Depositor, the Insurer's reinsurers, parent, regulators, liquidity providers and
auditors and to the extent the Seller instructs the Indenture Trustee in writing
to furnish information regarding the Trust or the Home Equity Loans to
third-party information providers. No Person entitled to receive copies of such
reports or tapes or lists of Noteholders shall use the information therein for
the purpose of soliciting the customers of the Seller or for any other purpose
except as set forth in this Agreement.
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Section 5.04 CROSS-COLLATERALIZATION RESERVE ACCOUNTS.
(a) The Indenture Trustee shall establish and maintain three
separate trust accounts in respect of Group I, Group II and Group III (the
"Group I Cross-Collateralization Reserve Account", the "Group II
Cross-Collateralization Reserve Account" and the "Group III
Cross-Collateralization Reserve Account," respectively, each, a
"Cross-Collateralization Reserve Account" and, together, the
"Cross-Collateralization Reserve Accounts"), titled "____________, as
Indenture Trustee, in trust for the registered holders Centex Home Equity
Loan Asset-Backed Notes and the Insurer, and as Paying Agent for the
Transferor in respect of the Ownership Interest, as their interests may
appear, Series 2000-__ Group [1][2][3] Cross-Collateralization Reserve
Account." Each Cross-Collateralization Reserve Account shall be an Eligible
Account.
On each Distribution Date, the Indenture Trustee shall deposit any
Cross-Collateralization Reserve Deposit for a Group and such Distribution Date
in the Cross-Collateralization Reserve Account for such Group. The amounts on
deposit, if any, in each Cross-Collateralization Reserve Account will be used to
make Cross-Collateralization Payments in respect of each other Class of Notes,
as provided in subsections (b)-(d) below. Amounts may be withdrawn or released
from the Cross-Collateralization Reserve Accounts solely in accordance with
subsections (b)-(e) of this Section 5.04. Amounts on deposit in each
Cross-Collateralization Reserve Account may be invested in Eligible Investments
pursuant to Section 5.06 below. Any investment earnings on such amounts will be
retained in the related Cross-Collateralization Reserve Account.
(b) On any Distribution Date on which the Note Principal Balance
of the Notes in a Class (after giving effect to payments in respect of principal
of such Notes, including any Cross-Collateralization Payments to be made from
Excess Available Funds for the other Group(s), but before giving effect to
withdrawals from the Cross-Collateralization Reserve Account for the other
Group(s), on such Distribution Date) exceeds the Group Principal Balance for
such Group as of the end of the related Remittance Period, the Indenture Trustee
shall withdraw from the Cross-Collateralization Reserve Account for each other
Group an amount in the aggregate equal to the lesser of (a) the
Undercollateralization Amount, and (b) the amount on deposit in the related
Cross-Collateralization Reserve Account and apply such withdrawn amount as a
Cross-Collateralization Payment in accordance with Section 5.01(a). The amount
to be withdrawn from each Cross-Collateralization Reserve Account is determined
pursuant to Section 5.04(d)(2) below.
(c) On any Distribution Date on which the sum of any Interest
Deficiency and Insurer Reimbursement Deficiency, in each case with respect to a
Group and such Distribution Date, exceeds the amount of Excess Available Funds
for the other Group(s) and Distribution Date after application of such Excess
Available Funds to any Cross-Collateralization Payment (such excess, the
"Deficiency Excess"), the Indenture Trustee shall withdraw from each other
Cross-Collateralization Reserve Account an amount equal in the aggregate to such
Deficiency Excess and apply such withdrawn amount as a Cross-Collateralization
Payment in accordance with Section 5.01(a).
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(d) (1) Any Cross-Collateralization Payments shall be made
first from all Excess Available Funds and then from amounts on deposit
in the Cross-Collateralization Reserve Accounts.
(2) If two Groups will make Cross-Collateralization Payments,
each contributing Group will contribute to the amount calculated for
the receiving Group in accordance with clause (b) of the definition of
"Cross Collateralization Payment" pro rata, based on the amount of
Excess Available Funds for each contributing Group, and if required,
based on the amounts on deposit in the Cross-Collateralization Reserve
Account of each contributing Group. Alternatively, if one Group will
make a Cross-Collateralization Payment, each receiving Group shall
share, pro rata, the Excess Available Funds and if required, the
amounts withdrawn from the Cross-Collateralization Reserve Account, of
the contributing Group, based on the amount calculated for each
receiving Group in accordance with clause (b) of the definition of
"Cross Collateralization Payment".
(e) On any Distribution Date on which the amounts on deposit in a
Cross-Collateralization Reserve Account for a Group exceed the Required
Cross-Collateralization Reserve Amount with respect to such Group and
Distribution Date (after giving effect to all distributions on such Distribution
Date), the Indenture Trustee shall withdraw an amount equal to the
Cross-Collateralization Reserve Release Amount for such Group and Distribution
Date, and distribute such Cross-Collateralization Reserve Release Amount to the
Transferor in respect of the Transferor Interest.
Section 5.05 DISTRIBUTION ACCOUNT. The Indenture Trustee shall
establish an account, which includes three separate subaccounts into which
amounts in respect of each Group will be separately deposited (the "Distribution
Account"), titled "________________, as Indenture Trustee, in trust for the
registered holders of Centex Home Equity Loan Asset-Backed Notes and the
Insurer, and as Paying Agent for the Transferor in respect of the Ownership
Interest, as their interests may appear, Series 2000-__ Distribution Account."
The Distribution Account shall be an Eligible Account. The Indenture Trustee
shall deposit any amounts representing payments on and any collections in
respect of the Home Equity Loans received by it immediately following receipt
thereof to the appropriate subaccount in the Distribution Account including,
without limitation, all amounts (i) withdrawn by the Servicer from the Principal
and Interest Account pursuant to Sections 3.03 or 3.04 herein for deposit to the
Distribution Account, (ii) drawn under any Insurance Policy in respect of an
Insured Payment, or (iii) received by it in respect of a Cross-Collateralization
Payment. Amounts on deposit in the Distribution Account may be invested in
Eligible Investments pursuant to Section 5.06 below.
Section 5.06 INVESTMENT OF ACCOUNTS.
(a) So long as no Event of Servicing Termination shall have
occurred and be continuing, and consistent with any requirements of the Code,
all or a portion of any Account
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held by the Indenture Trustee shall be invested and reinvested by the
Indenture Trustee, as directed in writing by the Servicer, in one or more
Eligible Investments bearing interest or sold at a discount. If an Event of
Servicing Termination shall have occurred and be continuing or if the
Servicer does not provide investment directions, the Indenture Trustee shall
invest all Accounts in Eligible Investments described in paragraph (vi) of
the definition of Eligible Investments. No such investment shall mature later
than (i) the Business Day immediately preceding the next Distribution Date,
in the case of the Distribution Account, (ii) the Monthly Remittance Date
immediately preceeding the Distribution Date, in the case of the Principal
and Interest Account, or (iii) the third Business Day immediately preceding
the next Distribution Date, in the case of the Cross-Collateralization
Reserve Accounts (except that, in the case of the Distribution Account, (i)
if such Eligible Investment is an investment described in item (vi) of
Eligible Investments or an obligation of the Indenture Trustee, then such
Eligible Investment shall mature not later than such Distribution Date and
(ii) any other date as may be approved by the Rating Agencies and the
Insurer).
(b) If any amounts are needed for disbursement from any Account
held by the Indenture Trustee and sufficient uninvested funds are not available
to make such disbursement, the Indenture Trustee shall cause to be sold or
otherwise converted to cash a sufficient amount of the investments in such
Account.
(c) The Indenture Trustee shall not in any way be held liable for
the selection of Eligible Investments or by reason of any investment loss or
charge or any insufficiency in any Account held by the Indenture Trustee
resulting from any investment loss on any Eligible Investment included therein
unless the Indenture Trustee's failure to perform in accordance with this
Section is the cause of such loss or charge (except to the extent that the
Indenture Trustee is the obligor and has defaulted thereon or as provided in
subsection (b) of this Section). The Indenture Trustee shall have no liability
in respect of losses incurred as a result of the liquidation of any Eligible
Investment prior to its stated maturity or the failure of the Servicer to
provide timely written investment direction. In the absence of written
investment direction, the Indenture Trustee shall invest funds in the Accounts
in the Eligible Investment described in clause (vi) of the definition thereof.
(d) The Indenture Trustee shall invest and reinvest funds in the
Accounts held by the Indenture Trustee, to the fullest extent practicable, in
such manner as the Servicer shall from time to time direct as set forth in
Section 5.06(a), but only in one or more Eligible Investments.
(e) So long as no Event of Servicing Termination shall have
occurred and be continuing, all net income and gain realized from investment of,
and all earnings on, funds deposited in the Principal and Interest Account and
the Distribution Account shall be for the benefit of the Servicer as servicing
compensation (in addition to the Servicing Fee), and shall (i) in the case of
the Distribution Account, be subject to withdrawal by the Servicer on or before
the first Business Day of the month following the month in which such income or
gain is received; and (ii) in the case of the Principal and Interest Account, be
subject to withdrawal by the Servicer immediately following remittance of the
Monthly Remittance Amount on the Monthly
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Remittance Date. The Servicer shall deposit in the Principal and Interest
Account or the Distribution Account, as the case may be, the amount of any
loss incurred in respect of any Eligible Investment held therein which is in
excess of the income and gain thereon immediately upon realization of such
loss from its own funds, without any right to reimbursement therefore.
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ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
Section 6.01 LIABILITY OF THE SELLER, THE SERVICER AND THE DEPOSITOR.
The Seller and the Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the Seller
or Servicer, as the case may be, herein. The Depositor shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Depositor.
Section 6.02 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SELLER, THE SERVICER OR THE DEPOSITOR. Any corporation into
which the Seller, the Servicer or Depositor may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Seller, the Servicer or the Depositor shall be a party, or any corporation
succeeding to the business of the Seller, the Servicer or the Depositor, shall
be the successor of the Seller, the Servicer or the Depositor, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; PROVIDED, HOWEVER, that the successor Servicer shall satisfy
all the requirements of Section 7.02 with respect to the qualifications of a
successor Servicer, and shall be approved by the Insurer.
Section 6.03 LIMITATION ON LIABILITY OF THE SERVICER AND OTHERS.
Neither the Servicer nor any of the directors or officers or employees or agents
of the Servicer shall be under any liability to the Trust or the Noteholders for
any action taken or for refraining from the taking of any action by the Servicer
in good faith pursuant to this Agreement, or for errors in judgment; PROVIDED,
HOWEVER, that this provision shall not protect the Servicer or any such Person
against any liability which would otherwise be imposed by reason of its willful
misfeasance, bad faith or negligence in the performance of duties of the
Servicer or by reason of its reckless disregard of its obligations and duties of
the Servicer hereunder; PROVIDED, FURTHER, that this provision shall not be
construed to entitle the Servicer to indemnity in the event that amounts
advanced by the Servicer to retire any senior lien exceed Net Liquidation
Proceeds realized with respect to the related Home Equity Loan. The Servicer and
any director or officer or employee or agent of the Servicer may rely in good
faith on any document of any kind PRIMA FACIE properly executed and submitted by
any Person respecting any matters arising hereunder. The Servicer and any
director or officer or employee or agent of the Servicer shall be indemnified by
the Trust and held harmless against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Notes, other
than any loss, liability or expense related to any specific Home Equity Loan or
Home Equity Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and any loss, liability or
expense incurred by reason of its willful misfeasance, bad faith or negligence
in the performance of duties hereunder or by reason of its reckless disregard of
obligations and duties hereunder. The Servicer may with the consent of the
Insurer (which consent shall not be unreasonably withheld) undertake any such
action which it may deem necessary or desirable in respect of this Agreement,
and the rights and duties of the parties hereto and the interests of the
Noteholders
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hereunder. In such event, the reasonable legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust. The Servicer's right to indemnity or reimbursement
pursuant to this Section 6.03 shall survive any resignation or termination of
the Servicer pursuant to Section 6.04 or 7.01 below with respect to any
losses, expenses, costs or liabilities arising prior to such resignation or
termination (or arising from events that occurred prior to such resignation
or termination). This paragraph shall apply to the Servicer solely in its
capacity as Servicer hereunder and in no other capacities.
Section 6.04 SERVICER NOT TO RESIGN. Subject to the provisions of
Section 6.02, Section 7.01 and Section 7.02 herein, the Servicer shall not
resign from the obligations and duties hereby imposed on it except (i) upon
determination that the performance of its obligations or duties hereunder are no
longer permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it or its subsidiaries or
Affiliates, the other activities of the Servicer so causing such a conflict
being of a type and nature carried on by the Servicer or its subsidiaries or
Affiliates at the date of this Agreement or (ii) upon satisfaction of the
following conditions: (a) the Servicer has proposed a successor servicer to the
Indenture Trustee in writing and such proposed successor servicer is reasonably
acceptable to the Indenture Trustee; (b) each Rating Agency shall have delivered
a letter to the Indenture Trustee prior to the appointment of the successor
servicer stating that the proposed appointment of such successor servicer as
Servicer hereunder will not result in the reduction or withdrawal of the then
current rating of the Notes; and (c) such proposed successor servicer is
reasonably acceptable to the Insurer, as evidenced by a letter to the Indenture
Trustee; PROVIDED, HOWEVER, that no such resignation by the Servicer shall
become effective until such successor servicer or, in the case of (i) above, the
Indenture Trustee shall have assumed the Servicer's responsibilities and
obligations hereunder or the Indenture Trustee shall have designated a successor
servicer in accordance with Section 7.02 below. Any such resignation shall not
relieve the Servicer of responsibility for any of the obligations specified in
Sections 7.01 and 7.02 below as obligations that survive the resignation or
termination of the Servicer. Any such determination permitting the resignation
of the Servicer pursuant to clause (i) above shall be evidenced by an Opinion of
Counsel to such effect delivered to the Indenture Trustee and the Insurer.
Section 6.05 DELEGATION OF DUTIES. In the ordinary course of business,
the Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, who agrees to conduct such duties in accordance
with standards comparable to those set forth in Section 3.01 herein. Such
delegation shall not relieve the Servicer of its liabilities and
responsibilities with respect to such duties and shall not constitute a
resignation within the meaning of Section 6.04 above. The Servicer shall provide
the Insurer and the Indenture Trustee with written notice prior to the
delegation of any of its duties to any Person other than any of the Servicer's
Affiliates or their respective successors and assigns, and the Insurer shall
have consented to the appointment of any such Subservicer (which consent shall
not have been unreasonably withheld).
Section 6.06 INDEMNIFICATION BY THE SERVICER. The Servicer shall
indemnify and hold harmless each of the Trust, the Depositor and the Indenture
Trustee and its officers, directors,
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agents and employees from and against any loss, liability, expense, damage or
injury suffered or sustained by reason of the Servicer's willful misfeasance,
bad faith or negligence in the performance of its activities in servicing or
administering the Home Equity Loans pursuant to this Agreement, including,
but not limited to, any judgment, award, settlement, reasonable fees of,
counsel of its selection and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim
related to the Servicer's misfeasance, bad faith or negligence. Any such
indemnification shall not be payable from the assets of the Trust. The
provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof. The provisions of this
Section 6.06 shall survive termination of the Agreement or the earlier of the
resignation or removal of the Servicer or the Indenture Trustee, as the case
may be. In addition, the Servicer agrees to indemnify the Indenture Trustee
pursuant to Section [6.7] of the Indenture.
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ARTICLE VII
SERVICING TERMINATION
Section 7.01 EVENTS OF SERVICING TERMINATION.
If any one of the following events ("Events of Servicing Termination")
shall occur and be continuing:
(i) The Servicer shall (a) apply for or consent to the
appointment of a receiver, trustee, liquidator or custodian or similar
entity with respect to itself or its property, (b) admit in writing its
inability to pay its debts generally as they become due, (c) make a
general assignment for the benefit of creditors, (d) be adjudicated a
bankrupt or insolvent, (e) commence a voluntary case under the federal
bankruptcy laws of the United States of America or any state bankruptcy
law or similar laws or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief or
seeking to take advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed against it in
any bankruptcy, reorganization or insolvency proceeding or (f) take
corporate action for the purpose of effecting any of the foregoing; or
(ii) If without the application, approval or consent of the
Servicer, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking in respect of the Servicer
an order for relief or an adjudication in bankruptcy, reorganization,
dissolution, winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a trustee,
receiver, liquidator or custodian or similar entity with respect to the
Servicer or of all or any substantial part of its assets, or other like
relief in respect thereof under any bankruptcy or insolvency law, and,
if such proceeding is being contested by the Servicer in good faith,
the same shall (A) result in the entry of an order for relief or any
such adjudication or appointment or (B) continue undismissed or pending
and unstayed for any period of seventy-five (75) consecutive days; or
(iii) The Servicer shall fail to perform any one or more of
its obligations hereunder and shall continue in default thereof for a
period of thirty (30) days (one (1) Business Day in the case of a delay
in making a payment or deposit required of the Servicer under this
Agreement) after the earlier of (a) actual knowledge of an officer of
the Servicer or (b) receipt of notice from the Indenture Trustee or the
Insurer of said failure; PROVIDED, HOWEVER, that if the Servicer can
demonstrate to the reasonable satisfaction of the Insurer that it is
diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Insurer; or
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(iv) The Servicer shall fail to cure any breach of any of its
representations and warranties set forth in Section 2.03 or in the
other Transaction Documents which materially and adversely affects the
interests of the Owners or the Insurer which remains unremedied for a
period of sixty (60) days after the earlier of the Servicer's discovery
or receipt of notice thereof; PROVIDED, HOWEVER, that if the Servicer
can demonstrate to the reasonable satisfaction of the Insurer that it
is diligently pursuing remedial action, then the cure period may be
extended with the written approval of the Insurer; or
(v) The merger, consolidation or other combination of the
Servicer with or into any other entity, unless (1) the Servicer or an
Affiliate of the Servicer is the surviving entity of such combination
or (2) the surviving entity (A) is servicing at least $300,000,000 of
home equity loans that are similar to the Home Equity Loans, (B) has
Tangible Net Worth of not less than $35,000,000 (as determined in
accordance with generally acceptable account principles), (C) is
consented to by the Insurer (such consent not to be unreasonably
withheld) and (D) agrees to assume the Servicer's obligations
hereunder; or
(vi) The failure of the Servicer to satisfy the Servicer
Termination Test; or
(vii) The Servicer shall be declared in default of its credit
facility by its credit facility provider, which default, if left
uncured, would result in termination or acceleration of amounts owed
thereunder; or
(viii) Centex Corporation or its successors shall fail to own,
directly or indirectly, at least 51% of the Servicer unless (a) the
Servicer shall be rated at least investment grade by each Rating Agency
or (b) the Servicer shall have at all times committed financing
capacity in a total amount of at least three times the Servicer's
average loan originations funded during the immediately preceding three
calendar months.
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied within the applicable grace period, the
Indenture Trustee shall, at the direction of the Insurer or the Holders of Notes
representing not less than 51% of the aggregate Note Principal Balance of all
Classes of Notes (with the consent of the Insurer, so long as no Insurer Default
exists), by notice then given in writing to the Servicer (and to the Indenture
Trustee if given by Holders of Notes), terminate all of the rights and
obligations of the Servicer as servicer under this Agreement. Any such notice to
the Servicer shall also be given to each Rating Agency, the Depositor, the Trust
and the Insurer. On or after the receipt by the Servicer of such written notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Notes or the Home Equity Loans or otherwise, shall pass to and be
vested in the Indenture Trustee pursuant to and under this Section 7.01; and,
without limitation, the Indenture Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of each
Home Equity Loan and
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related documents or otherwise. The Servicer agrees to cooperate with the
Indenture Trustee in effecting the termination of the responsibilities and
rights of the Servicer hereunder, including, without limitation, the transfer
to the Indenture Trustee for the administration by it of all cash amounts
that shall at the time be held by the Servicer and to be deposited by it in
Principal and Interest Account, or that have been deposited by the Servicer
in the Principal and Interest Account or thereafter received by the Servicer
with respect to the Home Equity Loans. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Mortgage Files to the successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 7.01 shall be
paid by the predecessor Servicer (or if the predecessor Servicer is the
Indenture Trustee, the initial Servicer) upon presentation of reasonable
documentation of such costs and expenses.
[In addition, upon the occurrence of any Trigger Event, as provided in
the Insurance Agreement, and upon the direction of the Insurer in connection
therewith, the Indenture Trustee shall terminate the rights and responsibilities
of the Servicer hereunder and shall appoint a successor Servicer in accordance
with the provisions of Section 7.02.]
Section 7.02 INDENTURE TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 7.01 or resigns pursuant to 6.04 herein, the
Indenture Trustee or a previously agreed upon successor Servicer shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer by the terms and provisions hereof. The Indenture Trustee
will immediately assume all obligations of the Servicer to make Delinquency
Advances. As compensation therefor, the Indenture Trustee shall be entitled to
such compensation as the Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the above, (i) if the
Indenture Trustee is unwilling to act as successor Servicer, or (ii) if the
Indenture Trustee is legally unable so to act, the Indenture Trustee shall
appoint or petition a court of competent jurisdiction to appoint, any
established housing and home finance institution, bank or other home equity loan
or home equity loan servicer which has been designated as an approved
seller-servicer by FNMA or FHLMC for first and second home equity loans and
having a net worth of not less than $50,000,000 (or such lower level as may be
acceptable to the Insurer) as determined in accordance with generally accepted
accounting practices as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder; PROVIDED that any such successor Servicer shall be
acceptable to the Insurer, as evidenced by the Insurer's prior written consent;
and PROVIDED, FURTHER, that the appointment of any such successor Servicer will
not result in the qualification, reduction or withdrawal of the ratings assigned
to the Notes by the Rating Agencies. Pending appointment of a successor to the
Servicer hereunder, unless the Indenture Trustee is prohibited by law from so
acting, the Indenture Trustee shall act in such capacity as hereinabove
provided. Notwithstanding anything herein or in the Indenture to the contrary,
in no event shall the Indenture Trustee be held liable for any Servicing Fee or
for any differential in the amount necessary to induce any successor servicer to
act as successor servicer
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under this Agreement and the transactions set forth or provided for therein.
In connection with such appointment and assumption, the successor shall be
entitled to receive compensation out of payments on Home Equity Loans in an
amount equal to the compensation which the Servicer would otherwise have
received pursuant to Section 3.12 herein (or such lesser compensation as the
Indenture Trustee and such successor shall agree). The appointment of a
successor Servicer shall not affect any liability of the predecessor Servicer
which may have arisen under this Agreement prior to its termination as
Servicer to pay any deductible under an insurance policy pursuant to Section
3.06 herein or to indemnify any party pursuant to Section 6.06), nor shall
any successor Servicer be liable for any acts or omissions of the predecessor
Servicer or for any breach by such Servicer of any of its representations or
warranties contained herein or in any related document or agreement. The
Indenture Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
(b) Any successor, including the Indenture Trustee, to the
Servicer as servicer shall during the term of its service as servicer (i)
continue to service and administer the Home Equity Loans for the benefit of the
Trust, and (ii) maintain in force an insurance policy or policies of insurance
covering errors and omissions in the performance of its obligations as Servicer
hereunder and a fidelity bond in respect of its officers, employees and agents
to the same extent as the Servicer is so required pursuant to Section 3.17
herein.
Section 7.03 WAIVER OF DEFAULTS. The Insurer or the or the Holders of
Notes representing not less than 51% of the aggregate Note Principal Balance of
all Classes of Notes, with the consent of the Insurer (which consent shall not
be unreasonably withheld) may, on behalf of all Noteholders, waive any events
permitting removal of the Servicer as servicer pursuant to this Article VII,
PROVIDED, HOWEVER, that the Insurer and the Holders of Notes representing not
less than 51% of the aggregate Note Principal Balance of all Classes of Notes
may not waive a default in making a required distribution on a Note without the
consent of the Holder of such Note. Upon any waiver of a past default, such
default shall cease to exist and any Event of Servicing Termination arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto except to the extent expressly so waived.
Notice of any such waiver shall be given by the Indenture Trustee to the Rating
Agencies.
Section 7.04 NOTIFICATION TO NOTEHOLDERS. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VII or
Section 6.04 above, the Indenture Trustee shall give prompt written notice
thereof to the Noteholders at their respective addresses appearing in the Note
Register, the Insurer and each Rating Agency.
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ARTICLE VIII
TERMINATION
Section 8.01 TERMINATION.
(a) The respective obligations and responsibilities of the
Depositor, the Seller, the Servicer, the Trust and the Indenture Trustee created
hereby (other than the obligation of the Indenture Trustee to make certain
payments to Noteholders after the Final Distribution Date and the obligation of
the Servicer to send certain notices as hereinafter set forth) shall terminate
upon notice to the Indenture Trustee of the later of (A) payment in full of all
amounts owing to the Insurer unless the Insurer shall otherwise consent and (B)
the earliest of (i) the final payment or other liquidation of the last Home
Equity Loan remaining in the Trust; (ii) the optional purchase by the Servicer
of the Home Equity Loans as described below and (iii) the Final Distribution
Date. Notwithstanding the forgoing, in no event shall the trust created hereby
continue beyond the expiration of 21 years from the date of the last survivor of
the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United States
to the Court of St. ▇▇▇▇▇, living on the date hereof.
(b) The Servicer may, at its option, terminate this Agreement on
any Monthly Remittance Date on or after the Clean-Up Call Date by purchasing all
of the outstanding Home Equity Loans and REO Properties at a price equal to the
sum of the outstanding Pool Principal Balance and accrued and unpaid interest
thereon at the weighted average of the Coupon Rates through the end of the
Remittance Period preceding the final Distribution Date, together with all
amounts due and owing to the Insurer (the "Termination Price").
In connection with any such purchase pursuant to the preceding
paragraph, the Servicer shall deposit in the Distribution Account all amounts
then on deposit in the Principal and Interest Account (less amounts permitted to
be withdrawn by the Servicer pursuant to Section 3.03), which deposit shall be
deemed to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the
Distribution Account on the Monthly Remittance Date before such Distribution
Date of the Termination Price.
(c) Notice of any termination, specifying the Distribution Date
(which shall be a date that would otherwise be a Distribution Date) upon which
the Noteholders may surrender their Notes to the Indenture Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Indenture Trustee (upon receipt of written directions from the Servicer, if the
Servicer is exercising its right to transfer of the Home Equity Loans, given not
later than the first day of the month preceding the month of such final
distribution) to the Insurer and to the Servicer by letter to the Noteholders
mailed not earlier than the 15th day and not later than the 25th day of the
month next preceding the month of such final distribution specifying (i) the
Distribution Date upon which final distribution of the Notes will be made upon
presentation and surrender of Notes at the office or agency of the Indenture
Trustee therein designated, (ii) the
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amount of any such final distribution and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable,
distributions being made only upon presentation and surrender of the Notes at
the office or agency of the Indenture Trustee therein specified.
(d) Upon presentation and surrender of the Notes, the Indenture
Trustee shall cause to be distributed to the Holders of the Notes on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Notes and to the extent that funds are available
for such purpose, an amount equal to the amount required to be distributed to
Noteholders pursuant to Section 5.01 for such Distribution Date. On the final
Distribution Date prior to having made the distributions called for above, the
Indenture Trustee shall, based upon the information set forth in the Servicing
Certificate for such Distribution Date, withdraw from the Distribution Account
and remit to the Insurer the lesser of (x) the amount available for distribution
on such final Distribution Date, net of any portion thereof necessary to pay the
Noteholders pursuant to Section 5.01(a) and any amounts owing to the Indenture
Trustee in respect of the Indenture Trustee Fee and (y) the unpaid amounts due
and owing to the Insurer pursuant to the Insurance Agreement.
(e) In the event that all of the Noteholders shall not surrender
their Notes for final payment and cancellation on or before such final
Distribution Date, the Indenture Trustee shall promptly following such date
cause all funds in the Distribution Account not distributed in final
distribution to Noteholders, to be withdrawn therefrom and credited to the
remaining Noteholders by depositing such funds in a separate escrow account for
the benefit of such Noteholders, and the Servicer (if the Servicer has exercised
its right to purchase the Home Equity Loans) or the Indenture Trustee (in any
other case) shall give a second written notice to the remaining Noteholders to
surrender their Notes for cancellation and receive the final distribution with
respect thereto. If within nine months after the second notice all the Notes
shall not have been surrendered for cancellation, the Transferor Interest will
be entitled to all unclaimed funds and other assets which remain subject hereto
and the Indenture Trustee upon transfer of such funds shall be discharged of any
responsibility for such funds and the Noteholders shall look to the holder of
the Transferor Interest for payment.
(f) Upon payment of all amounts owed under any Insurance Policy
and cancellation of the Notes, the Indenture Trustee shall provide the Insurer
notice of cancellation of the Notes and surrender the Insurance Policy to the
Insurer.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01 AMENDMENT.
(a) This Agreement may be amended from time to time by the
Depositor, the Seller, the Servicer, the Trust and the Indenture Trustee by
written agreement, without the consent of any of the Noteholders, but only with
the consent of the Insurer (which consent shall not be unreasonably withheld)
(i) to cure any ambiguity, (ii) to correct any defective provisions or to
correct or supplement any provisions herein that may be inconsistent with any
other provisions herein, (iii) to add to the duties of the Servicer, (iv) to add
any other provisions with respect to matters or questions arising under this
Agreement or any Insurance Policy, as the case may be, which shall not be
inconsistent with the provisions of this Agreement, (v) to add or amend any
provisions of this Agreement as required by any Rating Agency or any other
nationally recognized statistical rating agency in order to maintain or improve
any rating of the Notes (it being understood that, after obtaining the ratings
in effect on the Closing Date, neither the Indenture Trustee, the Seller, the
Depositor nor the Servicer is obligated to obtain, maintain or improve any such
rating), or (vi) to amend the definition of Specified O/C Amount; PROVIDED,
HOWEVER, that as evidenced by an Opinion of Counsel (at the expense of the party
requesting such amendment) in each case such action shall not, (1) have any
material adverse tax consequence with respect to such Noteholder, the Insurer or
the Trust or (2) adversely affect in any material respect the interest of any
Noteholder or the Insurer, PROVIDED, FURTHER, that the amendment shall not be
deemed to adversely affect in any material respect the interests of the
Noteholder or the Insurer, and no Opinion of Counsel to that effect shall be
required by this clause (2) if the Person requesting the amendment obtains a
letter from the Rating Agency stating that the amendment would not result in the
downgrading or withdrawal of the respective ratings then assigned to the Notes
without regard to any Insurance Policy.
(b) This Agreement also may be amended from time to time by the
Seller, the Servicer, the Depositor, the Trust and the Indenture Trustee, with
the consent of the Holders of Notes representing not less than 51% of the
aggregate Note Principal Balance of the Class of Notes affected thereby, or 51%
of the aggregate Note Principal Balance of all Classes of Notes if all such
Classes are affected thereby, and with the consent of the Insurer (which consent
shall not be unreasonably withheld), for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of this Agreement
or of modifying in any manner the rights of the Noteholders or the Transferor in
respect of the Ownership Interest; PROVIDED, HOWEVER, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing of, payments
on the Notes or distributions or payments under any Insurance Policy which are
required to be made on the Notes or without the consent of the Holder of such
Notes or (ii) reduce the aforesaid percentage required to consent to any such
amendment, without the consent of the Holders of all Notes then outstanding.
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Prior to the execution of any such amendments, the Indenture Trustee
shall furnish written notification of the substance of such amendment to each
Rating Agency. In addition, promptly after the execution of any such amendment
made with the consent of the Noteholders, the Indenture Trustee shall furnish
written notification of the substance of such amendment to each Noteholder and
fully executed original counterparts of the instruments effecting such amendment
to the Insurer.
(c) It shall not be necessary for the consent of Noteholders under
this Section 9.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, each of the
Indenture Trustee and the Owner Trustee shall be entitled to receive and
conclusively rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and all conditions
precedent to the execution of such amendment have been met. The Indenture
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Indenture Trustee's own rights, duties, indemnities or immunities
under this Agreement.
Section 9.02 RECORDATION OF AGREEMENT.
To the extent permitted by applicable law, this Agreement, or a
memorandum thereof if permitted under applicable law, is subject to recordation
in all appropriate public offices for real property records in all of the
counties or other comparable jurisdictions in which any or all of the Mortgaged
Properties are situated, and in any other appropriate public recording office or
elsewhere, such recordation to be effected by the Servicer at the Noteholders'
expense on direction of the Indenture Trustee or the Holders of Notes
representing not less than 51% of the aggregate Note Principal Balance of all
Classes of Notes, but only when accompanied by an opinion of counsel to the
effect that such recordation materially and beneficially affects the interests
of the Noteholders or is necessary for the administration or servicing of the
Home Equity Loans.
Section 9.03 DURATION OF AGREEMENT.
This Agreement shall continue in existence and effect until terminated
as herein provided.
Section 9.04 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN
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ACCORDANCE WITH SUCH LAWS, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS
OF LAW.
Section 9.05 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 overnight mail, certified mail or registered mail, postage prepaid, to: (i)
in the case of the Seller, the Trust or the Servicer, _________________,
Attention: __________, ________________________, (ii) in the case of the
Indenture Trustee, _________________, (iii) in the case of the Insurer,
_____________________________, (iv) in the case of ▇▇▇▇▇'▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Attention: Residential Mortgage Monitoring,
(v) in the case of Standard & Poor's, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, (vi) in the case of the Depositor, ________________________________
and (vii) in the case of the Noteholders, as set forth in the Note Register.
Any such notices shall be deemed to be effective with respect to any party
hereto upon the receipt of such notice by such party, except that notices to
the Noteholders shall be effective upon mailing or personal delivery.
Section 9.06 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other covenants,
agreements, provisions or terms of this Agreement.
Section 9.07 NO PARTNERSHIP.
Nothing herein contained shall be deemed or construed to create any
partnership or joint venture between the parties hereto and the services of the
Servicer shall be rendered as an independent contractor.
Section 9.08 COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same Agreement.
Section 9.09 SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of and be binding upon the
Servicer, the Seller, the Trust, the Indenture Trustee and the Noteholders and
their respective successors and permitted assigns. The Insurer is an express
third party beneficiary of this Agreement.
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Section 9.10 HEADINGS.
The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of
this Agreement.
Section 9.11 INDENTURE TRUSTEE.
All privileges, rights and immunities given to the Indenture Trustee in
the Indenture are hereby extended to and applicable to the Indenture Trustee's
obligations hereunder.
Section 9.12 REPORTS TO RATING AGENCIES.
The Indenture Trustee shall provide to each Rating Agency copies of
statements, reports and notices, to the extent received or prepared by the
Servicer hereunder, as follows:
(i) copies of amendments to this Agreement;
(ii) notice of any substitution or repurchase of any Home
Equity Loans;
(iii) notice of any termination, replacement, succession,
merger or consolidation of either the Servicer or the Trust;
(iv) notice of final payment on the Notes;
(v) notice of any Event of Servicing Termination;
(vi) copies of the annual independent auditor's report
delivered pursuant to Section 3.14 herein, and copies of any compliance
reports delivered by the Servicer hereunder including Section 3.13
herein; and
(vii) copies of any Servicing Certificate pursuant to Section
5.03 herein.
Section 9.13 INCONSISTENCIES AMONG TRANSACTION DOCUMENTS.
In the event certain provisions of a Transaction Document conflict with
the provisions of this Sale and Servicing Agreement, the parties hereto agree
that the provisions of this Sale and Servicing Agreement shall be controlling.
Section 9.14 RIGHTS OF THE INSURER TO EXERCISE RIGHTS OF NOTEHOLDERS.
By accepting its Note, each Noteholder agrees that unless an Insurer
Default exists, the Insurer shall have the right to exercise all rights of the
Noteholders as specified under this Agreement without any further consent of the
Noteholders. Any right conferred to the Insurer
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hereunder shall be suspended and shall run to the benefit of the Noteholders
during any period in which there exists an Insurer Default.
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IN WITNESS WHEREOF, the following have caused their names to be signed
by their respective officers thereunto duly authorized, as of the day and year
first above written, to this Sale and Servicing Agreement.
CENTEX HOME
EQUITY LOAN TRUST 2000-__,
By: ____________________________, not in
its individual capacity but solely as
Owner Trustee
By: ________________________________
Name:
Title:
CENTEX CREDIT CORPORATION,
d/b/a CENTEX HOME EQUITY CORPORATION
as Seller and Servicer
By: ________________________________
Name:
Title:
CHEC FUNDING, LLC
as Depositor
By: __________________________________
Name:
Title:
____________________________________________
as Indenture Trustee
By: __________________________________
Name:
Title:
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THE STATE OF ________ )
)
COUNTY OF ________ )
BEFORE ME, on _____________ ___, 2000, the undersigned authority, a
Notary Public, on this day personally appeared __________________, known to me
to be a person and officer whose name is subscribed to the foregoing instrument
and acknowledged to me that the same was the act of the said
__________________________ not in its individual capacity but in its capacity as
Owner Trustee of CENTEX HOME EQUITY LOAN TRUST 2000-__, as the Trust, and that
he executed the same as the act of such corporation for the purpose and
consideration therein expressed, and in the capacity therein stated.
-------------------------------
Notary Public, State of _____________