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EXHIBIT 4.1
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CITYSCAPE CORP.
as Seller, Servicer and Claims Administrator
and
---------------------------------
as Trustee
POOLING AND SERVICING AGREEMENT
Dated as of __________ __, 199_
Cityscape Loan Trust 199_-__
Pass-Through Certificates 199__-__
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TABLE OF CONTENTS
Page
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PRELIMINARY STATEMENT.....................................................1
ARTICLE ONE DEFINITIONS...........................................2
Section 1.01. Definitions...........................................2
Section 1.02. Interest Calculations................................40
Section 1.03. Determination of Material Adverse Effect.............41
ARTICLE TWO CONVEYANCE OF THE TRUST; ORIGINAL ISSUANCE OF
CERTIFICATES........................................41
Section 2.01. Conveyance of the Trust..............................41
Section 2.02. Conveyance of the Subsequent Mortgage Loans..........45
Section 2.03. Acceptance by Trustee; Repurchase or
Substitution of Mortgage Loans......................49
Section 2.04. Representations and Warranties Regarding the
Seller, Servicer and Claims Administrator...........53
Section 2.05. Representations and Warranties of the Seller
Regarding the Mortgage Loans........................56
Section 2.06. Execution and Authentication of Certificates.........70
Section 2.07. Designation of Certificates; Designation of
Startup Day.........................................70
ARTICLE THREE ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS; CERTIFICATE ACCOUNT..........................71
Section 3.01. Administration of the Trust; Servicing of the
Mortgage Loans......................................71
Section 3.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicers.......................................75
Section 3.03. Termination of Sub-Servicing Agreements..............76
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Section 3.04. Liability of the Servicer............................76
Section 3.05. No Contractual Relationship Between
Sub-Servicers and Trustee or
Certificateholders..................................76
Section 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee...............................77
Section 3.07. Collection of Certain Mortgage Loan Payments.........77
Section 3.08. Sub-Servicing Accounts...............................78
Section 3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts...........................78
Section 3.10. Collection Account...................................79
Section 3.11. Withdrawals from the Collection Account; the
Certificate Account.................................81
Section 3.12. Investment of Funds in the Accounts..................83
Section 3.13. Maintenance of Hazard Insurance and Errors
and Omissions and Fidelity Coverage.................84
Section 3.14. Enforcement of Due-On-Sale Clauses;
Assumption Agreements...............................86
Section 3.15. Realization Upon Defaulted Mortgage Loans............87
Section 3.16. Trustee to Cooperate; Release of Mortgage
Files...............................................89
Section 3.17. Servicing Compensation...............................90
Section 3.18. Reports to the Trustee; Collection Account
Statement...........................................91
Section 3.19. Statement as to Compliance and Financial
Statements..........................................91
Section 3.20. Independent Public Accountants' Servicing
Report..............................................92
Section 3.21. Access to Certain Documentation......................92
Section 3.22. Title, Management and Disposition of REO
Property............................................93
Section 3.23. Compensating Interest................................95
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Section 3.24. Superior Liens.......................................95
Section 3.25. Indemnification......................................96
Section 3.26. Certain Procedures Relating to Successor
Sub-Servicers and Successor Servicers...............97
Section 3.27. Additional Servicing Responsibilities for the
Adjustable Rate Mortgage Loans and the FHA
Loans...............................................98
Section 3.28. Pre-Funding Account..................................98
Section 3.29. Capitalized Interest Account.........................99
Section 3.30. Establishment of FHA Premium Account;
Deposits in FHA Premium Account; Permitted
Withdrawals from FHA Premium Account...............100
Section 3.31. Duties of the Claims Administrator..................101
Section 3.32. Trustee Not to Hold Other FHA Insured Title I
Loans..............................................103
ARTICLE FOUR FLOW OF FUNDS.......................................103
Section 4.01. Establishment of Accounts...........................103
[SECTION 4.02. THE CERTIFICATE INSURANCE POLICY]..................103
Section 4.03. Deposits to, and Transfers Among, the Accounts......106
Section 4.04. Flow of Funds and Distributions.....................106
Section 4.05. Statements to Certificateholders....................110
Section 4.06. Remittance Reports; Delinquency Advances by
the Servicer and Insurance Claims..................114
Section 4.07. Compliance with Withholding Requirements............115
Section 4.08. Excess Claim Amounts................................115
ARTICLE FIVE THE CERTIFICATES....................................116
Section 5.01. The Certificates....................................116
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Section 5.02. Registration of Transfer and Exchange of
Certificate........................................117
Section 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.......................................120
Section 5.04. Persons Deemed Certificateholders...................120
Section 5.05. Book-Entry Certificates.............................120
Section 5.06. Notices to Depositary...............................121
Section 5.07. Definitive Certificates.............................122
ARTICLE SIX THE SELLER, THE SERVICER AND THE CLAIMS
ADMINISTRATOR......................................122
Section 6.01. Liability of the Seller, the Claims
Administrator and the Servicer.....................122
Section 6.02. Merger or Consolidation of the Seller, the
Claims Administrator or the Servicer...............122
Section 6.03. Limitation on Liability of the Seller, the
Servicer and Others................................123
Section 6.04. Limitation on Resignation of the Servicer or
the Claims Administrator; No Assignment or
Delegation of Duties by Servicer...................124
Section 6.05. Rights of the Seller, the Certificateholders
and Others in Respect of the Servicer..............125
Section 6.06. Eligibility Requirements for Servicer...............125
ARTICLE SEVEN DEFAULT.............................................126
Section 7.01. Events of Default...................................126
Section 7.02. Trustee to Act; Appointment of Successor............128
Section 7.03. Notification to Mortgagors and
Certificateholders.................................130
Section 7.04. Additional Remedies of Trustee Upon Event of
Default............................................130
Section 7.05. Waiver of Events of Default.........................131
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ARTICLE EIGHT THE TRUSTEE.........................................131
Section 8.01. Duties of the Trustee...............................131
Section 8.02. Certain Matters Affecting the Trustee...............132
Section 8.03. Trustee Not Liable for Certificates or
Mortgage Loans.....................................134
Section 8.04. Trustee May Own Certificates........................134
Section 8.05. Expenses of Trustee.................................134
Section 8.06. Trustee Eligibility Requirements....................135
Section 8.07. Resignation and Removal of the Trustee..............135
Section 8.08. Successor Trustee...................................136
Section 8.09. Merger or Consolidation of Trustee..................137
Section 8.10. Appointment of Co-Trustee or Separate Trustee.......137
Section 8.11. Trustee Records.....................................138
Section 8.12. Appointment of Office or Agency.....................139
Section 8.13. Exercise of Trustee Powers by [CERTIFICATE
INSURER AND] Certificateholders....................139
[ARTICLE NINE CERTAIN MATTERS REGARDING THE CERTIFICATE
INSURER............................................139
SECTION 9.01. CERTAIN RIGHTS OF THE CERTIFICATE INSURER...........139
SECTION 9.02. TRUSTEE TO ACT SOLELY WITH CONSENT OF THE
CERTIFICATE INSURER................................140
SECTION 9.03. TRUST ESTATE AND ACCOUNTS HELD FOR BENEFIT OF
THE CERTIFICATE INSURER AND THE
CERTIFICATEHOLDERS.................................141
SECTION 9.04. EFFECT OF PAYMENTS BY THE CERTIFICATE
INSURER; SUBROGATION...............................141
SECTION 9.05. NOTICES TO THE CERTIFICATE INSURER..................142
SECTION 9.06. THIRD-PARTY BENEFICIARY............................142]
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ARTICLE TEN TERMINATION.........................................142
Section 10.01. Termination........................................142
Section 10.02. Additional Termination Requirements................145
ARTICLE ELEVEN MISCELLANEOUS PROVISIONS............................145
Section 11.01. Amendment..........................................145
Section 11.02. Recordation of Agreement...........................147
Section 11.03. Limitation on Rights of Certificateholders.........147
Section 11.04. Governing Law; Jurisdiction........................148
Section 11.05. Notices............................................148
Section 11.06. Severability of Provisions.........................149
Section 11.07. Article and Section References.....................149
Section 11.08. Notice to S&P and ▇▇▇▇▇'▇..........................149
Section 11.09. Further Assurances.................................150
Section 11.10. Benefits of Agreement..............................150
Section 11.11. Acts of Certificateholders.........................151
Section 11.12. Appointment of Tax Matters Person..................151
Section 11.13. Certificates Nonassessable and Fully Paid..........151
SCHEDULES
Schedule I List of Sub-Servicers
Schedule II Representations and Warranties of Seller
Regarding
Subsequent Mortgage Loans
EXHIBITS
Exhibit A Form of Class [A-__] Certificate
Exhibit B Form of Class R Certificate
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Exhibit C-1 Pool I Mortgage Loan Schedule
Exhibit C-2 Pool II Mortgage Loan Schedule
Exhibit C-3 Pool III Mortgage Loan Schedule
Exhibit C-4 Pool IV Mortgage Loan Schedule
Exhibit D-1 Request for Release (Foreclosure)
Exhibit D-2 Request for Release (Paid-in-Full)
Exhibit E-1 Trustee's Acknowledgment of Receipt
Exhibit E-2 Form of Trustee's Certification
Exhibit E-3 Form of Trustee Report
Exhibit F Collection Account Certification
Exhibit G Form of Liquidation Report
Exhibit H Collection Account Activity Report
Exhibit I Form of Transfer Certificate
Exhibit J Form of Transfer Affidavit
Exhibit K Written Order to Authenticate Pursuant to
Section 5.01 of the Pooling and Servicing
Agreement
Exhibit L Seller's Underwriting Guidelines
Exhibit M Requests for Refunds and Expenses From the
Collection Account
Exhibit N Depository Agreement
Exhibit O Request for Release of Documents of 90 Day
Delinquent FHA Loans
Exhibit P Notice to Trustee
Exhibit Q Form of Subsequent Transfer Agreement
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THIS POOLING AND SERVICING AGREEMENT, dated as of __________ __, 199_,
among CITYSCAPE CORP., a New York corporation, as seller (in such capacity, the
"Seller"), as servicer (in such capacity, together with permitted successors
hereunder, the "Servicer") and as claims administrator (in such capacity,
together with permitted successors hereunder, the "Claims Administrator"), and
_______________________, as trustee (the "Trustee"),
PRELIMINARY STATEMENT:
The Seller intends to sell the Certificates to be issued hereunder in
multiple Classes, which in the aggregate will evidence the entire beneficial
ownership interest in the Trust to be created hereunder, the primary assets of
which will be four separate cross-supported sub-trusts, each consisting of a
Pool of Mortgage Loans having the characteristics described herein, and amounts
on deposit in the Pre-Funding Account. As provided herein, the Trustee shall
elect or shall cause an election to be made that a portion of the segregated
pools of assets subject to this Agreement (including, without limitation, the
Mortgage Loans) be treated for federal income tax purposes as a real estate
mortgage investment conduit (a "REMIC").
The following table sets forth the Class designation, the pass-through
rate, the initial aggregate Loan Balance and the initial ratings given by the
Rating Agencies for each subclass of Certificates evidencing interests in the
Trust.
Original
Class Class __ Class __ Certificate Rating
Designation Pass-Through Rate Principal Balance [ ] - [ ]
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Class [A-__] ________ $____ --
Class R ________ $____ --
As and to the extent provided herein, with respect to the Pool I
Certificates, the Class [A-__], Class [A-__] and Class [A-__] Certificates will
be subordinate to the Class [A-___] Certificates; with respect to the Pool II
Certificates, the Class [A-__] Certificates will be subordinate to the Class
[A-__] Certificates; and with respect to the Pool III Certificates, the Class
[A-__], Class [A-__] and Class [A-__] Certificates will be subordinate to the
Class [A-__] Certificates.
The Class [LIST CLASSES] Certificates will evidence "regular interests" in
the REMIC created hereunder. The sole class of "residual interests" in the REMIC
created hereunder will be evidenced by the Class R Certificates.
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As of the close of business on the Cut-off Date, the Mortgage Loans had an
aggregate Loan Balance, after application of all payments of principal due on or
before such date, whether or not received, equal to $ .
W I T N E S S E T H T H A T :
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE ONE
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.
Accepted Servicing Procedures: Servicing procedures that meet at least the
same standards the Servicer would follow in servicing residential mortgage loans
held for its own account, giving due consideration to standards of practice of
prudent mortgage lenders and loan servicers that originate and service mortgage
loans comparable to the Mortgage Loans and to the reliance placed by the
Certificateholders [AND THE CERTIFICATE INSURER] on the Servicer for the
servicing of the Mortgage Loans (or, in the case of FHA Loans, in accordance
with accepted Title I servicing practices) but without regard to:
(i) any relationship that the Servicer, any Sub-Servicer or
any affiliate of the Servicer or any Sub-Servicer may have with the
related Mortgagor;
(ii) the ownership of any Certificate by the Servicer or any
affiliate of the Servicer;
(iii) the Servicer's obligation to make Delinquency Advances
or Servicing Advances; or
(iv) the Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder with respect to any particular
transaction.
Account: Any of the Collection Account, the Certificate Account,
Distribution Account, the Pre-Funding Account, the FHA Premium Account,
the Servicing Account, the Capitalized Interest Account and Policy
Payments Account.
Addition Notice: With respect to the transfer of Subsequent Mortgage Loans
to the Trust pursuant to Section 2.02 of this Agreement, notice of the Seller's
designation of
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Subsequent Mortgage Loans to be sold to the Trust and the aggregate Subsequent
Cut-off Date Principal Balance of such Subsequent Mortgage Loans, which notice
shall be given to the Trustee [AND TO THE CERTIFICATE INSURER] not later than
one Business Day prior to the related Subsequent Transfer Date.
Additional Servicing Compensation: As defined in Section 3.17.
Additional Subsequent Purchase Price: As to the last Subsequent Transfer
Date occurring during the Funding Period and with respect to the appropriate
Pool, the amount, if any, specified by [THE CERTIFICATE INSURER] in connection
with its approval of the Subsequent Mortgage Loans pursuant to Section 2.02
using criteria established on or before the Closing Date.
Adjustable Rate Mortgage Loan: Any Mortgage Loan with a Mortgage Loan Rate
that is adjustable at regular periodic intervals, based on the Index plus the
related Gross Margin subject to any Minimum Rate, Maximum Rate and any periodic
limitations on adjustment from time to time, all as set forth in the Mortgage
Loan Schedule. All Pool II Mortgage Loans and Pool IV Mortgage Loans are
Adjustable Rate Mortgage Loans.
Adjustment Date: With respect to any Adjustable Rate Mortgage Loan, the
date on which a change to the Mortgage Loan Rate on a Mortgage Loan becomes
effective.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings corresponding to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Appraised Value: With respect to any Mortgaged Property, the value thereof
as determined by an independent appraisal made at the time of the origination of
the related Mortgage Loan; except that, with respect to any Mortgage Loan that
is a purchase money mortgage loan, the lesser of (i) the value thereof as
determined by an independent appraisal made at the time of the origination of
such Mortgage Loan, and (ii) the sales price of the related Mortgaged Property.
Assignment: An assignment of Mortgage, notice of transfer or equivalent
instrument, in recordable form, which is sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage.
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Available Funds: As defined in Section 4.02(a) hereof.
Available Funds Shortfall: As defined in Section 4.02(a) hereof.
Balloon Loan: Any Mortgage Loan that provided on the date of origination
for scheduled monthly payments in level amounts substantially lower than the
amount of the final scheduled payment.
Balloon Payment: With respect to any Balloon Loan, as of any date
of determination, the Monthly Payment payable on the stated maturity date
of such Mortgage Loan.
Bankruptcy Code: The Bankruptcy Code, as amended (Title 11 to the
United States Code).
BIF: The Bank Insurance Fund of the FDIC.
Book-Entry Certificate: Any Certificate registered in the name of the
Depositary or its nominee, ownership of which is reflected on the books of the
Depositary or on the books of a Person maintaining an account with such
Depositary (directly or as an indirect participant in accordance with the rules
of such Depositary).
Business Day: Any day other than (a) a Saturday or a Sunday or (b) a day
on which banking institutions in the State of New York are required or
authorized by law, executive order or governmental decree to be closed.
Capitalized Interest Account: The segregated account, which shall be an
Eligible Account, established and maintained pursuant to Section 3.29 and
entitled "_____________________________, as Trustee for Cityscape Loan Trust
199__-__ Pass-Through Certificates 199__-__, Capitalized Interest Account."
Capitalized Interest Account Deposit: $_______________.
Carry-Forward Amount: With respect to any Pool as of any Distribution
Date, equals the sum of (i) the amount, if any, by which (a) the Insured
Distribution Amount with respect to such Pool for the immediately preceding
Distribution Date exceeded (b) the amount actually distributed to the Holders of
the related Classes of Class [A] Certificates on such Distribution Date in
respect of such Insured Distribution Amount (including, without limitation, any
Insured Payments with respect to such Pool) and (ii) 30 days' interest on such
amount in clause (i) at the Pass-Through Rate for such Distribution (or in the
case of Pool II or Pool IV, interest for the actual number of days in the
related Due Period).
Certificate: Any Class [A] Certificate or Class R Certificate.
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Certificate Account: The segregated account or accounts, which shall be an
Eligible Account or Accounts, established and maintained pursuant to Section
4.01 with respect to each Pool and entitled "_____________________, as Trustee
for Cityscape Loan Trust 199__-__ Pass-Through Certificates 199__-__, Pool I
[POOL II, POOL III OR POOL IV, AS APPLICABLE] Certificate Account."
[CERTIFICATE INSURANCE POLICY: THE FINANCIAL GUARANTY INSURANCE
POLICY NO. ________, DATED THE STARTUP DATE, ISSUED BY THE CERTIFICATE
INSURER TO THE TRUSTEE FOR THE BENEFIT OF THE HOLDERS OF THE CLASS [A]
CERTIFICATES.]
[CERTIFICATE INSURER: [INSERT NAME AND STATE OF BUSINESS], OR ANY
SUCCESSOR THEREOF, AS ISSUER OF THE CERTIFICATE INSURANCE POLICY.]
[CERTIFICATE INSURER DEFAULT: THE EXISTENCE AND CONTINUANCE OF ANY
OF THE FOLLOWING:
(a) THE CERTIFICATE INSURER FAILS TO MAKE A PAYMENT REQUIRED
UNDER THE CERTIFICATE INSURANCE POLICY IN ACCORDANCE WITH ITS TERMS; OR
(b) (i)...THE ENTRY BY A COURT HAVING JURISDICTION IN THE PREMISES OF (A)
A DECREE OR ORDER FOR RELIEF IN RESPECT OF THE CERTIFICATE 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 CERTIFICATE INSURER AS BANKRUPT OR
INSOLVENT, OR APPROVING AS PROPERLY FILED A PETITION SEEKING REORGANIZING,
REHABILITATION, ARRANGEMENT, ADJUSTMENT OR COMPOSITION OF OR IN RESPECT OF THE
CERTIFICATE 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 CERTIFICATE 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 EFFECT FOR A PERIOD OF 60 CONSECUTIVE
DAYS; OR
(ii) THE COMMENCEMENT BY THE CERTIFICATE 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 OF THE
CERTIFICATE INSURER TO THE ENTRY OF A DECREE OR ORDER FOR RELIEF IN RESPECT OF
THE CERTIFICATE INSURER IN AN INVOLUNTARY CASE OR PROCEEDING UNDER ANY
APPLICABLE UNITED STATES FEDERAL OR STATE BANKRUPTCY, INSOLVENCY CASE OR
PROCEEDING AGAINST THE CERTIFICATE INSURER, OR THE FILING BY THE CERTIFICATE
INSURER OR THE CONSENT OF THE CERTIFICATE 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
CERTIFICATE INSURER OR OF ANY SUBSTANTIAL
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PART OF ITS PROPERTY, OR THE FAILURE BY THE CERTIFICATE INSURER TO PAY DEBTS
GENERALLY AS THEY BECOME DUE, OR THE ADMISSION BY THE CERTIFICATE INSURER IN
WRITING OF ITS INABILITY TO PAY ITS DEBTS GENERALLY AS THEY BECOME DUE, OR THE
TAKING OF CORPORATE ACTION BY THE CERTIFICATE INSURER IN FURTHERANCE OF ANY SUCH
ACTION.]
Certificate Owner: With respect to any Book-Entry Certificate, the Person
who is the beneficial owner thereof.
Certificate Principal Balance: With respect to the Class [LIST
SUBCLASSES] Certificates, the Class [LIST SUBCLASSES] Certificate
Principal Balance.
Certificate Register: The register maintained pursuant to Section 5.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that a Disqualified Organization
or non-U.S. Person shall not be a Holder of a Class R Certificate for any
purpose hereof.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940, as
amended.
Claim: An insurance claim submitted to the FHA by the Claims Administrator
with respect to a 90 Day Delinquent FHA Loan pursuant to the FHA Regulations.
Claims Administrator: The Servicer, acting in the capacity of Claims
Administrator appointed as herein provided.
Class: Collectively, Certificates having the same priority of payment and
bearing the same class designation and whose form is identical except for
variation in the Percentage Interest evidenced thereby.
Class [A] Certificates: Any one of the Class [LIST SUBCLASSES]
Certificate.
Class [A] Certificate Principal Balance: As of any date of determination,
the Original Class [A] Certificate Principal Balance less any amounts actually
distributed with respect to the Principal Distribution Amount pursuant to
Section 4.04(b) hereof on all preceding Distribution Dates.
Class [A] Certificateholder: Any holder of a Class [A] Certificate.
Class [A] Distribution Amount: As of any Distribution Date and with
respect to any Pool, the sum of (i) the Interest Distribution Amount with
respect to such Pool and (ii) the Principal Distribution Amount for such Pool
and Distribution Date.
Class Certificate Principal Balance: With respect to any Class of Class
[A] Certificates and any Determination Date, the Original Class Certificate
Principal Balance of
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such Class, less any amounts actually distributed with respect to such Class
from the Principal Distribution Amount (including that portion of Insured
Payments, if any, made in respect of principal and, with respect to Pool III
Certificates, any FHA Payments made in respect of principal) pursuant to Section
4.04(b) hereof on all preceding Distribution Dates.
Class R Certificate: Any one of the Certificates designated on the face
thereof as a Class R Certificate, substantially in the form annexed hereto as
Exhibit B, executed, authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and evidencing an interest
designated as the "residual interest" in the Trust for the purposes of the REMIC
Provisions.
Closing Date: __________ __, 199_.
Closing Date Deposit: The aggregate amount deposited by the Seller in the
Collection Account on or prior to the Closing Date pursuant to Section 2.01,
which amount is equal to [30] days of interest on the principal balance of each
Mortgage Loan that is included in the Trust as of the Cut-off Date and does not
have a Monthly Payment due in the Due Period relating to the __________ 199_
Distribution Date (except that, with respect to Mortgage Loans in Pool II or
Pool IV, the Closing Date Deposit shall reflect __ days of interest on the
principal balance of each such Mortgage Loan not having a Monthly Mortgage
Payment due in the Due Period relating to the _______ 199_ Distribution Date),
at a per annum rate equal to the Mortgage Loan Rate for each such Mortgage Loan,
net of the applicable Servicing Fee Rate.
Code: The Internal Revenue Code of 1986, as amended from time to time.
Collection Account: The segregated account or accounts, each of which
shall at all times be an Eligible Account, established and maintained pursuant
to Section 3.10(a) and entitled "[SERVICER], in trust for the benefit of Holders
of Cityscape Loan Trust 199__-__ Pass-Through Certificates 199__-__, Collection
Account." References herein to the Collection Account shall include any
Sub-Servicing Account as the context requires.
Combined Loan-to-Value Ratio: With respect to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the Loan Balance
of the related Mortgage Loan on the date of origination of such Mortgage Loan or
(in the event the Appraised Value for the related Mortgaged Property is based on
an appraisal conducted at the time of the purchase by the Seller of such
Mortgage Loan) the Loan Balance of such Mortgage Loan at the time of such
purchase, plus, in the case of a Junior Mortgage Loan, the outstanding principal
balance of the related Senior Lien on such date of origination or purchase, as
the case may be, of the Mortgage Loan, and the denominator of which is the
Appraised Value of the related Mortgaged Property.
Company: Cityscape Corp., a Delaware corporation.
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Compensating Interest: With respect to any Deposit Date, for each Mortgage
Loan that was the subject during the related Due Period of a Principal
Prepayment an amount equal to the excess, if any, of (i) a full month's interest
on the amount of such Principal Prepayment at a per annum rate equal to the
Mortgage Loan Rate (or at such lower rate as may be in effect for such Mortgage
Loan pursuant to application of the Civil Relief Act) minus the Servicing Fee
Rate over (ii) the amount of interest actually remitted by the Mortgagor in
connection with such Principal Prepayment less the Servicing Fee for such
Mortgage Loan in such month.
Conventional Home Improvement Loan: A Pool III Home Improvement Loan that
is not an FHA Loan.
Corporate Trust Office: The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business with
respect to the Certificates shall be administered, which office at the date of
the execution of this instrument is located at __________, __________,
_________, Attention: _________________ or at such other address as the Trustee
may designate from time to time by notice to the Certificateholders, the Seller,
the Servicer [AND THE CERTIFICATE INSURER].
Cram Down Loss: With respect to a Mortgage Loan, the amount of reduction
of a Loan Balance or the Mortgage Loan Rate (or both) of a Mortgage Loan
resulting from an order being issued by a court of appropriate jurisdiction in
an insolvency proceeding. A "Cram Down Loss" shall be deemed to have occurred on
the date of issuance of such order.
Cumulative Loss Percentage: As of any date of determination thereof, the
aggregate of all Realized Losses since the Startup Day as a percentage of the
Maximum Collateral Amount.
Cumulative Loss Test: The Cumulative Loss Test for each period indicated
below is satisfied if the Cumulative Loss Percentage for such period does not
exceed the percentage set out for such period below:
Period Cumulative Loss Percentage
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Cumulative Net Losses: As of any date of determination, the amount by
which the aggregate Loan Balances of, and accrued interest on, all Mortgage
Loans on which Final Recovery Determinations have been made exceeds the Net
Recovery Proceeds for such Mortgage Loans allocated to principal and accrued
interest.
Cut-off Date: The close of business on __________ __, 199_.
Defective Mortgage Loan: Any Mortgage Loan which is required to be
repurchased or substituted by the Seller pursuant to Section 2.03 or 2.05.
Definitive Certificates: As defined in Section 5.05.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by one
or more Qualified Replacement Mortgage Loans.
Delinquency Advance: As defined in Section 4.06(b) hereof.
Delinquency Report: The monthly report described in Section 3.18(a).
Deposit Date: With respect to any Distribution Date, the fifth Business
Day preceding such Distribution Date.
Depositary: The initial Depositary shall be the Depository Trust Company
("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depositary shall initially be the
registered Holder of the Book-Entry Certificates. The Depositary shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
Depository Agreement: With respect to the Book-Entry Certificates, the
agreement among the Seller, the Trustee and the initial Depositary, dated as of
the Closing Date, substantially in the form of Exhibit N.
Depository Participant: A broker, dealer, bank or other financial
institution or other person for whom from time to time a Depositary effects
book-entry transfers and pledges of securities deposited with the Depositary.
Determination Date: With respect to any Distribution Date, the close of
business on the fourteenth day of the calendar month in which such Distribution
Date occurs or, if such fourteenth day is not a Business Day, the close of
business on the Business Day immediately preceding such fourteenth day.
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Directly Operate: With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust other than through an
Independent Contractor; provided, however, that the Trustee (or the Servicer on
behalf of the Trustee) shall not be considered to Directly Operate an REO
Property solely because the Trustee (or the Servicer on behalf of the Trustee)
establishes rental terms, chooses tenants, enters into or renews leases, deals
with taxes and insurance, or makes decisions as to repairs or capital
expenditures with respect to such REO Property.
Disqualified Organization: A "disqualified organization" under Section
860E of the Code, which as of the Closing Date is either (i) the United States,
any state or political subdivision thereof, any possession of the United States,
or any agency or instrumentality of any of the foregoing, (ii) a foreign
government, any international organization, or any agency or instrumentality of
either of the foregoing, (iii) any organization (other than a cooperative
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code unless such organization is subject to the tax imposed by
Section 511 of the Code or (iv) any organization described in Section
1381(a)(2)(C) of the Code or (v) any other Person so designated by the Trustee
based upon an Opinion of Counsel provided by nationally recognized counsel to
the Trustee that the holding of an ownership interest in a Class R Certificate
by such Person may cause the Trust Estate or any Person having an ownership
interest in any Class of Certificates (other than such Person) to incur
liability for any federal tax imposed under the Code that would not otherwise be
imposed but for the transfer of an ownership interest in the Class R Certificate
to such Person. In the case of subparagraphs (i) and (ii) above, a corporation
will not be treated as an instrumentality of the United States, any state or
political subdivision thereof, or of a foreign governmental or international
organization, if all of its activities are subject to tax and, a majority of its
board of directors is not selected by a governmental unit. The term "United
States", "state" and "international organizations" shall have the meanings set
forth in Section 7701 of the Code.
Distribution Account: The trust account or accounts established and
maintained by the Trustee pursuant to Section 4.01 with respect to each pool
which shall be entitled "Pool I [POOL II, POOL III OR POOL IV, AS APPLICABLE]
Distribution Account, _______, as Trustee, in trust for the registered Pool I
[POOL II, POOL III OR POOL IV, AS APPLICABLE] Certificateholders of Cityscape
Loan Trust 199_-_" and which must be an Eligible Account.
Distribution Date: The twenty-fifth day of each month or, if such
day is not a Business Day, the Business Day immediately following such
twenty-fifth day, beginning __________ __, 199_.
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Due Date: With respect to each Mortgage Loan and any Distribution Date,
the day of the calendar month preceding the calendar month in which such
Distribution Date occurs on which the Monthly Payment for such Mortgage Loan was
due, exclusive of any days of grace.
Due Period: As to any Distribution Date, the period beginning on the first
day of the calendar month immediately preceding the month in which such
Distribution Date occurs (or, in the case of the first Distribution Date,
beginning on the day after the Cut-Off Date) and ending on the last day of such
calendar month.
Eligible Account: Either (A) a segregated account or accounts maintained
with an institution whose deposits are insured by the BIF or the SAIF of the
FDIC, the unsecured and uncollateralized long term debt obligations of which
shall be rated "A" or better by S&P and "A2" or better by Moody's and in one of
the two highest short term rating categories by S&P and P-1 by Moody's, and
which is any of (i) a federal savings and loan association duly organized,
validly existing and in good standing under the federal banking laws, (ii) an
institution duly organized, validly existing and in good standing under the
applicable banking laws of any state, (iii) a national banking association duly
organized, validly existing and in good standing under the federal banking laws,
(iv) a principal subsidiary of a bank holding company, and (v) approved in
writing by [THE CERTIFICATE INSURER] or (B) a segregated trust account
maintained with the trust department of a federal or state chartered depository
institution or trust company, having capital and surplus of not less than
$100,000,000, acting in its fiduciary capacity. Any Eligible Account maintained
by the Trustee shall comply with the provisions of clause (B) hereof.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
Estate in Real Property: A fee simple estate or a leasehold estate in a
parcel of real property.
Event of Default: One or more of the events described in Section 7.01.
Excess Overcollateralized Amount: With respect to the Mortgage Loans of
any Pool and any Distribution Date, the excess, if any, of (x) the
Overcollateralized Amount with respect to such Pool that would apply on such
Distribution Date after taking into account the payment of the related Class [A]
Distribution Amount on such Distribution Date (except for any distributions of
related Overcollateralization Reduction Amounts for such Pool on such
Distribution Date) over (y) the related Specified Overcollateralization Amount
with respect to such Pool for such Distribution Date; provided, however, that
the Excess Overcollateralization Amount for each Pool for the period beginning
with the Distribution Date in ____ 199_ and ending on the Distribution Date in
_____ 199_ (inclusive) shall be limited to the amount obtained using the
following formula.
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n-24 X E.O.A.
----
6
Where "n" is equal to the number of Distribution Dates that have occurred
since the Startup Day and "E.O.A." is equal to the amount of Excess
Overcollateralized Amount with respect to such Pool that would otherwise be
obtained (e.g., in ____ 199_, n=__) for such Distribution Date without regard to
the provisions of this proviso.
FDIC: The Federal Deposit Insurance Corporation and its successors in
interest.
FHA: The Federal Housing Administration, and its successors in interest.
FHA Contract of Insurance: [INSERT DEFINITION.]
FHA Insurance Premium: The premium charged by the FHA pursuant to 24
C.F.R. Section 201.31, or any successor regulation, as payment for Title I
insurance coverage for any FHA Loan, which premium shall be the responsibility
of the Servicer, who will be reimbursed from the FHA Premium Account in
accordance with Section 3.30(b) hereof; provided that [THE CERTIFICATE INSURER]
shall have the option to pay the FHA Insurance Premium with respect to any FHA
Loan to the extent funds are not otherwise available and to be reimbursed from
the FHA Premium Account in accordance with Section 3.30(b)(i) hereof.
FHA Insurance Rate: As to any FHA Loan with respect to which the FHA
Insurance Premium is paid by the related Mortgagor as part of the Mortgage Loan
Rate, the rate of ___% per annum, which is used to calculate the amount to be
applied to the payment of the related FHA Insurance Premium.
FHA Loan: A Pool III Home Improvement Loan that is partially insured by
the FHA under Title I.
FHA Payment: The amount received from the FHA for a Claim filed with
respect to a 90 Day Delinquent FHA Loan.
FHA Premium Account: The account, which shall be an Eligible Account,
established and maintained by the Trustee in accordance with Section 3.30 hereof
to reimburse the Servicer [AND THE CERTIFICATE INSURER] for payments with
respect to FHA Premiums or to make payments with respect to FHA Premiums and
entitled "____________, as Trustee for Cityscape Loan Trust 199__-__
Pass-Through Certificates 199__-__, FHA Premium Account."
FHA Premium Amount: With respect to any FHA Loan for any Distribution
Date, (i) if the FHA Insurance Premium is paid by the related Mortgagor as part
of the Mortgage Loan Rate on an FHA Loan, an amount equal to 1/12 of the product
of the FHA Insurance Rate
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times the Loan Balance as of the first day of the immediately preceding Due
Period and (ii) if the related Mortgagor pays the FHA Insurance Premium as a
separate amount in addition to Monthly Payments, any such amount received by the
Servicer during the related Due Period.
FHA Regulations: The regulations of the FHA with respect to Title I home
improvement loans set forth in 24 C.F.R. Section 201, as the same may be amended
during the term of this Agreement.
FHA Reserve Account: The account of the Trustee maintained by the FHA with
respect to the FHA Loans and certain other mortgage loans in accordance with
Section 3.33 hereof, registered in the name of the Trustee and insured by the
FHA under Title I in accordance with the FHA Regulations.
FHLMC: The Federal Home Loan Mortgage Corporation and its successors in
interest.
Final Maturity Date: The Distribution Date occurring in __________, 20__
which is the Distribution Date that corresponds to the final scheduled maturity
date of the latest maturing Mortgage Loan initially included in the REMIC Trust,
plus approximately two years and two months.
Final Recovery Determination: A determination by the Servicer with respect
to any defaulted Mortgage Loan or REO Property (other than a Mortgage Loan
purchased or replaced by the Seller or the Servicer pursuant to Section 2.06 or
3.15(c)) that all Net Recovery Proceeds and other payments or recoveries that
the Servicer, in its reasonable judgment, expects to be finally recoverable have
been recovered or that the Servicer, in its reasonable judgment as evidenced by
an Officer's Certificate which accompanies the related Liquidation Report,
believes the cost of obtaining any additional recoveries would exceed the amount
of such recoveries. The Servicer shall maintain records, prepared by a Servicing
Officer, of each Final Recovery Determination.
First Mortgage Loan: Any Mortgage Loan that is secured by a first lien on
or first priority security interest in the related Mortgaged Property.
Fixed Rate Mortgage Loan: Any Mortgage Loan with a Mortgage Loan Rate that
is a fixed per annum rate of interest, as set forth in the Mortgage Loan
Schedule. All of the Pool I Mortgage Loans and Pool III Mortgage Loans are Fixed
Rate Mortgage Loans.
FNMA: The Federal National Mortgage Association and its successors in
interest.
Funding Period: The period beginning on the Closing Date and ending on the
earlier of (a) the date on which the amount on deposit in the Pre-Funding
Account is less than
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$_______________, or (b) the close of business on __________ __, 199_. [NOT
LATER THAN 90 DAYS AFTER THE CLOSING DATE]
Gross Margin: With respect to an Adjustable Rate Mortgage Loan, the fixed
percentage amount set forth in the related Mortgage Note, which amount is added
to the Index in accordance with the terms of the related Mortgage Note to
determine the Mortgage Loan Rate.
Home Improvement Loan: A Fixed Rate Mortgage Loan that is a single family
residential first, second and more junior home improvement mortgage loan. All
Home Improvement Loans will be included in Pool III.
HUD: The United States Department of Housing and Urban Development, and
its successors in interest.
Indemnified Party: As defined in Section 3.25(a).
Independent: When used with respect to any specified Person, any such
Person who (i) is in fact independent of the Seller, the Servicer and the
Underwriter, (ii) does not have any direct financial interest or any material
indirect financial interest in the Seller, the Servicer or in any affiliate of
either, and (iii) is not connected with the Seller, the Servicer or the
Underwriter as an officer, employee, promoter, underwriter, trustee, partner,
director or Person performing similar functions.
Independent Contractor: Either (i) any Person (other than the Servicer and
the Seller) that would be an "independent contractor" with respect to the Trust
within the meaning of Section 856(d)(3) of the Code if the Trust were a real
estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35 percent or more of any Class of Certificates), so long as the
Trust does not receive or derive any income from such Person and provided that
the relationship between such Person and the Trust is at arm's length, all
within the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any
other Person (including the Servicer and the Seller) if the Trustee[, THE
CERTIFICATE INSURER] and the Certificateholders have each received an Opinion of
Counsel to the effect that the taking of any action in respect of any REO
Property by such Person, subject to any conditions therein specified, that is
otherwise herein contemplated to be taken by an Independent Contractor will not
cause such REO Property to cease to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
Index: With respect to any Adjustable Rate Mortgage Loan, the applicable
index for computing the Mortgage Loan Rate as specified in the Mortgage Note.
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Initial Certificate Principal Balance: With respect to any Class [A]
Certificate, the Initial Certificate Principal Balance set forth on the face
thereof.
Initial Mortgage Loans: The Initial Pool I Mortgage Loans, Initial Pool II
Mortgage Loans, Initial Pool III Mortgage Loans and Initial Pool IV Mortgage
Loans, collectively.
Initial Pool I Mortgage Loans: The Pool I Mortgage Loans listed on Exhibit
C-1 delivered to the Trustee on the Closing Date.
Initial Pool II Mortgage Loans: The Pool II Mortgage Loans listed on
Exhibit C-2 delivered to the Trustee on the Closing Date.
Initial Pool III Mortgage Loans: The Pool III Mortgage Loans listed on
Exhibit C-3 delivered to the Trustee on the Closing Date.
Initial Pool IV Mortgage Loans: The Pool IV Mortgage Loans listed on
Exhibit C-4 delivered to the Trustee on the Closing Date.
Initial Specified Overcollateralization Amount: $_______________ .
[INSURANCE AGREEMENT: THE INSURANCE AND INDEMNITY AGREEMENT DATED AS OF
____ __, 199_ BETWEEN THE CERTIFICATE INSURER AND THE SELLER.]
[INSURANCE PREMIUM: WITH RESPECT TO ANY DISTRIBUTION DATE, THE PRODUCT OF
(x) THE CLASS [A] CERTIFICATE PRINCIPAL BALANCE, AFTER TAKING INTO ACCOUNT ALL
DISTRIBUTIONS TO BE MADE ON SUCH DISTRIBUTION DATE AND (y) ONE-TWELFTH OF THE
PREMIUM RATE.]
[INSURED DISTRIBUTION AMOUNT: WITH RESPECT TO ANY POOL AND ANY
DISTRIBUTION DATE, THE SUM OF (i) THE INTEREST DISTRIBUTION AMOUNT FOR SUCH POOL
AND (ii) THE OVERCOLLATERALIZATION DEFICIT, IF ANY, FOR SUCH POOL AND FOR SUCH
DISTRIBUTION DATE.]
[INSURED PAYMENT: WITH RESPECT TO EACH POOL AND AS OF ANY DISTRIBUTION
DATE, (i) ANY AVAILABLE FUNDS SHORTFALL PLUS (ii) ANY PREFERENCE AMOUNT NOT
OTHERWISE PAID TO A CERTIFICATEHOLDER OF A RELATED POOL CERTIFICATE.]
Interest Distribution Amount: With respect to any Distribution Date and
any Class of Class [A] Certificates, the sum of (i) interest accrued during the
related Due Period on the Class Certificate Principal Balance of such Class at
the related Pass-Through Rate and (ii) the pro rata share allocable to such
Class (based on the amount of interest they would otherwise be entitled to
receive) of the portion of the Carry-Forward Amount representing interest.
Interest Remittance Amount: As defined in Section 3.11(a)(i)(A) hereof.
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Jumbo Loan: An adjustable rate, one- to four-family residential
first mortgage loan which has an initial Loan Balance of $________ or
more. All Pool IV Mortgage Loans are Jumbo Loans.
Junior Mortgage Loan: Any Mortgage Loan that is secured by a second lien
on or second priority security interest in the related Mortgaged Property.
Late Collection: With respect to any Mortgage Loan and the Monthly Payment
due thereon during any Due Period, all amounts received subsequent to the
Determination Date immediately following such Due Period, whether as a late
payment of such Monthly Payment or as Property Insurance Proceeds, Liquidation
Proceeds or otherwise, which represent the late payment or collection of such
Monthly Payment.
Late Payment Rate: For any Distribution Date, the lesser of (i) the rate
of interest set forth in the Eastern Edition of The Wall Street Journal in its
"Money Rates" section as the "prime rate" on the first Business Day preceding
such Distribution Date that such rate is so published plus __% and (ii) the
maximum rate permissible under any applicable law limiting interest rates. The
Late Payment Rate shall be computed on the basis of a year of 365 days
calculating the actual number of days elapsed.
Lien: As defined in Section 2.05(b).
Lifetime Cap: With respect to each Pool II Mortgage Loan, the percentage
set forth in the related Mortgage Note to be added to the initial Mortgage Loan
Rate thereof to determine such Mortgage Loan's Maximum Rate.
Liquidated Mortgage Loan: As to any Distribution Date, any Mortgage Loan
as to which the Servicer has determined, in accordance with the servicing
procedures specified herein, during the related Due Period that all Liquidation
Proceeds which it expects to recover from or on account of such Mortgage Loan
have been recovered.
Liquidation Expenses: Expenses which are incurred by the Servicer in
connection with the liquidation of any Mortgage Loan and not recovered under any
insurance policy or from any Mortgagor. Such expenses shall include, without
limitation, legal fees and expenses, real estate brokerage commissions, any
unreimbursed amount expended by the Servicer pursuant to Section 3.06 respecting
the related Mortgage Loan (including, without limitation, amounts voluntarily
advanced to correct defaults on each mortgage loan that is senior to such
Mortgage Loan), any other related and previously unreimbursed Servicing Advances
and any related and previously unreimbursed Property Protection Expenses.
Liquidation Proceeds: Cash (other than Property Insurance Proceeds)
received in connection with the liquidation of any Mortgaged Property, whether
through trustee's sale, foreclosure sale, condemnation, taking by eminent domain
or otherwise received in respect of
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any Mortgage Loan foreclosed upon as described in Section 3.15 (including,
without limitation, proceeds from the rental of the related Mortgaged Property)
other than FHA Payments and Related Payments.
Liquidation Report: A liquidation report in the form of Exhibit G attached
hereto delivered by the Servicer pursuant to Section 3.15(e).
Loan Balance: With respect to each Mortgage Loan, the outstanding
principal balance thereof calculated in accordance with the terms of the related
Mortgage Note; provided, however, that the Loan Balance for any Mortgage Loan
upon which a Final Recovery Determination has been made shall be zero as of the
last day of the Due Period in which such Final Recovery Determination was made,
and at all times thereafter.
Majority Certificateholders: The Holders of Class [A] Certificates
evidencing at least 51% of the Voting Interests.
Majority Class R Certificateholders: The Holders of Class R Certificates
evidencing at least 75% of the Voting Percentage.
Maximum Collateral Amount: With respect to each Pool, the aggregate Loan
Balances of all Mortgage Loans for such Pool as of the Cut-Off Date plus the
aggregate Loan Balances of all Subsequent Mortgage Loans for such Pool on the
related Subsequent Cut-Off Dates.
Maximum Rate: With respect to an Adjustable Rate Mortgage Loan, the
provision in the Mortgage Note which provides for an absolute maximum Mortgage
Loan Rate.
Minimum Rate: With respect to an Adjustable Rate Mortgage Loan, the
provision in the Mortgage Note which provides for an absolute minimum Mortgage
Loan Rate, subject to the initial Mortgage Loan Rate first adjusting to a level
in excess of such Mortgage Loan Rate in accordance with the terms of the
Mortgage Note.
Monthly Excess Spread: With respect to any Distribution Date and for any
Pool, the excess of (i) the interest which is collected on the Mortgage Loans of
such Pool, less the related Servicing Fees, during the prior Due Period, plus
any Delinquency Advances with respect to such Pool, and any amount covering a
Compensating Interest with respect to such Pool paid by the Servicer with
respect to such Due Period, over (ii) the sum of (x) the Interest Distribution
Amount with respect to such Pool for such Distribution Date, (y) the amount to
be distributed with respect to such Pool to [THE CERTIFICATE INSURER] pursuant
to Section 4.04(a)(i) on such Distribution Date and (z) the amount to be
distributed with respect to such Pool to the Trustee pursuant to Section
4.04(a)(ii) on such Distribution Date.
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Monthly Payment: With respect to any Mortgage Loan, the scheduled monthly
payment of principal and interest on such Mortgage Loan which is payable by a
Mortgagor from time to time under the related Mortgage Note in accordance with
its terms, determined: (i) without giving effect to any extension, deferral,
modification, waiver or amendment granted or agreed to by the Servicer pursuant
to Section 3.01 or 3.07; and (ii) after giving effect to any reduction in the
amount of interest collectible from the related Mortgagor as a result of the
application of the Civil Relief Act.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc., a corporation organized and
existing under the laws of the State of Delaware, and its successors, and, if
such corporation shall for any reason no longer perform the functions of a
securities rating agency, "Moody's" shall be deemed to refer to any other
"nationally recognized rating organization," as set forth on the most current
list of such organizations released by the Securities and Exchange Commission
and designated by [THE CERTIFICATE INSURER], notice of which designation shall
be given to the Trustee and the Servicer by [THE CERTIFICATE INSURER].
Mortgage: The mortgage, deed of trust or other instrument creating a
first, second or third lien on an estate in fee simple in real property securing
a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to
a particular Mortgage Loan and any additional documents required to be added to
such Mortgage File pursuant to this Agreement.
Mortgage Loan: Each mortgage loan sold, transferred and assigned to the
Trust pursuant to Section 2.01 or 2.02 as from time to time is held as a part of
the Trust, the Mortgage Loans so held being identified in the Mortgage Loan
Schedule. Any mortgage loan which, although intended by the parties hereto to
have been, and which purportedly was, sold to the Trust by the Seller (as
indicated by Exhibit C), that in fact was not transferred and assigned to the
Trust for any reason whatsoever, shall nevertheless be considered a "Mortgage
Loan" for all purposes of this Agreement. As applicable, "Mortgage Loan" shall
be deemed to refer to the related REO Property.
Mortgage Loan Rate: As to any Mortgage Loan other than an Adjustable Rate
Mortgage Loan, the fixed per annum rate of interest applicable to the
calculation of interest thereon; provided that, with respect to any FHA Loan for
which the related Mortgagor pays the FHA Insurance Premium as part of the
Mortgage Loan Rate, such Mortgage Loan Rate shall be adjusted to reflect any
such FHA Premium Amount. With respect to any Adjustable Rate Mortgage Loan, the
per annum rate of interest computed in accordance with the related Mortgage Note
as the sum of the Index and the Gross Margin, subject to the Minimum Rate, the
Maximum Rate and any periodic limitation on adjustments to such rate applicable
from time to time to the calculation of interest thereon.
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Mortgage Loan Schedule: As of any date, the separate schedules of Pool I,
Pool II, Pool III and Pool IV Mortgage Loans delivered to the Trustee for
inclusion in the Trust on such date, in substantially the form attached hereto
as ▇▇▇▇▇▇▇▇ ▇-▇, ▇-▇, ▇-▇ and D-4, respectively, which schedules shall set forth
the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property, including
the city, state and zip code;
(iv) the type of Mortgaged Property;
(v) the Mortgage Loan Rate;
(vi) the occupancy status;
(vii) the original term;
(viii) as of the Cut-Off Date the remaining number of months
to stated maturity;
(ix) the original principal balance (except with respect to any
Mortgage Loan purchased by the Seller, such balance at the time of
acquisition by the Seller of such Mortgage Loan);
(x) the paid through date;
(xi) the amount of the Monthly Payment;
(xii) the unpaid principal balance as of the Cut-Off Date;
(xiii) the Combined Loan-to-Value Ratio (except to the extent
not applicable to Pool III Mortgage Loans);
(xiv) the stated maturity date;
(xv) the Due Date;
(xvi) the Appraised Value, if available;
(xvii) the lien priority of the Mortgage Loan;
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(xviii) the Net Mortgage Loan Rate;
(xix) the paid-to date;
(xx) the origination date (except with respect to any Mortgage Loan
purchased by the Seller, the date of acquisition by the Seller of such
Mortgage Loan);
(xxi) balloon amortization, which is the number of months it would
take a Mortgagor making timely and equal payments without any reference to
the Balloon Payment and the number of scheduled months which the Mortgagor
has to pay off such Mortgage Loan including the Balloon Payment (e.g.,
"360 months due in 180 months");
(xxii) with respect to Exhibits D-2 and D-4, the Minimum Rate, the
Maximum Rate and any periodic limitation on adjustments to each such
Mortgage Loan's Mortgage Loan Rate; and
(xxiii) with respect to Exhibit C-3, whether such Home Improvement
Loan is an FHA Loan or a Conventional Home Improvement Loan.
Such schedules shall also set forth the total of the amounts described under
(xii) above for all of the Mortgage Loans as of the specified date. Such
schedules may be in the form of more than one list, which list or lists may have
one or more attachments, collectively setting forth all of the information
required. Such list of information contained in a Mortgage Loan Schedule shall
also be provided to the Trustee in a computer-readable format on a tape or disk.
The Mortgage Loan Schedule shall be amended from time to time by the Trustee in
accordance with Section 2.07. With respect to any Qualified Replacement Mortgage
Loan, the amounts described in clauses (viii) and (xii) shall be set forth as of
the date of substitution.
The Mortgage Loan Schedule shall be amended on each Subsequent Transfer
Date to reflect the addition of the related Subsequent Mortgage Loans to the
Trust.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
Mortgage Portfolio Performance Test: The Mortgage Portfolio Performance
Test is satisfied for any Pool on any date of determination thereof if (i) the
Rolling Six Month Delinquency Rate with respect to such Pool is less than ____%,
(ii) the O/C Loss Test with respect to such Pool is satisfied, (iii) the Rolling
Twelve Month Loss Rate with respect to such Pool for the twelve month period
immediately preceding the date of determination thereof is not greater than or
equal to ____% and (iv) no more than ___% of the aggregate
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current principal balance of Mortgage Loans in the related Pool which are
secured by Small Mixed-Use Properties is 30 days or more Delinquent.
Mortgaged Property: The underlying property securing a Mortgage Loan,
including any REO Property, consisting of an Estate in Real Property improved by
a Residential Dwelling.
Mortgagor: The obligor or obligors on a Mortgage Note.
Net Liquidation Proceeds: As to any Mortgage Loan, Liquidation Proceeds
net of Liquidation Expenses. For all purposes of this Agreement, Net Liquidation
Proceeds shall be allocated first to accrued and unpaid interest on the related
Mortgage Loan and then to the Loan Balance thereof.
Net Monthly Excess Cashflow: With respect to any Pool, for any
Distribution Date, equals the amount, if any, by which (i) the funds on deposit
in the related Certificate Account (net of any related Premium Amount, Servicing
Fees and Trustee Fees) for such Distribution Date exceed (ii) the sum of (a) the
Interest Distribution Amount for each Class in such Pool plus the Principal
Distribution Amount for each Class in such Pool (calculated for this purpose
without regard to any Overcollateralization Increase Amount or portion thereof
included therein) and (b) any Reimbursement Amount with respect to such Pool
owed to [THE CERTIFICATE INSURER].
Net Mortgage Loan Rate: With respect to each Mortgage Loan, a per annum
rate of interest equal to the Mortgage Loan Rate minus the Servicing Fee Rate.
Net Recovery Proceeds: The amount of any gross Property Insurance
Proceeds, or Liquidation Proceeds received with respect to any Mortgage Loan or
REO Property minus the amount of any unreimbursed Servicing Advances,
unreimbursed Delinquency Advances or accrued and unpaid Servicing Fees and,
without duplication, liquidation expenses.
New Lease: Any lease of REO Property entered into on behalf of the Trust,
including any lease renewed or extended on behalf of the Trust if the Trust has
the right to renegotiate the terms of such lease.
90 Day Delinquent FHA Loan: With respect to any Distribution Date, an FHA
Loan with respect to which four consecutive Monthly Payments have not been
received by the Servicer as of the last day of the related Due Period unless on
or prior to the last day of the Due Period in which the fourth Monthly Payment
is due, the Servicer has received from the related Mortgagor an amount at least
equal to one unpaid Monthly Payment.
Non-acknowledged FHA Loans: As defined in Section 2.05(ggg) hereof.
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Nonrecoverable Delinquency Advance: Any Delinquency Advance previously
made in respect of a Mortgage Loan or REO Property which the Servicer
determines, in connection with a Final Recovery Determination with respect to
such Mortgage Loan (such determination to be evidenced by a certificate of a
Servicing Officer delivered to the Trustee [AND THE CERTIFICATE INSURER]), will
not be recovered from Late Collections, Property Insurance Proceeds or
Liquidation Proceeds on such Mortgage Loan or REO Property.
Notice: As defined in Section 4.02.
Notice of Claim: The notice required to be furnished by the Trustee to
[THE CERTIFICATE INSURER] in the event a Class [A] Insured Amount is required to
be paid under the [CERTIFICATE INSURANCE POLICY] with respect to any
Distribution Date, in the form set forth as Exhibit P hereto.
O/C Loss Test: The O/C Loss Test for any Pool 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:
Period Cumulative Loss Percentage
------ --------------------------
Officer's Certificate: A certificate signed by the Chairman of the Board,
the President or a Vice President of the Seller, the Servicer or the Claims
Administrator, as the case may be, and delivered to the Trustee[, CERTIFICATE
INSURER] or each Rating Agency, as the case may be.
Opinion of Counsel: A written opinion of counsel, who (unless such Opinion
of Counsel is required to be an Independent Opinion of Counsel) may be counsel
for the Seller, the Trustee, the Servicer [OR THE CERTIFICATE INSURER]
(including, except as otherwise expressly provided in this Agreement, the
in-house general counsel for the Servicer, the Seller, the Trustee, any
Certificateholder [OR THE CERTIFICATE INSURER], as the case may be), and who
shall be reasonably acceptable to the parties to which such opinion is
addressed; except that any opinion of counsel relating to the qualification of
the Trust as a REMIC, or compliance with the REMIC Provisions, must be an
opinion of counsel who is a tax counsel experienced in REMIC matters.
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Original Class [A] Certificate: The Class [A] Certificates issued
on the Closing Date.
Original Class [A] Certificate Principal Balance: $__________.
Original Class Certificate Principal Balance: With respect to any Class of
Certificates (other than the Class R Certificates), the corresponding amounts
set forth opposite such Class in the table below:
Original Class
Class Certificate Principal Balance
----- -----------------------------
Class A-1 $
Class A-2
Class A-3
Class A-4
[SPECIFY OTHER CLASSES]
OTS: The Office of Thrift Supervision or any successor.
Overcollateralization Deficit: For each Pool and with respect to any
Distribution Date, the amount, if any, by which (x) the Class Certificate
Principal Balance of the Pool Certificates of the related Pool, after taking
into account the payment of the Class [A] Distribution Amount on such
Distribution Date for the related Pool (except for the amount of any Insured
Payment to be paid on such Distribution Date to reduce the Overcollateralization
Deficit for the related Pool), exceeds (y) the aggregate Loan Balance of the
Mortgage Loans for the related Pool as of the close of business on the last day
of the immediately preceding Due Period.
Overcollateralization Increase Amount: For each Pool and with respect to
any Distribution Date the lesser of (i) the Specified Overcollateralization
Deficiency Amount for the related Pool as of such Distribution Date (after
taking into account the payment of the Class [A] Distribution Amount on such
Distribution Date (except for any Overcollateralization Increase Amount) for the
related Pool) and (ii) the amount of Monthly Excess Spread on deposit in the
Certificate Account for the related Pool on such Distribution Date after the
payment of any Reimbursement Amount for the related Pool.
Overcollateralization Reduction Amount: For each Pool and with respect to
any Distribution Date, an amount equal to the lesser of (x) the Excess
Overcollateralized Amount for the related Pool on such Distribution Date and (y)
the Principal Remittance Amount of the related pool transferred from the
Collection Account to the Certificate Account on the Deposit Date immediately
preceding such Distribution Date.
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Overcollateralized Amount: For each Pool, as of any Distribution Date, the
excess, if any, of (x) aggregate Loan Balance of all the Mortgage Loans of the
related pool as of the close of business on the last day of the immediately
preceding Due Period, over (y) the Class Certificate Principal Balance of the
Pool Certificates of the related Pool as of such Distribution Date (after taking
into account the payment of the Class [A] Distribution Amount on such
Distribution Date).
Pass-Through Rate: Class A-1: ___% per annum
Class A-2: ___% per annum
Class A-3: ___% per annum
Class A-4: ___% per annum.
[INSERT APPROPRIATE DEFINITIONS WITH RESPECT TO ADDITIONAL CLASSES OF
CERTIFICATES, IF APPLICABLE.]
Payment Ahead: Any payment of one or more Monthly Payments remitted by a
Mortgagor with respect to a Mortgage Note in excess of the Monthly Payment due
during such Due Period with respect to such Mortgage Note, which sums the
related Mortgagor has instructed the Servicer to apply to Monthly Payments due
in one or more subsequent Due Periods. A Monthly Payment that was a Payment
Ahead shall, for purposes of computing certain amounts under this Agreement, be
deemed to have been received by the Servicer on the date in the related Due
Period that such Monthly Payment would have been due if such Monthly Payment was
not a Payment Ahead.
Percentage Interest: With respect to any Class of Class [A] Certificates,
a fraction, expressed as a decimal, the numerator of which is the Initial
Certificate Principal Balance represented by such Class of Class [A]
Certificates and the denominator of which is the Original Class Certificate
Principal Balance of the related Class. With respect to a Class R Certificate,
the portion of the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate, all of which shall total 100% with respect to
the related Class. The Class [A] Certificates are issuable only in minimum
Percentage Interests corresponding to minimum initial Class [A] Certificate
Principal Balances of $1,000. The Class R Certificates are issuable only in
minimum Percentage Interests equal to 10% of all of the interests represented by
the Certificates of such Class.
Permitted Investments: As used herein, Permitted Investments shall include
the following:
(i) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and
interest by, the United States or
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any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States, FHA debentures,
FHLMC senior debt obligations, and FNMA senior debt obligations, but
excluding any of such securities whose terms do not provide for payment of
a fixed dollar amount upon maturity or call for redemption;
(ii) federal funds, certificates of deposit, time and demand deposits
and banker's acceptances (in each case having original maturities of not
more than 365 days) of any bank or trust company incorporated under the
laws of the United States or any state thereof, provided that the
short-term debt obligations of such bank or trust company at the date of
acquisition thereof have been rated "A-1+" or better by S&P and "Prime-1"
or better by ▇▇▇▇▇'▇;
(iii) deposits of any bank or savings and loan association which has
combined capital, surplus and undivided profits of at least $100,000,000
which deposits are held up to the applicable limits insured by BIF or SAIF
and a rating, with respect to its long-term, unsecured, debt obligations,
of "A" or better by S&P and "A2" or better by ▇▇▇▇▇'▇;
(iv) commercial paper (having original maturities of not more than
180 days) rated "A-1+" or better by S&P and "Prime-1" by ▇▇▇▇▇'▇; and
(v) investments in money market funds rated "AAAm" or "AAAm-G" by
S&P and "Aaa" by ▇▇▇▇▇'▇;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity. Permitted Investments shall mature not
later than the Business Day prior to the earliest date on which such monies may
be needed to make payments.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy Payments Account: As defined in Section 4.02(b) hereof.
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Pool: With respect to the Class [A] Certificates, the Pool I, Pool II,
Pool III or Pool IV Certificates, as the case may be, and with respect to the
Mortgage Loans, the Pool I, Pool II, Pool III or Pool IV Mortgage Loans, as the
case may be.
Pool Balance: With respect to any Pool and as to the Distribution Date
occurring in __________ 199_, the sum of the aggregate of the Loan Balances of
the Mortgage Loans in the related Pool as of the end of the related Due Period
and the Pre-Funding Account Deposit with respect to the related Pool, minus the
sum of all Subsequent Purchase Price amounts as of the last day of the related
Due Period. As to any Distribution Date thereafter, the aggregate of the Loan
Balances of the Mortgage Loans in the related Pool as of the end of the related
Due Period.
Pool Certificate: With respect to Pool I, the Pool I Certificates; with
respect to Pool II, the Pool II Certificates; with respect to Pool III, the Pool
III Certificates; and with respect to Pool IV, the Pool IV Certificates.
Pool Delinquency Rate: With respect to any Pool and any Due Period, the
fraction, expressed as a percentage, equal to (x) the aggregate Loan Balances of
all Mortgage Loans in such Pool 60 or more days Delinquent, in foreclosure or
relating to REO Properties as of the close of business on the last day of such
Due Period over (y) the aggregate Loan Balances of all Mortgage Loans in such
Pool as of the close of business on the last day of such Due Period.
[POOL PROJECTED NET MONTHLY EXCESS CASHFLOW: AS OF ANY DATE OF
CALCULATION, WITH RESPECT TO POOL I, FIVE TIMES (OR, WITH RESPECT TO POOL II AND
POOL IV, THREE TIMES) NET MONTHLY EXCESS CASHFLOW RELATING TO SUCH POOL, AS
CALCULATED ON THE DISTRIBUTION DATE IMMEDIATELY PRECEDING SUCH DATE OF
CALCULATION. POOL PROJECTED NET MONTHLY EXCESS CASHFLOW SHALL NOT APPLY TO POOL
III.]
Pool I Certificate: A Class [A-_], Class [A-_], Class [A-_] or Class
[A-[SPECIFY OTHERS]] Certificate.
Pool I Initial Specified Overcollateralized Amount: $_______.
Pool I Mortgage Loan: A Mortgage Loan listed on Exhibit C-1 delivered to
the Trustee, as such Exhibit may be amended from time to time.
Pool I Specified Overcollateralized Amount: means (as such amount may be
changed in accordance with the provisions of Section 2.02 hereof) the greater of
(i) the Pool I Initial Specified Overcollateralized Amount or (ii) the Specified
Overcollateralization Amount with respect to Pool I.
Pool II Certificate: A Class [A-_] or Class [A-_] Certificate.
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Pool II Initial Specified Overcollateralized Amount: $_______.
Pool II Mortgage Loan: A Mortgage Loan listed on Exhibit C-2 delivered to
the Trustee, as such Exhibit may be amended from time to time.
Pool II Specified Overcollateralized Amount: means (as such amount may be
changed in accordance with the provisions of Section 2.02 hereof) the greater of
(i) the Pool II Initial Specified Overcollateralized Amount or (ii) the
Specified Overcollateralization Amount with respect to Pool II.
Pool III Certificate: A Class [A-_], Class [A-_], Class [A-_] or Class
[A-_] Certificate.
Pool III Delinquency Period: Any period commencing on a Distribution Date
for which the sum of (i) the three-month moving average of 75% of the Loan
Balance of all 90 Day Delinquent FHA Loans and (ii) the amount of all Claims
filed in the Due Period immediately preceding the then current Distribution Date
is greater than the current Excess Spread for the Pool III Loans for such
Distribution Date, and ending on the first Distribution Date thereafter for
which (a) the six-month moving average of the sum of 75% of the Loan Balance of
all 90 Day Delinquent FHA Loans and (b) the amount of all Claims filed in the
Due Period immediately preceding the then current Distribution Date is less than
the Excess Spread for the Pool III Mortgage Loans for three consecutive
Distribution Dates.
Pool III Initial Specified Overcollateralized Amount: $_______.
Pool III Mortgage Loan: A Mortgage Loan listed on Exhibit C-3 delivered to
the Trustee, as such Exhibit may be amended from time to time.
Pool III Specified Overcollateralized Amount: means (as such amount may be
changed in accordance with the provisions of Section 2.02 hereof) the greater of
(i) the Pool III Initial Specified Overcollateralized Amount or (ii) the
Specified Overcollateralization Amount with respect to Pool III; provided,
however, that the Pool III Specified Overcollateralized Amount shall equal the
Pool III Initial Specified Overcollateralized Amount during any Pool III
Delinquency Period.
Pool IV Certificate: A Class [A-_] Certificate.
Pool IV Initial Specified Overcollateralized Amount: $_______.
Pool IV Mortgage Loan: A Mortgage Loan listed on Exhibit C-4 delivered to
the Trustee, as such Exhibit may be amended from time to time.
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Pool IV Specified Overcollateralized Amount: means (as such amount may be
changed in accordance with the provisions of Section 2.02 hereof) the greater of
(i) the Pool IV Initial Specified Overcollateralized Amount; (ii) the Specified
Overcollateralization Amount with respect to Pool IV; or (iii) the sum of the
Loan Balances of the three largest Pool IV Mortgages.
Preference Amount: Any amount previously distributed on the Class [A]
Certificates that is recovered as a voidable preference by a trustee in
bankruptcy pursuant to the Bankruptcy Code in accordance with a final
nonappealable order of a court having competent jurisdiction.
Preference Claim: As defined in Section 4.4(e).
Pre-Funding Account: The segregated account, which shall be an Eligible
Account, established and maintained pursuant to Section 3.28 and entitled
"____________________, as Trustee for Cityscape Loan Trust 199__-__ Pass-Through
Certificates 199__-__, Pre-Funding Account."
Pre-Funding Account Deposit: The amount deposited in the Pre-Funding
Account that is allocated for the purchase of Subsequent Mortgage Loans, which
amount is equal to the sum of (i) $________ from the proceeds of the sale of the
Pool I Certificates, (ii) $________ from the proceeds of the sale of the Pool II
Certificates, (iii) $________ from the proceeds of the sale of the Pool III
Certificates and (iv) $________ from the proceeds of the sale of the Pool IV
Certificates.
Premium Rate: With respect to any Distribution Date, a per annum rate
equal to ___%.
Prepayment Assumption: As defined in the Prospectus Supplement.
Principal Distribution Amount: With respect to any Pool and any
Distribution Date, the lesser of:
(a) the Available Funds with respect to such Pool plus any Insured
Payment with respect to such Pool (and, in the case of Pool III
Certificates, any FHA Payments) minus the Interest Distribution
Amount with respect to such Pool; and
(b) (i) the excess, if any, of the sum, without duplication, of:
(A) the Carry-Forward Amount with respect to the
related Pool Certificates as it relates to
principal,
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(B) the Preference Amount owed to the Holders of such Pool
Certificates as such amounts relate to principal
previously distributed on such Pool Certificates,
(C) the principal (including any Principal Prepayment)
actually collected by the Servicer during the related
Due Period with respect to such Pool,
(D) the Loan Balance of each Mortgage Loan in such Pool that
was repurchased by the Seller or purchased by the
Servicer during the related Due Period, to the extent
such Loan Balance is actually received by the Trustee on
or prior to the related Deposit Date,
(E) the Net Recovery Proceeds actually collected by
the Servicer during the related Due Period with
respect to each Mortgage Loan in such Pool
remaining after prior application thereof to all
accrued and unpaid interest on the related
Mortgage Loan (but not in excess of the
then-outstanding Loan Balance of the related
Mortgage Loan), to the extent such Net Recovery
Proceeds are actually received by the Trustee on
or prior to the related Deposit Date,
(F) the amount of any Overcollateralization Deficit
with respect to the related Pool on such
Distribution Date,
(G) the portion of the proceeds received by the Trustee from
any termination of the Trust (to the extent such
proceeds related to principal and such Pool), and
(H) the amount of any Overcollateralization Increase Amount
with respect to the related Pool on such Distribution
Date, to the extent of any Monthly Excess Spread;
over
(ii) the amount of any Overcollateralization Reduction Amount with
respect to the related Pool on such Distribution Date.
Principal Payment: As to any Mortgage Loan and Due Period, all amounts
received or, in the case of the principal portion of any Payment Ahead, deemed
to have been received by the Servicer from or on behalf of the related Mortgagor
during such Due Period (including Principal Prepayments) which, at the time of
receipt or, in the case of any Payment Ahead, at
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the time such Payment Ahead is deemed to have been received, were applied or
were required to be applied by the Servicer in reduction of the Loan Balance of
such Mortgage Loan.
Principal Prepayment: As to any Mortgage Loan and Due Period, any
Mortgagor payment or other recovery in respect of principal on a Mortgage Loan
(including Net Liquidation Proceeds) which, in the case of a Mortgagor payment,
is received in advance of its scheduled due date and is not a Payment Ahead.
Principal Remittance Amount: As defined in Section 3.11(a)(i)(B) hereof.
Property Insurance Proceeds: Proceeds of any title policy, hazard policy
or other insurance policy covering a Mortgage Loan, other than any payments
under the [CERTIFICATE INSURANCE POLICY], to the extent such proceeds are not to
be applied to the restoration of the related Mortgaged Property or released to
the Mortgagor in accordance with the Accepted Servicing Procedures, subject to
the terms and conditions of the related Mortgage Note and Mortgage.
Property Protection Expenses: Expenses (exclusive of overhead expenses)
reasonably paid or incurred by or for the account of the Servicer in connection
with the preservation or protection of a Mortgaged Property or the security of a
Mortgaged Property, including (a) hazard insurance policy premiums, (b) real
estate taxes and property repair, replacement, protection and preservation
expenses, (c) amounts expended to cure or prevent any default with respect to
any mortgage loan senior to the related Mortgage Loan, and (d) similar expenses
reasonably paid or incurred to preserve or protect the value of such Mortgaged
Property or security (including but not limited to reasonable legal fees and
expenses).
Prospectus Supplement: That certain prospectus supplement dated ______ __,
199_ relating to the public offering of the Class [A] Certificates.
Purchase Price: With respect to any Mortgage Loan required to be purchased
pursuant to Section 2.03 or to be purchased pursuant to Section 3.15(c) and as
confirmed by an Officer's Certificate, an amount equal to the sum, without
duplication, of (i) 100% of the Loan Balance as of the date of purchase, (ii)
interest from the date interest was last paid by the Mortgagor through the end
of the calendar month in which such purchase occurs, at a per annum rate equal
to the Mortgage Loan Rate, (iii) any unreimbursed Servicing Advances allocable
to such Mortgage Loan and (iv) in the event the Mortgage Loan is required to be
purchased pursuant to Section 2.03, expenses reasonably incurred or to be
incurred by the Servicer or the Trustee in respect of the breach or defect
giving rise to the purchase obligation, including any reasonable expenses
arising out of the enforcement of the purchase obligation.
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Qualified Replacement Mortgage Loan: A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on the
date of such substitution, (i) have an outstanding principal balance (when taken
together with any other Qualified Replacement Mortgage Loan being substituted
for such Deleted Mortgage Loan), after deduction of all scheduled payments of
principal due in the month of substitution, not in excess of and not
substantially less than the unpaid principal balance of the Deleted Mortgage
Loan as of the date of substitution, (ii) have a Mortgage Loan Rate not less
than (and not more than ___ percentage point[s] in excess of) the Mortgage Loan
Rate of the Deleted Mortgage Loan, (iii) have a remaining term to maturity not
greater than (and not more than _______ less than) that of the Deleted Mortgage
Loan, (iv) have a Combined Loan-to-Value Ratio equal to or lower than the
Combined Loan-to-Value Ratio of the Deleted Mortgage Loan as of such date, (v)
satisfy the criteria set forth from time to time in the definition of "qualified
replacement mortgage" at Section 860G(a)(4) of the Code, (vi) have the same or a
superior lien priority as the Deleted Mortgage Loan, (vii) comply as of the date
of substitution with each representation and warranty set forth in Section 2.07
hereof, (viii) have the same or better property type as the Deleted Mortgage
Loan, (ix) have the same or better occupancy status, (x) have the same Due Date
as the Deleted Mortgage Loan, (xi) be of the same or of a better credit quality
(determined in accordance with the Seller's credit underwriting guidelines as
attached hereto as Exhibit L) as the Mortgage Loan being replaced and (xii) with
respect to Pool III, is an FHA Loan if the Deleted Mortgage Loan was an FHA Loan
or a Conventional Home Improvement Loan if the Deleted Mortgage Loan was a
Conventional Home Improvement Loan. In the event that one or more mortgage loans
are proposed to be substituted for one or more Deleted Mortgage Loans, [THE
CERTIFICATE INSURER] may allow the tests set forth in (i)-(iii) above to be met
on a weighted average basis or other aggregate basis (based on the mortgage
loans substituted in any one Due Period) acceptable to [THE CERTIFICATE
INSURER].
Rating Agencies: S & P and ▇▇▇▇▇'▇ (each, a "Rating Agency"), and their
respective successors in interest. If any such agency or successor is no longer
in existence, "Rating Agency" shall be such statistical credit rating agency, or
other comparable Person, designated by the Servicer, notice of which designation
shall be given to the Trustee.
Realized Loss: As to any Mortgage Loan on which a Final Recovery
Determination has been made, the amount, if any, by which the Loan Balance of
such Mortgage Loan as of the date of such Final Recovery Determination exceeds
the Net Recovery Proceeds allocable to principal for such Mortgage Loan.
With respect to each 90 Day Delinquent FHA Loan for which a Claim is
eligible to be filed with the FHA, the Realized Loss, if any, shall be
determined as of the Determination Date following the date the related FHA
Payment is received by the Trustee, and shall be an amount (not less than zero
or greater than the related outstanding Loan Balance as of the date the Claim
relating to such FHA Loan is filed with the FHA) equal to the outstanding Loan
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Balance of the FHA Loan as of the date of such filing, minus amounts paid from
the Certificate Account relating to such 90 Day Delinquent FHA Loan (such
amounts to be applied first to the Loan Balance of such FHA Loan and then to
interest thereon).
Record Date: With respect to each Distribution Date, the last Business Day
of the month immediately preceding the month in which such Distribution Date
occurs.
Reimbursement Amount: With respect to any Pool and as of any Distribution
Date, the sum of (x) (i) the aggregate of all Insured Payments with respect to
such Pool previously received by the Trustee and not previously repaid to [THE
CERTIFICATE INSURER] pursuant to Section 4.04(a)(vi) hereof plus (ii) interest
accrued on each Insured Payment with respect to such Pool not previously repaid
calculated at a rate equal to the Late Payment Rate from the date the Trustee
received such Insured Payment with respect to such pool, (y) (i) the amount of
any Insurance Premium attributable to such Pool and not paid on the date due and
(ii) interest on such amount at the Late Payment Rate from the date such
Insurance Premium was due to be paid and (z) the amount of any amounts owing and
unpaid under the Insurance Agreement. [THE CERTIFICATE INSURER] shall notify the
Trustee, the Seller and the Servicer of the amount of any Reimbursement Amount
with respect to any Pool.
Related Payments: As described in Section 3.31(c).
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
REMIC Trust: The segregated pool of assets consisting of the Trust Estate
except for the Distribution Account, the Pre-Funding Account and the Capitalized
Interest Account.
Remittance Report: A report prepared by the Trustee pursuant to Section
4.06(a).
Rents from Real Property: With respect to any REO Property, gross income
of the character described in Section 856(d) of the Code.
REO Disposition: The receipt by the Servicer of all Net Recovery Proceeds
and other payments or recoveries (including proceeds of a final sale) which the
Servicer expects to be finally recoverable from the sale or other disposition of
the related REO Property.
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REO Property: A Mortgaged Property acquired by the Servicer in the name of
the Trustee on behalf of the Certificateholders through foreclosure or
deed-in-lieu of foreclosure, as described in Section 3.22.
Request for Release: A release signed by a Servicing Officer, in the form
of Exhibit D-1 or Exhibit D-2 attached hereto.
Reserve Amount: As of any Determination Date, the maximum amount of FHA
insurance available with respect to all FHA Loans. The Reserve Amount initially
will equal at least 10% of the aggregate Loan Balances of all Home Improvement
Loans as of the Cut-off Date and will decline as set forth in 24 C.F.R. Section
201.32(b).
Residential Dwelling: Any one of the following: (i) a detached or
semi-detached single-family dwelling, (ii) a two- to four-unit dwelling, (iii) a
townhouse, (iv) a unit in a condominium or a planned unit development, none of
which is a co-operative unit or a mobile home, but which may be a pre-fabricated
manufactured unit affixed to a permanent foundation or (v) a Small Mixed-Use
Property where generally at least ___% of the gross income arises from
residential purposes in accordance with the Seller's Underwriting Guidelines
attached hereto as Exhibit L.
Responsible Officer: When used with respect to the Trustee, the Chairman
or Vice Chairman of the Board of Directors, the President, any vice president,
any assistant vice president, the Secretary, any assistant secretary, the
Treasurer, any assistant treasurer, the Controller and any assistant controller
or any other officer of the Trustee customarily performing functions similar to
those performed by any of the above designated officers and also to whom, with
respect to a particular matter, such matter is referred because of such
officers' knowledge of and familiarity with the particular subject.
Rolling Six Month Delinquency Rate: With respect to any Pool, beginning
with the sixth Determination Date and as of each Determination Date thereafter
the average of the Pool Delinquency Rates for each of the six immediately
preceding Due Periods.
Rolling Twelve Month Loss Rate: With respect to any Pool, beginning with
the twelfth Determination Date and as of each Determination Date thereafter the
fraction, expressed as a percentage, equal to (x) the dollar amount of all
Realized Losses with respect to such Pool for the preceding twelve months over
(y) the aggregate Loan Balances of the Mortgage Loans in such Pool as of the
opening of business on the first day of the preceding twelfth month.
S&P: Standard & Poor's, a division of McGraw Hill, and its successors,
and, if such division shall for any reason no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any other
"nationally recognized rating organization," as set forth on the most current
list of such organizations released by the Securities and
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Exchange Commission and designated by [THE CERTIFICATE INSURER], notice of which
designation shall be given to the Trustee and the Servicer by [THE CERTIFICATE
INSURER].
SAIF: The Savings Association Insurance Fund of the FDIC.
Securities Act: The Securities Act of 1933, as amended.
Seller: Cityscape Corp., a corporation organized under the laws of New
York, or its successor in interest, in its capacity as the originator of the
Mortgage Loans. The Seller is also recognized in certain states as Cityscape
Mortgage Corp.
Senior Lien: With respect to any Junior Mortgage Loan, any liens on the
related Mortgaged Property of higher priority.
Servicer: The Company or any successor servicer appointed as provided
pursuant to this Agreement.
Servicer Information: Any information contained in a Liquidation Report, a
Servicer Remittance Report or a Delinquency Report.
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
calculation 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
------ ---------------
Servicer Remittance Report: The monthly report described in Section
3.18(a).
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Servicer Termination Test: The Servicer Termination Test is satisfied for
any date of determination thereof if (x) as of the immediately preceding
Determination Date, the Rolling Six Month Delinquency Rate is less than ____%,
(y) the Servicer Loss Test is satisfied and (z) as of the immediately preceding
Determination Date, the Rolling Twelve Month Loss Rate is not greater than
____%.
Servicing Account: The account or accounts created and maintained pursuant
to Section 3.09.
Servicing Advances: The costs and expenses incurred by the Servicer in
connection with (i) the preservation, restoration and protection of a Mortgaged
Property or REO Property, (ii) any enforcement or judicial proceedings,
including foreclosures, (iii) the management (including reasonable fees in
connection therewith) and liquidation of any REO Property, (iv) the payment of
any taxes or insurance premiums, and the performance of its obligations under
Sections 3.01(b)(ii), 3.09, 3.13, 3.15(a) and 3.22, (v) in connection with the
liquidation of a Mortgage Loan, expenditures relating to the purchase or
maintenance of the Senior Lien pursuant to Section 3.24 and (vi) the payment of
any FHA Insurance Premium not otherwise satisfied by FHA Premium Amounts
received.
Servicing Fee: With respect to each Mortgage Loan and for any Due Period,
an amount equal to one month's interest (or in the event of any payment of
interest which accompanies a Principal Prepayment in full made by the Mortgagor
during such calendar month, interest for the number of days covered by such
payment of interest) at the Servicing Fee Rate on that principal amount on which
interest on such Mortgage Loan accrues during such calendar month. A portion of
such Servicing Fee may be paid to any Sub-Servicer as its servicing
compensation.
Servicing Fee Rate: With respect to each Mortgage Loan and Due Period a
per annum rate equal to 0.__%.
Servicing Officer: Any officer of the Servicer or any Sub-Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans, whose name and specimen signatures appear on a list of servicing
officers furnished to the Trustee [AND THE CERTIFICATE INSURER] by the Servicer
or such Sub-Servicer, as such list may from time to time be amended. There shall
at no time be fewer than two Servicing Officers.
Small Mixed-Use Property: A Mortgaged Property with improvements
consisting of a two- to four-unit residential dwelling and not more than two
non-residential units.
Specified Overcollateralization Amount: With respect to any Pool and a
Distribution Date (x) prior to the Stepdown Date with respect to such Pool, the
amount which is equal to __% of the Maximum Collateral Amount for such Pool and
(y) after the Stepdown Date (i) if the Stepdown Requirement with respect to such
Pool is satisfied, the lesser of (A) the amount
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equal to ___% of the then outstanding aggregate Loan Balances of the Mortgage
Loans for such Pool or (B) the Initial Specified Overcollateralization Amount
for such Pool or (ii) if the Stepdown Requirement is not satisfied, the amount
which is equal to __% of the Maximum Collateral Amount for such Pool; provided,
however, that such amount will not be reduced below the product of 0.__% and the
Maximum Collateral Amount for such Pool; provided, further, that if on any
Distribution Date, the Mortgage Portfolio Performance Test with respect to such
Pool is not satisfied, then the Specified Overcollateralization Amount for the
related Pool will be unlimited during the period that such Mortgage Portfolio
Performance Test is not satisfied; provided, further, that notwithstanding
anything to the contrary in this definition of Specified Overcollateralization
Amount, the Specified Overcollateralization Amount for each Pool and for any
Distribution Date on which the Monthly Excess Spread with respect to such Pool
is less than one-twelfth of __% of the Class Certificate Principal Balance of
the Pool Certificates of the related Pool for such Distribution Date, shall be
the sum of (I) the Specified Overcollateralization Amount otherwise obtained
hereunder for the related Pool and (II) three times the excess of (i)
one-twelfth of ____% of the Class Certificate Principal Balance of the Pool
Certificates of the related Pool for such Distribution Date over (ii) the
Monthly Excess Spread for the related Pool for such Distribution Date.
Specified Overcollateralization Deficiency Amount: With respect to any
Pool and any Distribution Date, the excess, if any, of (i) the Specified
Overcollateralized Amount of the related Pool applicable to such Distribution
Date over (ii) the Overcollateralized Amount of the related Pool for such
Distribution Date prior to taking into account the payment of any related
Overcollateralization Increase Amounts for the related Pool on such Distribution
Date.
Startup Day: As defined in Section 2.07.
Stepdown Date: The Determination Date occurring in ________ 199_.
Stepdown Requirement: With respect to each Pool, the Stepdown Requirement
is satisfied for any date of determination thereof if as of such date of
determination (x) the Rolling Six Month Delinquency Rate for such Pool as of the
immediately preceding Determination Date is less than ________%, (y) the
Cumulative Loss Test for such Pool is satisfied and (z) the Rolling Twelve Month
Loss Rate for such Pool is not greater than or equal to 0.__%.
Subsequent Cut-off Date: The date specified as such in a Subsequent
Transfer Agreement with respect to those Subsequent Mortgage Loans which are
transferred and assigned to the Trust pursuant to the related Subsequent
Transfer Agreement.
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Subsequent Cut-off Date Principal Balance: As to any Subsequent Mortgage
Loan, the actual outstanding principal balance due thereunder from the Mortgagor
on the Subsequent Cut-off Date.
Subsequent Mortgage Loan: A Mortgage Loan sold to the Trust pursuant to
Section 2.02 of this Agreement, which shall be listed on the Subsequent Mortgage
Loan Schedule attached to a Subsequent Transfer Agreement.
Subsequent Mortgage Loan Schedule: As of any Subsequent Transfer Date, the
schedule of Subsequent Pool I, Pool II, Pool III and Pool IV Mortgage Loans as
of the related Subsequent Cut-off Date being transferred to the Trust on such
Subsequent Transfer Date pursuant to a Subsequent Transfer Agreement. Each
Subsequent Mortgage Loan Schedule shall contain information regarding the
related Subsequent Mortgage Loans of the type included in, and shall be
substantially in the form of, the Mortgage Loan Schedules attached hereto as
▇▇▇▇▇▇▇▇ ▇-▇, ▇-▇, ▇-▇ and D-4.
Subsequent Pool I Mortgage Loan: A Subsequent Mortgage Loan assigned to
Pool I.
Subsequent Pool II Mortgage Loan: A Subsequent Mortgage Loan assigned to
Pool II.
Subsequent Pool III Mortgage Loan: A Subsequent Mortgage Loan assigned to
Pool III.
Subsequent Pool IV Mortgage Loan: A Subsequent Mortgage Loan assigned to
Pool IV.
Subsequent Purchase Price: As of any Subsequent Transfer Date, with
respect to the Subsequent Mortgage Loans, an amount equal to the sum of (i) the
product of _____% and the aggregate of the Loan Balances as of the Subsequent
Cut-off Date of such Subsequent Mortgage Loans listed in the related Subsequent
Transfer Agreement and (ii) any Additional Subsequent Purchase Price
attributable to such Subsequent Mortgage Loans; provided, however, that the
Additional Subsequent Purchase Price, if any, shall be paid only on the last day
of the Funding Period, provided, further, that in no event shall the Subsequent
Purchase Price exceed 100% of the Loan Balances of the Subsequent Mortgages
Loans.
Subsequent Transfer Agreement: With respect to any Subsequent Mortgage
Loan, the agreement pursuant to which such Subsequent Mortgage Loan is
transferred to the Trust, in substantially the form attached hereto as Exhibit
Q.
Subsequent Transfer Date: The date specified in each Subsequent Transfer
Agreement, but no later than __________ __, 199_.
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Subsequent Transfer Deposit: The amount deposited by the Seller in the
Collection Account in connection with each conveyance of Subsequent Mortgage
Loans pursuant to Section 2.02, which amount is equal to one month's interest on
the principal balance of each Subsequent Mortgage Loan that does not have a
Monthly Payment due in the Due Period relating to the __________ 199_
Distribution Date, at a per annum rate equal to the Mortgage Loan Rate for each
such Mortgage Loan, net of the applicable Servicing Fee Rate.
Sub-Servicer: Any Person with which the Servicer has entered into a
Sub-Servicing Agreement and which meets the qualifications of a Sub-Servicer
pursuant to Section 3.02.
Sub-Servicing Account: An account established by a Sub-Servicer which
meets the requirements set forth in Section 3.08 and is otherwise acceptable to
the Servicer.
Sub-Servicing Agreement: The written contract between the Servicer and a
Sub-Servicer and any successor Sub-Servicer relating to servicing and
administration of certain Mortgage Loans as provided in Section 3.02.
Tax Matters Person: The Tax Matters Person appointed pursuant to Section
11.12 hereof.
Tax Returns: The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of REMIC Trust in its capacity as a REMIC under the REMIC Provisions,
together with any and all other information reports or returns that may be
required to be furnished to the Certificateholders or filed with the Internal
Revenue Service or any other governmental taxing authority under any applicable
provisions of federal, state or local tax laws.
Termination Price: As defined in Section 10.01(b) hereof.
30 days Delinquent: A Mortgage Loan is "30 days Delinquent" if any Monthly
Payment due thereon has not been received by the close of business on the
corresponding day of the month immediately succeeding the month in which such
Monthly Payment was due corresponding to the day that such monthly payment was
due , or, if there is no such corresponding day (e.g., as when a 30-day month
follows a 31-day month in which a payment was due on the 31st day of such month)
then on the last day of such immediately succeeding month. Similarly for "60
days Delinquent," "90 days Delinquent" and so on.
Title I: Section 2 of Title I of the National Housing Act and the rules
and regulations promulgated thereunder.
Trust: Cityscape Loan Trust 199_-_, the trust created hereunder.
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Trust Estate: The segregated pool of assets subject hereto, constituting
the trust created hereby and to be administered hereunder, consisting of: (i)
such Mortgage Loans as from time to time are subject to this Agreement, together
with the Mortgage Files relating thereto, and together with all collections
thereon and proceeds thereof, (ii) any REO Property, together with all
collections thereon and proceeds thereof, (iii) the Trustee's rights with
respect to the Mortgage Loans under all insurance policies required to be
maintained pursuant to this Agreement and any proceeds thereof, (iv) the
[CERTIFICATE INSURANCE POLICY], (v) the rights and remedies of the Trustee
against any person making any representation or warranty to the Trustee
hereunder, to the extent provided herein, and (vi) each Account and the Policy
Payments Account, together with such assets that are deposited therein from time
to time and any investments thereof, together with any and all income, proceeds
and payments with respect thereto. The Mortgage Loans included from time to time
in the Trust shall be divided into four separate sub-trusts, one for the Pool I
Mortgage Loans, one for the Pool II Mortgage Loans, one for the Pool III
Mortgage Loans and one for the Pool IV Mortgage Loans.
Trustee: ____________________, a ________, and its successors in interest
or any successor trustee appointed as provided pursuant to this Agreement. In
the event that the Trust contains FHA Loans, the Trustee shall be required to
have and maintain a valid FHA Contract of Insurance, or else appoint a
co-trustee pursuant to Section 8.10 that is so insured, to act as trustee with
respect to the FHA Loans. In the event of the appointment of a co-trustee
pursuant to the preceding sentence, the term "Trustee," as used in this
Agreement, shall include such co-trustee with respect to any references herein
related to the FHA Loans or as the context otherwise requires.
Trustee's Fee: With respect to any Distribution Date, the product of (x)
one-twelfth of the Trustee's Fee Rate and (y) the aggregate Loan Balances of all
Mortgage Loans as of the opening of business on the first day of the related Due
Period.
Trustee's Fee Rate: With respect to any Distribution Date, the greater of
(x) _____% and (y) the fraction, expressed as a percentage, the numerator of
which is $________ and the denominator of which is the aggregate Loan Balance of
all Mortgage Loans as of opening of business on the first day of the related Due
Period.
Underwriter: Greenwich Capital Markets, Inc., a ____________ corporation,
and ____________, a ____________ corporation, each in its capacity as
underwriter of the Class [A] Certificates.
Uninsured Cause: Any cause of damage to a Mortgaged Property such that the
complete restoration of such property is not fully reimbursable by the hazard
insurance policies required to be maintained pursuant to Section 3.13.
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United States Person or U.S. Person: A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the Unites States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States. The term "United States" shall have the meaning set forth in
Section 7701 of the Code or successor provisions.
Vice President: Any vice president, whether or not designated by a number
or a word or words added before or after the title "vice president."
Voting Interest: The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. Except as otherwise
expressly provided for herein, for so long as the Class [A] Certificates are
outstanding, 100% of the Voting Interests shall be allocated among Classes of
Class [A] Certificates in proportion to their Certificate Principal Balances and
among Holders of each Class in proportion to their respective Voting
Percentages; provided, however, that any Class [A] Certificate registered in the
name of the Servicer, the Seller or the Trustee or any of their respective
affiliates shall not be included in the calculation of Voting Interests;
provided, further, that when the Class [A] Certificates are no longer
outstanding, 100% of the Voting Interests shall be allocated among Holders of
the Class R Certificates in accordance with their respective Voting Percentage.
Voting Percentage: With respect to any Class of Class [A] Certificates, a
fraction, expressed as a decimal, the numerator of which is the Certificate
Principal Balance represented by such Class [A] Certificate and the denominator
of which is the Class [A] Certificate Principal Balance of the related Class.
With respect to a Class R Certificate, the Percentage Interest set forth on such
Certificate.
Written Order to Authenticate: A written order in the form of Exhibit K
hereto by which the Seller directs the Trustee to issue the Certificates.
Section 1.02. Interest Calculations. All calculations of interest at the
Mortgage Loan Rate that are made in respect of the Loan Balance of a Mortgage
Loan shall be made on a daily basis using a 360-day year of twelve 30-day
months.
All calculations of interest with respect to Fixed Rate Mortgage Loans
will be computed on the basis of a 360-day year of twelve 30-day months.
All calculations of interest with respect to Adjustable Rate Mortgage
Loans will be computed on the basis of the actual number of days elapsed in the
related Due Period and a year of 360 days.
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Section 1.03. Determination of Material Adverse Effect. Whenever a
determination is to be made under this Agreement as to whether a given action,
course of conduct, event or set of facts or circumstances could or would have a
material adverse effect on the Trust or the Certificateholder (or any similar or
analogous determination), such determination shall be made without giving effect
to the insurance provided by the [CERTIFICATE INSURANCE POLICY]; subject to the
FHA Regulations, if applicable.
ARTICLE TWO
CONVEYANCE OF THE TRUST;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of the Trust. The Seller, concurrently with the
execution and delivery of this Agreement, does hereby irrevocably sell,
transfer, assign, set over and otherwise convey to the Trustee, in trust for the
benefit of the Certificateholders of the related Pool, without recourse (except
as otherwise explicitly provided for herein), all of its right, title and
interest in and to the Trust, including specifically, without limitation, the
Initial Pool I, Pool II, Pool III and Pool IV Mortgage Loans, the Mortgages, the
Mortgage Files, the Mortgage Notes and, with respect to FHA Loans, all rights
under the Reserve Amount relating to such FHA Loans, including all interest and
principal received or deemed to be received by the Seller on or with respect to
the Mortgage Loans on or after the Cut-off Date (whether in the nature of
amounts held by the Seller for application on behalf of the related Mortgagor as
a Monthly Payment that is due on any date on or after the Cut-off Date or
otherwise), together with all of its right, title and interest in and to the
proceeds received on or after the Cut-off Date of any related insurance
policies. In addition, on or prior to the Closing Date the Seller shall [(i)]
cause the [CERTIFICATE INSURANCE POLICY] to be delivered to the Trustee [AND
(ii) DEPOSIT THE CLOSING DATE DEPOSIT IN THE COLLECTION ACCOUNT].
The Mortgage Loans that from time to time constitute part of the Trust
Estate shall be divided into four separate sub-trusts, one for the Pool I
Mortgage Loans, one for the Pool II Mortgage Loans, one for the Pool III
Mortgage Loans and one for the Pool IV Mortgage Loans. Nothing in this
Agreement, however, shall be deemed to create a transfer of an FHA Loan in
violation of Title I or the FHA Regulations.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Trust by the Seller to the Trustee, such
sale and assignment are deemed to constitute a pledge of security for a loan, it
is the intent of this Agreement that the Seller shall be deemed to have granted
to the Trustee for the benefit of the Certificateholders of the related Pool a
first priority perfected security interest in all of the Seller's right, title
and interest in and to the Mortgage Loans, the Mortgages, the Mortgage Files and
the Mortgage Notes, all payments of principal or interest on the Mortgage Loans
received on or after the Cut-off Date, all other payments (exclusive of
assumption fees, late payment charges,
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charges for checks returned for insufficient funds, prepayment fees, if any, and
extension and other administrative charges) made in respect of such Mortgage
Loans on or after the Cut-off Date and all proceeds of any thereof with respect
to the related Pool, including all amounts on deposit in the Certificate
Account, the Collection Account, the Pre-Funding Account and the Capitalized
Interest Account and amounts invested in Permitted Investments, and that this
Agreement shall constitute a security agreement under applicable law.
The Company confirms to the Trustee that it has caused its computer
records relating to the Mortgage Loans to indicate by a code that the Mortgage
Loans have been sold to the Trustee on behalf of the Trust and constitute part
of the Trust in accordance with the terms of the Trust and that the Company will
treat the transaction contemplated by such sale and assignment as a sale in
accordance with generally accepted accounting principles and will reflect such
sale on its primary accounting records.
In connection with such sale and assignment, the Company, in its capacity
as Seller hereunder, does hereby deliver to, and deposit with, the Trustee the
originals of the following documents or instruments with respect to each
Mortgage Loan so assigned:
(a) The original Mortgage Note, endorsed in blank or in the
following form: "Pay to the order of _______________, as Trustee under the
Pooling and Servicing Agreement, dated as of _____ __, 199_, Cityscape
Loan Trust 199_-_, without recourse", with all prior and intervening
endorsements showing a complete chain of endorsement from origination of
the Mortgage Loan to the Seller;
(b) The original Mortgage with evidence of recording thereon (or, if
the original Mortgage has not been returned from the applicable public
recording office or is not otherwise available, a copy of the Mortgage
certified by a Responsible Officer of the Seller or by the closing
attorney or by an officer of the title insurer or agent of the title
insurer which issued the related title insurance policy or commitment
therefor to be a true and complete copy of the original Mortgage submitted
for recording) and, if the Mortgage was executed pursuant to a power of
attorney, the original power of attorney with evidence of recording
thereon (or, if the original power of attorney has not been returned from
the applicable public recording office or is not otherwise available, a
copy of the power of attorney certified by a Responsible Officer of the
Seller or by the closing attorney or by an officer of the title insurer or
agent of the title insurer which issued the related title insurance policy
or commitment therefor, to be a true and complete copy of the original
power of attorney submitted for recording);
(c) The original executed Assignment of the Mortgage, acceptable for
recording except with respect to any currently unavailable recording
information, from the Seller to the Trustee in blank or in the following
form:
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"___________________, as Trustee under the Pooling and Servicing
Agreement, dated as of _______ __, 199_, Cityscape Loan Trust 199_-_";
(d) The original Assignment and any intervening Assignments of the
Mortgage, with evidence of recording thereon, showing a complete chain of
assignment from origination of the Mortgage Loan to the Seller (or, if any
such Assignment has not been returned from the applicable public recording
office or is not otherwise available, a copy of such Assignment certified
by a Responsible Officer of the Seller or by the closing attorney or by an
officer of the title insurer or agent of the title insurer which issued
the related title insurance policy or commitment therefor to be a true and
complete copy of the original Assignment submitted for recording);
(e) The original, or a copy certified by the Seller to be a true and
correct copy of the original, of each assumption, modification, written
assurance or substitution agreement, if any;
(f) (1) Except with respect to the FHA Loans, (i) an original, or a
copy certified by the Seller to be a true and correct copy of the
original, of a lender's title insurance policy, or if a lender's title
policy has not been issued as of the Closing Date of a commitment (binder)
(including any marked additions thereto or deletions therefrom) to issue
such policy, and (ii) either: (A) an original hazard insurance policy; (B)
a certificate of insurance issued by the related insurer or its agent as
to such policy; or (C) an Officer's Certificate of the Seller certifying
that a hazard insurance policy is in effect as to the Mortgaged Property
(in which case such Officer's Certificate shall be accompanied by a copy
of such hazard insurance policy); and (2) with respect to the FHA Loans,
the written Mortgage Loan application, title report, credit reconciliation
worksheet, credit investigation receipts and approval sheet; and
(g) If required because a Mortgaged Property is located in a
federally designated special flood zone, either: (A) an original flood
insurance policy or (B) a certificate of insurance issued by the related
insurer or its agent as to such policy; or (C) an Officer's Certificate of
the Seller certifying that a flood insurance policy is in effect covering
the Mortgaged Property (in which case such Officer's Certificate shall be
accompanied by a copy of such flood insurance policy).
With respect to any Mortgage referred to in clause (b) above as to which
the original Mortgage is not available as of the Closing Date, and with respect
to any Assignment referred to in clause (c) above or clause (d) above as to
which the original Assignment is not available as of the Closing Date, the
Seller shall deliver, prior to the Closing Date, a copy of such Mortgage or such
Assignment, as the case may be, certified by the Seller to be a true and correct
copy, to the Trustee and shall also deliver the original Mortgage, or where the
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original Mortgage is unavailable a copy thereof certified by the applicable
public recording office, and the original Assignment, or where the original
Assignment is unavailable a copy thereof certified by the applicable public
recording office, to the Trustee within five Business Days of receipt thereof by
the Seller but in no event later than 360 days (or such longer period as [ANY
ONE RATING AGENCY/THE CERTIFICATE INSURER] may approve in writing with respect
to specific Mortgage Loans upon the request of the Seller) following the date of
origination of the related Mortgage Loan or the date of such Assignment to the
Seller, as the case may be. The failure of the Seller to deliver to the Trustee
(x) any original Mortgage under clause (b) above (or where the original is
unavailable a copy thereof certified by the applicable public recording office),
or (y) any original Assignment under clause (c) above or clause (d) above (or
where the original is unavailable a copy thereof certified by the applicable
public recording office), shall not be deemed a breach of this Agreement for any
purpose whatsoever until the expiration of such 360 day period (or such longer
period as [ANY ONE RATING AGENCY/THE CERTIFICATE INSURER] may approve in writing
with respect to specific Mortgage Loans upon the request of the Seller).
The Trustee shall promptly (and in no event later than twenty Business
Days following the Closing Date) submit for recording, at the Seller's own
expense, in the appropriate public office for real property records, each
original Assignment referred to in clause (c) above, as well as each original
Assignment referred to in clause (d) above that was not previously submitted for
recording. With respect to any original Assignment referred to in clause (c)
above as to which the related recording information is unavailable within five
Business Days following the Closing Date, such original Assignment shall be
submitted for recording within five Business Days after receipt of such
information but in no event later than 180 days (or such longer period, up to an
additional 180 days, as [ANY ONE RATING AGENCY/THE CERTIFICATE INSURER] may
approve and any longer period as approved by [ANY ONE RATING AGENCY/THE
CERTIFICATE INSURER] and the Majority Certificateholders in writing with respect
to specific Mortgage Loans upon the request of the Seller) after the Closing
Date. The Seller shall deliver each recorded Assignment referred to in clause
(c) above or, where the original is unavailable, a copy thereof certified by the
applicable public recording office to be a true and correct copy of the
original, to the Trustee within 360 days (or such longer period as [ANY ONE
RATING AGENCY/THE CERTIFICATE INSURER] may approve in writing with respect to
specific Mortgage Loans upon the request of the Seller) of the Closing Date or
Subsequent Transfer Date, and any failure of the Seller to deliver to the
Trustee, prior to the expiration of such 360 day period (or any such longer
period as [ANY ONE RATING AGENCY/THE CERTIFICATE INSURER] may have approved in
accordance with the terms set forth above), any such recorded Assignment, or
such certified copy if such recorded Assignment has not been received by it,
shall not be deemed a breach of this Agreement for any purpose. In the event
that any such Assignment is lost or returned unrecorded because of a defect
therein, the Seller shall promptly prepare a substitute Assignment or cure such
defect, as the case may be, and thereafter cause each such Assignment to be duly
recorded.
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The Trustee shall promptly upon receipt thereof, with respect to each
Mortgage Note and Assignment of Mortgage delivered in blank in accordance with
clause (a) above and clause (c) above, respectively, endorse each such Mortgage
Note and Assignment in the form described therein.
The Servicer shall promptly upon receipt thereof (and in no event later
than the earlier of (i) twenty Business Days following such receipt and (ii) 360
days after the Closing Date or Subsequent Transfer Date (or such longer period
as [ANY ONE RATING AGENCY/THE CERTIFICATE INSURER] may approve in writing with
respect to specific Mortgage Loans upon the request of the Seller)), deliver to
the Trustee (a) the original recorded Mortgage in those instances where a
certified copy thereof was delivered to the Trustee; (b) the original recorded
Assignment of Mortgage to the Trustee; (c) the original recorded Assignment or
Assignments of the Mortgage showing a complete chain of assignment from
origination of a Mortgage Loan to the Seller in those instances where certified
copies thereof were delivered to the Trustee; (d) the original policy of title
insurance or a copy certified by the Seller to be a true and correct copy in
those instances where a commitment (binder) (including any marked additions
thereto or deletions therefrom) to issue such policy was delivered to the
Trustee; and (e) any other original documents constituting a part of a Mortgage
File received with respect to any Mortgage Loan, including, but not limited to,
any original documents evidencing an assumption or modification of any Mortgage
Loan.
In the event that [ANY ONE RATING AGENCY/THE CERTIFICATE INSURER] approves
in writing any extension of time for delivery of any document as provided for in
this Section 2.01, a copy of such written approval shall be sent to the Trustee.
All original documents relating to the Mortgage Loans that are not
delivered to the Trustee are and shall be held by the Seller or the Servicer, as
the case may be, in trust for the benefit of the Trustee on behalf of the
Certificateholders. In the event that any such original document is required
pursuant to the terms of this Section to be a part of a Mortgage File, such
document shall be delivered promptly to the Trustee. Any original document that
is not required pursuant to the terms of this Section to be a part of a Mortgage
File delivered to or held by the Trustee shall be delivered promptly to the
Servicer.
If the Seller has not delivered all required documentation with respect to
any Mortgage Loan within the time periods specified in this Agreement, the
Seller shall be required to take action with respect to such Mortgage Loan as
and to the extent provided in Section 2.03 hereof.
Section 2.02. Conveyance of the Subsequent Mortgage Loans. Subject to the
conditions set forth in the paragraphs below, in consideration of the Trustee's
delivery on the related Subsequent Transfer Dates to or upon the order of the
Seller of the Subsequent Purchase Price of the related Subsequent Mortgage Loans
from amounts on deposit in the
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Pre-Funding Account, the Seller shall, from time to time, on any Subsequent
Transfer Date sell, transfer, assign, set over and otherwise convey without
recourse, to the Trustee on behalf of the Certificateholders of the related
Pool, all right, title and interest of the Seller in and to each Subsequent
Mortgage Loan identified on the Subsequent Mortgage Loan Schedule attached to
the related Subsequent Transfer Agreement delivered by the Seller on such
Subsequent Transfer Date, including all of its right, title and interest in and
to principal and interest received or deemed to be received by the Seller on
each such Subsequent Mortgage Loan on and after the related Subsequent Cut-off
Date (whether in the nature of amounts held by the Seller for application on
behalf of the related Mortgagor as a Monthly Payment that is due on any date on
or after the related Subsequent Cut-off Date or otherwise) and all items with
respect to such Subsequent Mortgage Loan to be delivered pursuant to Section
2.01 and other items in the related Mortgage File; provided, however, that the
Seller reserves and retains all of its right, title and interest in and to
principal (including prepayments) and interest collected on each such Subsequent
Mortgage Loan prior to the related Subsequent Cut-off Date. The transfer by the
Seller of the Subsequent Mortgage Loans set forth on the Subsequent Mortgage
Loan Schedule to the Trustee shall be absolute and shall be intended by the
parties hereto to be treated as a sale by the Seller.
In connection with each conveyance of Subsequent Mortgage Loans, the
Seller shall deposit any applicable Subsequent Transfer Deposit in the
Collection Account on the related Subsequent Transfer Date.
In the event that, notwithstanding the intent of the parties hereto to
effect a sale and assignment of the Subsequent Mortgage Loans on the related
Subsequent Transfer Date by the Seller to the Trustee, such sale and assignment
will be deemed to constitute a pledge of security for a loan, it is the intent
of this Agreement that the Seller shall be deemed to have granted to the Trustee
for the benefit of the Certificateholders of the related Pool a first priority
perfected security interest in all of the Seller's right, title and interest in
and to the Subsequent Mortgage Loans, the Mortgages, the Mortgage Files and the
Mortgage Notes, all payments of principal and interest on the Subsequent
Mortgage Loans received on or after the related Subsequent Cut-off Date, all
other payments (exclusive of assumption fees, late payment charges, charges for
checks returned for insufficient funds, prepayment fees, if any, and extension
and other administrative charges) made in respect of such Subsequent Mortgage
Loans on or after the related Subsequent Cut-off Date and all proceeds of any
thereof with respect to the related Pool, and that this Agreement and the
related Subsequent Transfer Agreement shall each constitute a security agreement
with respect to the related Subsequent Mortgage Loans under applicable law.
The amount released from the Pre-Funding Account with respect to any Pool
on any Subsequent Transfer Date in connection with any conveyance of Subsequent
Mortgage Loans into such Pool shall be equal to the aggregate of the Subsequent
Purchase Prices for such Subsequent Mortgage Loans, which amount shall not
exceed the Pre-Funding Account
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Deposit with respect to such Pool; provided, however, that any Additional
Subsequent Purchase Price in respect of the Subsequent Mortgage Loans shall only
be paid on the last day of the Funding Period. The amount released from the
Pre-Funding Account in connection with any conveyance of Subsequent Mortgage
Loans shall, for federal income tax purposes, be considered cash contributed to
the REMIC Trust by the Seller and used by the Trustee to acquire the related
Subsequent Mortgage Loans.
On the related Subsequent Transfer Date, the Seller shall transfer to the
Trustee the Subsequent Mortgage Loans and the other property and rights related
thereto described in the first paragraph in this section only upon the
satisfaction of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(a) the Seller shall provide the Trustee and the [RATING
AGENCIES/CERTIFICATE INSURER] with an Addition Notice and shall provide
any information reasonably requested by the Trustee or the [RATING
AGENCIES/CERTIFICATE INSURER] with respect to the Subsequent Mortgage
Loans;
(b) the Seller shall deliver to the Trustee[, THE CERTIFICATE
INSURER] and the Rating Agencies a duly executed Subsequent Transfer
Agreement and any other exhibits listed thereon;
(c) the Seller shall deposit in the Collection Account all
collections in respect of the Subsequent Mortgage Loans received on or
after the related Subsequent Cut-off Date;
(d) the Seller shall certify that, as of the Subsequent Transfer
Date, the Seller was not insolvent nor was made insolvent by such transfer
nor is aware of any pending insolvency;
(e) the Seller shall certify that such addition of Subsequent
Mortgage Loans will not result in a material adverse tax consequence to
the Trust or the Holders of Class [A] Certificates;
(f) the Funding Period shall not have terminated;
(g) the Seller shall make the representations and warranties set
forth in Section A of Schedule II to the Agreement; and
(h) on such Subsequent Transfer Date, the Seller shall deposit any
applicable Subsequent Transfer Deposit in the Collection Account.
In addition, the Seller will provide [THE CERTIFICATE INSURER AND] the
Trustee with data regarding all Subsequent Mortgage Loans transferred to the
Trust on any Subsequent
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Transfer Date at least ten Business Days prior to the end of the Funding Period.
No later than the end of the Funding Period, the following conditions shall have
been satisfied with respect to all Subsequent Mortgage Loans transferred to the
Trust on any Subsequent Transfer Date:
(i) the Seller shall have delivered to the Trustee and the [RATING
AGENCIES/CERTIFICATE INSURER] an Officer's Certificate confirming the
satisfaction of each condition precedent specified in this Section 2.02
and in the related Subsequent Transfer
Agreements;
(ii) the Seller shall have delivered to the [RATING
AGENCIES/CERTIFICATE INSURER] and the Trustee Opinions of Counsel with
respect to the transfer of all of the Subsequent Mortgage Loans to the
Trust on any Subsequent Transfer Date substantially in the form of the
Opinions of Counsel delivered to the Trustee [AND THE CERTIFICATE INSURER]
on the Closing Date (regarding bankruptcy, corporate and tax matters) or,
in lieu of such Opinions of Counsel, a letter of counsel to the effect
that the [RATING AGENCIES/CERTIFICATE INSURER] and the Trustee may rely on
the Opinion of Counsel delivered on the Closing Date by such counsel to
the same extent as if it were dated the date of such letter authorizing
reliance (except that the statements in such Opinion of Counsel shall be
deemed to give effect to the transfer of the Subsequent Mortgage Loans and
other changes of fact and law since the date of such Opinion of Counsel);
(iii) the Trustee shall deliver to the Rating Agencies[, THE
CERTIFICATE INSURER] and the Seller an Opinion of Counsel with respect to
each of the Subsequent Transfer Agreements substantially in the form of
the Opinion of Counsel delivered to the Seller and the [RATING
AGENCIES/CERTIFICATE INSURER] on the Closing Date or, in lieu of such
Opinions of Counsel, a letter of counsel to the effect that the Rating
Agencies[, THE CERTIFICATE INSURER] and the Seller may rely on the Opinion
of Counsel delivered on the Closing Date by such counsel to the same
extent as if it were dated the date of such letter authorizing reliance
(except that the statements in such Opinion of Counsel shall be deemed to
give effect to the Subsequent Transfer Agreements and other changes of
fact and law since the date of such Opinion of Counsel); [AND]
(iv) The Seller shall deliver to the Trustee an Officer's Certificate
confirming that each Subsequent Pool I Mortgage Loan, Subsequent Pool II
Mortgage Loan, Subsequent Pool III Mortgage Loan or Subsequent Pool IV
Mortgage Loan, as the case may be, conforms in all material respects to
the representations and warranties concerning the individual Initial Pool
I Mortgage Loans, Initial Pool II Mortgage Loans, Initial Pool III
Mortgage Loans or Initial Pool IV Mortgage Loans, as the case may be
(including, if such Subsequent Pool III
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Mortgage Loan is an FHA Loan, the representations and warranties
concerning FHA Loans), set forth in Sections 2.04 and 2.05 and Section B
of Schedule II to the Agreement (except that any reference therein to the
Cut-off Date shall be deemed a reference to the applicable Subsequent
Cut-off Date) and that the inclusion of all Subsequent Pool I Mortgage
Loans, Subsequent Pool II Mortgage Loans, Subsequent Pool III Mortgage
Loans or Subsequent Pool IV Mortgage Loans, as the case may be, being
transferred to the Trust Estate on such Subsequent Transfer Date will not
change, in any material respect, the characteristics of the Initial Pool I
Mortgage Loans, Initial Pool II Mortgage Loans, Initial Pool III Mortgage
Loans or Initial Pool IV Mortgage Loans, as the case may be, in the
aggregate, set forth in Sections 2.04 and 2.05, in Section B of Schedule
II to the Agreement and in the Prospectus Supplement; [AND
(v) THE CERTIFICATE INSURER SHALL DELIVER TO THE SELLER, THE TRUSTEE
AND THE RATING AGENCIES A WRITTEN NOTICE CONFIRMING THE CERTIFICATE
INSURER'S CONSENT AND APPROVAL TO THE ADDITION OF ALL SUBSEQUENT POOL I
MORTGAGE LOANS, SUBSEQUENT POOL II MORTGAGE LOANS, SUBSEQUENT POOL III
MORTGAGE LOANS OR SUBSEQUENT POOL IV MORTGAGE LOANS, AS THE CASE MAY BE,
PURCHASED BY THE TRUST ON ANY SUBSEQUENT TRANSFER DATE.]
Upon the satisfaction of the conditions set forth in clauses (i) through
[(iv)/(v)] of the immediately preceding paragraph, on the last Subsequent
Transfer Date during the Funding Period, the Trustee shall release to the Seller
from the Pre-Funding Account the aggregate Additional Subsequent Purchase Prices
with respect to all Subsequent Mortgage Loans, which amount shall not exceed the
Pre-Funding Account Deposit.
In connection with the transfer of any Subsequent Mortgage Loans to the
Trust Estate, the Seller, the Servicer and the Trustee may[, WITH THE PRIOR
WRITTEN CONSENT OF THE CERTIFICATE INSURER,] amend the definition of "Specified
Overcollateralization Amount" (or any component of the definition thereof) with
respect to the related Pool for the purpose of changing the related Specified
Overcollateralization Amount (or any component of the definition thereof);
provided, however, that any such amendment, other than an amendment increasing
the Pool I, Pool II, Pool III or Pool IV Initial Specified Overcollateralized
Amount (or any component of the definition thereof), as the case may be, and
accompanied by a cash deposit into the Collection Account pursuant to Section
3.10, must comply with the provisions of Section 11.01.
Section 2.03. Acceptance by Trustee; Repurchase or Substitution of
Mortgage Loans. The Trustee acknowledges the sale and assignment of the Trust
and receipt by it of the original Mortgage Notes, Assignments and Mortgages
pursuant to this Agreement [AND THE DELIVERY TO IT OF THE CERTIFICATE INSURANCE
POLICY,] and, subject to the provisions of the penultimate paragraph of Section
2.01, any exceptions noted on the Trustee's certificate in
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the form of Exhibit E-1 and the review provided for in this Section, the
documents referred to in clauses (a) through (g) of Section 2.01, and the
Officer's Certificates delivered pursuant to Section 2.01, declares that it will
hold the Trust in trust upon the terms herein set forth for the use and benefit
of all present and future Certificateholders of the related Pool. The Trustee
agrees, for the benefit of Certificateholders of the related Pool, to review
each Mortgage File within ten days after the Closing Date (or, with respect to
the Subsequent Mortgage Loans, ten days after the Subsequent Transfer Date) to
determine if the documents described in Section 2.01(a)-(d), (f)-(g) have been
executed and received, and that such documents relate to the Mortgage Loans
identified in the Mortgage Loan Schedule or the Subsequent Mortgage Loan
Schedule, as applicable, and in so doing the Trustee may rely on the purported
due execution and genuineness of any such document and on the purported
genuineness of any signature thereon. If within such ten-day period the Trustee
finds any document constituting a part of a Mortgage File not to have been
executed or received, or to be unrelated to the Mortgage Loans identified in the
Mortgage Loan Schedule, then the Trustee shall promptly notify the Seller and
shall provide a copy of such notice to [THE CERTIFICATE INSURER], and the Seller
shall have a period of 90 days after such notice within which to correct or cure
any such defect.
Further, for each Mortgage Loan (other than Pool III Mortgage Loans) with
an original Loan Balance in excess of $_____________ for which the documents in
possession of the Trustee indicate that the Seller conducted a drive-by
appraisal pursuant to FHLMC Form 704 or alternative FNMA Form in connection with
originating such Mortgage Loan, the Trustee shall verify whether the Trustee's
Mortgage File shows that such Mortgage Loan (A) had an original Loan Balance not
in excess of $_____________ and (B) has a Combined Loan-to-Value Ratio less than
_____% (based solely on the Combined Loan-to-Value Ratio included on the
Mortgage Loan Schedule) and/or an appraisal on FNMA/FHLMC Form 1004 was
performed by the Seller within one year prior to the origination of such
Mortgage Loan. Notwithstanding the second paragraph of Section 8.01, the Trustee
shall be under no duty or obligation to inspect, review or examine any such
documents, instruments, certificates or other papers to determine that they are
genuine, enforceable, or appropriate for the represented purpose or that they
have actually been recorded or that they are other than what they purport to be
on their face. Within ten days after the Closing Date, the Trustee shall deliver
to the Seller, the Servicer [AND THE CERTIFICATE INSURER] a certificate in the
form of Exhibit E-2, with any applicable exceptions noted therein.
If the Trustee has notified the Seller of a defect in a Mortgage File
following its review of the Mortgage Files pursuant to this Section and such
defect remains uncured and such defect materially and adversely affects the
interests of the Certificateholders in the related Mortgage Loan, the Seller
shall, (i) in the case of a defect consisting solely of the failure of the
Company to deliver the original Mortgage or any intervening mortgage assignment
with evidence of recording thereon, on the first Deposit Date occurring after
the expiration of 360 days (or any longer period approved by [THE CERTIFICATE
INSURER] and
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notified to the Trustee pursuant to Section 2.01) from the Closing Date and (ii)
in the case of all other defects, on the Deposit Date occurring not later than
90 days (which period may be extended for up to an additional 60 days by [ANY
ONE RATING AGENCY/THE CERTIFICATE INSURER] (or such longer period as [ANY ONE
RATING AGENCY/THE CERTIFICATE INSURER] may consent to), if in its reasonable
judgment it believes the Seller is proceeding diligently to cure any such breach
or missing document) after receipt of notice of such defect from the Trustee,
either (I) repurchase the related Mortgage Loan (including any property acquired
in respect thereof and any insurance policy or insurance proceeds with respect
thereto) from the Trust at a price equal to the Purchase Price, which shall be
accomplished by deposit of monies by the Seller in the Certificate Account on
such Deposit Date, or (II) substitute a Qualified Replacement Mortgage Loan for
the related Mortgage Loan. Notwithstanding the time periods in the previous
sentence, in the case of a defect that would cause the related Mortgage Loan or
Subsequent Mortgage Loan to fail to be a "qualified mortgage" as such term is
defined in the REMIC Provisions if such defect had been discovered prior to the
Startup Day, the Seller must either repurchase the related Mortgage Loan or
Subsequent Mortgage Loan or substitute a Qualified Replacement Mortgage Loan for
the related Mortgage Loan, as discussed above, no more than 90 days after the
discovery of such defect.
Upon receipt by the Trustee of an Officer's Certificate of the Servicer to
the effect that the Purchase Price for a Defective Mortgage Loan (other than a
Defective Mortgage Loan that is a Deleted Mortgage Loan) has been deposited in
the Certificate Account, and upon confirmation by the Trustee that such Purchase
Price has been received by it, the Trustee shall execute and deliver such
instrument of transfer or assignment presented to it by the Seller, in each case
without recourse, as shall be necessary to vest in the Seller legal and
beneficial ownership of such repurchased Defective Mortgage Loan (including any
property acquired in respect thereof or insurance policy or insurance proceeds
with respect thereto), including, without limitation, for each FHA Loan, an FHA
Transfer of Note Report to be filed with the FHA.
Payments received with respect to Qualified Replacement Mortgage Loans in
the Due Period prior to the Deposit Date on which such substitution occurs will
not be part of the Trust and will be retained by the Seller. For the
Distribution Date following the Deposit Date on which such substitution occurs,
distributions to Certificateholders will reflect the payments received on such
Deleted Mortgage Loan in the related Due Period, and the Seller shall thereafter
be entitled to retain all amounts subsequently received in respect of such
Deleted Mortgage Loan. In the case of a Qualified Replacement Mortgage Loan, the
Mortgage File relating thereto shall be delivered to the Trustee and the amount,
if any, by which the Loan Balance of the related Deleted Mortgage Loan exceeds
the Loan Balance of the Qualified Replacement Mortgage Loan shall be remitted by
the Seller to the Trustee for deposit in the Certificate Account on the Deposit
Date on which the substitution occurs. For purposes of this Agreement, any such
amount so deposited in the Certificate Account in connection with the
substitution of a Qualified Replacement Mortgage Loan shall be deemed
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a prepayment of the related Deleted Mortgage Loan in a corresponding amount as
of the prior Determination Date. Upon receipt by the Trustee of the Officer's
Certificate certifying that the Qualified Replacement Mortgage Loan conforms to
the requirements of this Agreement and (a) written notification of such deposit
signed by a Servicing Officer and (b) the new Mortgage File (containing all of
the documents referred to in clauses (a) through (g) of Section 2.01), the
Trustee shall release or cause to be released to the Seller the Mortgage File
related to the Deleted Mortgage Loan or property and shall execute and deliver
or cause to be executed and delivered such instrument of transfer or assignment
presented to it by the Seller, without recourse, as shall be necessary to vest
in the Seller all of the legal and beneficial ownership of such Deleted Mortgage
Loan or property and the Trustee shall have no further responsibility with
respect to said Mortgage File. It is understood and agreed that the obligation
of the Seller to substitute a Qualified Replacement Mortgage Loan for or
repurchase any Defective Mortgage Loan (or any property acquired in respect
thereof or insurance policy or insurance proceeds with respect thereto) shall
constitute the sole remedy against it respecting such defect available to the
Certificateholders of the related Pool or the Trustee, and such obligation on
the part of the Seller shall survive any resignation or termination of the
Company as Servicer under this Agreement. Notwithstanding the foregoing, a
substitution by the Seller for a defect in a constituent document will not be
made unless the Trustee receives an Officer's Certificate that the Qualified
Replacement Mortgage Loan conforms to the requirements of this Agreement and an
Opinion of Counsel that such substitution will not be a "prohibited transaction"
as defined in Section 860F(a)(2) of the Code. Any substitution must be effected
not later than two years, or such longer period of time as may be permitted
under the REMIC Provisions for substitution of mortgage loans, after the Closing
Date.
On or prior to __________ __, 199_ (__________ __, 199_ with respect to
the Subsequent Mortgage Loans), the Trustee shall certify to [THE CERTIFICATE
INSURER,] the Seller and the Servicer that it has received all of the documents
referred to in clauses (a)-(d) and (f)-(g) of Section 2.01 and that all
corrections or curative actions required to be taken by the Seller within the
90-day period referred to in the first paragraph of this Section have been
completed or effected, or the related Mortgage Loans have been repurchased or
substituted, in accordance with the provisions of this Section or, if any
deficiencies in the Mortgage Files or other omissions of the Seller with respect
to the Mortgage Files are known to the Trustee at the time of such
certification, the Trustee shall make such certification only with respect to
those Mortgage Loans as to which no such defects or omissions are known, and
shall qualify such certification with respect to the remaining Mortgage Loans,
identifying the related defects or omissions. Thereafter, the Trustee shall
provide [THE CERTIFICATE INSURER,] the Seller and the Servicer with quarterly
exception reports in the form of Exhibit E-3 indicating the status of any
exceptions until all such exceptions have been eliminated. Such quarterly
exception reports shall be distributed on the next following Distribution Date
with the Statement to Certificateholders.
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The Trustee shall, upon the written request of any Certificateholder [OR
OF THE CERTIFICATE INSURER] and, at the expense of the requesting party, provide
a written report to such Certificateholder [OR THE CERTIFICATE INSURER] of each
Mortgage File released to the Servicer for servicing purposes.
At such time as any Mortgage Loan becomes 90 days Delinquent, the Servicer
shall make, or cause to be made, a reasonable investigation to determine whether
such Mortgage Loan satisfied the representations and warranties of the Seller
set forth in Section 2.05 as of the Closing Date or the Subsequent Transfer
Date, as the case may be; provided, however, that only one such investigation
shall be required for any Mortgage Loan.
Section 2.04. Representations and Warranties Regarding the Seller,
Servicer and Claims Administrator. The Company, as Seller, Servicer and Claims
Administrator, hereby represents and warrants to the Trustee[, THE CERTIFICATE
INSURER] and the Certificateholders that, as of the Closing Date:
(i) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York and has, and
had at all relevant times, full power to own its property and to carry on
its business as currently conducted. The Company is in compliance with the
laws of each state in which it is acting as Servicer with respect to a
Mortgage Loan to the extent necessary to ensure the enforceability of each
Mortgage Loan in accordance with the terms of this Agreement. Each
Sub-Servicer is in compliance with the laws of each state where the
Mortgaged Properties under the applicable Sub-Servicing Agreement are
located to the extent necessary to perform the servicing obligations
hereunder. The Company has the power and authority to execute and deliver
this Agreement and to perform its obligations in accordance herewith; the
execution, delivery and performance of this Agreement (including all
instruments of transfer to be delivered pursuant to this Agreement) by the
Company and the consummation of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action; this
Agreement evidences the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally or the
application of equitable principles in any proceeding, whether at law or
in equity; and the consummation of the transactions contemplated hereby
will not result in the breach of any terms or provisions of the articles
of incorporation or by-laws of the Company or result in a breach of any
term or provision of, or conflict with or constitute a default under or
result in the acceleration for any obligation under, any material
agreement, indenture or loan or credit agreement or other material
instrument to which the Company or its property is subject, or result in
the violation of any law, rule, regulation, order, judgment or decree to
which the Company or its property is subject. Each Sub-Servicer has all
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requisite corporate power and authority to conduct its business and
perform the obligations under the Sub-Servicing Agreement to which such
Sub-Servicer is a party;
(ii) All actions, approvals, consents, waivers, exemptions,
variances, franchises, orders, permits, authorizations, rights and
licenses required to be taken, given or obtained, as the case may be, by
or from any federal, state or other governmental authority or agency, that
are necessary in connection with the execution and delivery by the Company
of this Agreement and the Certificates, have been duly taken, given or
obtained, as the case may be, are in full force and effect, are not
subject to any pending proceedings 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 on the
part of the Company and the performance by the Company of its obligations
as Servicer under this Agreement;
(iii) There are no actions or proceedings against, or investigations
of, the Company pending with regard to which the Company has received
service of process, or, to the knowledge of the Company, threatened,
before any court, administrative agency or other tribunal (A) that, if
determined adversely, would prohibit its entering into this Agreement or
render the Certificates invalid, (B) seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by this Agreement or (C) that, if determined adversely, would
prohibit or materially and adversely affect the performance by the Company
of its obligations under, or the validity or enforceability of, this
Agreement or the Certificates;
(iv) The Company is not in default with respect to, and the execution
and delivery of this Agreement by the Company will not constitute a
violation 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 might have consequences that would materially and
adversely affect the condition (financial or otherwise) or operations of
the Company or its properties or might have consequences that would
adversely affect its duties hereunder;
(v) The transfer, assignment and conveyance of the Mortgage Loans by
the Company, as Seller, pursuant to this Agreement are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction;
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(vi) The Seller did not sell the Mortgage Loans to the Trust with any
intent to hinder, delay or defraud any of its creditors; the Seller will
not be rendered insolvent as a result of the sale of the Mortgage Loans to
the Trust;
(vii) As of the Closing Date, the Seller had good title to, and was
the sole owner of, each Mortgage Loan free and clear of any Lien other
than any such Lien released simultaneously with the sale contemplated
herein, and, immediately upon each transfer and assignment herein
contemplated, the Seller will have taken all steps necessary so that the
Trust will have good title to, and will be the sole owner of, each
Mortgage Loan free and clear of any lien (except for such liens as may
exist consistent with the representations and warranties made in Sections
2.05(c) and (h) hereof);
(viii) The Seller acquired title to the Mortgage Loans in good faith,
without notice of any adverse claim;
(ix) The Company, as Servicer, will examine each Sub-Servicing
Agreement and will be familiar with the terms thereof. Each designated
Sub-Servicer and the terms of each Sub-Servicing Agreement will be
required to comply with the provisions of Section 3.02 hereof. The terms
of any Sub-Servicing Agreement will not be inconsistent with any of the
provisions of this Agreement.
(x) No Officer's Certificate, statement, report or other document
prepared by the Seller or Servicer, and furnished or to be furnished by it
pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of material fact or
omits to state a material fact necessary to make the statements contained
herein or therein not misleading;
(xi) The Company is duly licensed where required as a "Licensee" or
is otherwise qualified in each state in which it transacts business and is
not in default of such state's applicable laws, rules and regulations,
except where the failure to so qualify or such default would not have a
material adverse effect on the ability of the Company to conduct its
business or perform its obligations hereunder;
(xii) The Seller is solvent, is able to pay its debts as they become
due and has capital sufficient to carry on its business and its
obligations hereunder; it will not be rendered insolvent by the execution
and delivery of this Agreement or by the performance of its obligations
hereunder; no petition of bankruptcy (or similar insolvency proceeding)
has been filed by or against the Seller prior to the date hereof;
(xiii) Neither the Company nor the Trust is required to be registered
as an "investment company" under the Investment Company Act of 1940, as
amended;
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(xiv) The Servicer believes that the Servicing Fee Rate provides a
reasonable level of base compensation to the Servicer for servicing the
Mortgage Loans on the terms set forth herein;
(xv) The transactions contemplated by this Agreement are in the
ordinary course of business of the Servicer; and
(xvi) The Servicer services mortgage loans in accordance with Accepted
Servicing Practices.
The representations and warranties set forth in this Section shall survive
the sale and assignment of the Mortgage Loans to the Trust and the issuance,
sale and delivery of the Certificates and shall inure to the benefit of the
Certificateholders and the Trustee. Upon discovery by any of the Company or the
Trustee of a breach of any of the foregoing representations and warranties which
materially and adversely affects the value of any Mortgage Loan or the interests
of the Certificateholders, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the other parties [AND THE CERTIFICATE INSURER]. Within 60 days of
its discovery or its receipt of notice of breach, the Company shall cure such
breach in all material respects.
Section 2.05. Representations and Warranties of the Seller Regarding the
Mortgage Loans. The Seller represents and warrants to the Trustee[, THE
CERTIFICATE INSURER] and the Certificateholders as of the Closing Date and, with
respect to any Subsequent Mortgage Loan, as of the related Subsequent Transfer
Date (in either case except as otherwise expressly stated) that, as to each
Mortgage Loan conveyed to the Trust by it:
(a) The information set forth on the Mortgage Loan Schedule relating
to the Mortgage Loans is complete, true and correct as of the Cut-Off
Date;
(b) The Mortgage Note and the Mortgage are not assigned or pledged
by the Seller to a Person other than the Trust, and immediately prior to
the transactions herein contemplated, the Seller had good and marketable
title thereto, and was the sole owner and holder of the Mortgage Loan free
and clear of any and all liens, claims, encumbrances, participation
interests, equities, pledges, charges or security interests of any nature
(collectively, a "Lien"), other than any such Lien released simultaneously
with the sale contemplated herein, and had full right and authority,
subject to no interest or participation of, or agreement with, any other
party, to sell and assign the same pursuant to this Agreement, and
immediately upon the transfer and assignment of each Mortgage Loan as
herein contemplated, the Trustee shall have good title to, and will be the
sole legal owner of, each Mortgage Loan free and clear of any Lien;
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(c) The Mortgage is a valid and existing lien on the property
therein described, and the Mortgaged Property is free and clear of all
encumbrances and liens having priority over the lien of the Mortgage,
except (i) liens for real estate taxes and special assessments not yet due
and payable, (ii) in the case of a Mortgaged Property that is a
condominium or an individual unit in a planned unit development, liens for
common charges permitted by statute and (iii) in the case of a Junior
Mortgage Loan, the lien securing the related Senior Lien. Any security
agreement, chattel mortgage or equivalent document related to the Mortgage
and delivered to the Trustee establishes in the Seller a valid and
subsisting lien on the property described therein, and the Seller has full
right to sell and assign the same to the Trustee;
(d) The terms of the Mortgage Note and the Mortgage have not been
impaired, altered or modified in any respect which would have any adverse
effect on the Certificateholders, except by a written instrument which has
been recorded, if necessary to protect the interests of the
Certificateholders, and which has been delivered to the Trustee. The
substance of any such alteration or modification is reflected on the
Mortgage Loan Schedule;
(e) No instrument of release or waiver has been executed in
connection with the Mortgage 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 Trustee;
(f) Except with respect to delinquencies described in clause (l) of
this Section, no Mortgagor is in default in complying with the terms of
the Mortgage Note or the Mortgage and there exists no event which, with
the passage of time or notice or both, would constitute a default
thereunder, and the Seller has not waived any default, breach, violation
or event of acceleration except that the Seller may have accepted late
payments. At origination all taxes, governmental assessments, insurance
premiums, or water, sewer and municipal charges and rents under all ground
leases which previously became due and owing have been paid, and each
Mortgage Note and/or the related Mortgage obligate the related Mortgagor
to pay all similar amounts as they become due. The Seller has not advanced
funds, or induced, solicited or knowingly received any advance of funds by
a party other than the Mortgagor, directly or indirectly, for the payment
of any amount required by the Mortgage, except for interest accruing from
the date of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is more recent, to the day which precedes by one month
the Due Date of the first installment of principal and interest;
(g) There is no proceeding pending or, to the best of Seller's
knowledge, threatened for the total or partial condemnation of the
Mortgaged Property, nor is
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such a proceeding currently occurring, and such property is undamaged by
waste, fire, water, earthquake or earth movement, windstorm, flood,
tornado, or otherwise, so as to affect adversely the value of the
Mortgaged Property as security for the Mortgage Loan or the use for which
the premises were intended;
(h) Except with respect to Home Improvement Loans, as to which no
representation is made pursuant to this clause, there are no mechanics' or
similar liens or claims which have been filed for work, labor or material
(and no rights are outstanding that under law could give rise to such
lien) affecting the Mortgaged Property which are, or may be, liens prior
or equal to, or coordinate with, the lien of the Mortgage except those
that are stated in the title insurance policy and for which related losses
are affirmatively insured against by such policy;
(i) Other than with respect to the Home Improvement Loans, as to
which no representation is made pursuant to this clause, to the best
knowledge of the Company, all of the improvements that were included for
the purpose of determining the Appraised Value of the Mortgaged Property
lie wholly within the boundaries and building restriction lines of such
property, and no improvements on adjoining properties encroach upon the
Mortgaged Property except those that are stated in the title insurance
policy and for which related losses are affirmatively insured against by
such policy;
(j) Other than with respect to the Home Improvement Loans, as to
which no representation is made pursuant to this clause, to the best
knowledge of the Company, no improvement located on or being part of the
Mortgaged Property is in violation of any applicable zoning law or
regulation. All inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy 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 the
Mortgaged Property is lawfully occupied under applicable law;
(k) All parties that have had any interest in the Mortgage Loan,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (1) in
compliance with any and all licensing requirements of the United States
and of the laws of the state wherein the Mortgaged Property is located
that are applicable to such parties, and (2)(A) organized under the laws
of such state, or (B) qualified to do business in such state or exempt
from such qualification in a manner so as not to affect adversely the
enforceability of such Mortgage Loan, or (C) federal savings and loan
associations or national banks having principal offices in such state, or
(D) not doing business in such state;
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(l) As of the Cut-Off Date, no more than __%, __%, __% and __% of
the Initial Pool I Mortgage Loans, Initial Pool II Mortgage Loans, Initial
Pool III Mortgage Loans and Initial Pool IV Mortgage Loans, respectively,
each measured by Cut-Off Date Loan Balances, were 30 days or more
Delinquent, and none of the Mortgage Loans was 60 days or more Delinquent;
(m) The Mortgage File contains each of the documents and instruments
specified to be included therein duly executed and in due and proper form
and each such document or instrument is in a form generally acceptable to
prudent institutional mortgage lenders that regularly originate or
purchase mortgage loans comparable to the Mortgage Loans for sale to
prudent investors in the secondary market that invest in mortgage loans
such as the Mortgage Loans;
(n) The Mortgage Note and the related Mortgage are genuine, and each
is the legal, valid and binding obligation of the maker thereof,
enforceable in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law). All parties to the Mortgage Note and the Mortgage had legal capacity
(and, with respect to any Mortgage Loan secured by a Small Mixed-Use
Property, such party had full power and authority and had been duly
authorized) to execute the Mortgage Note and the Mortgage, and each
Mortgage Note and Mortgage has been duly and properly executed by such
parties. The Mortgagor is a natural person (except with respect to
Mortgage Loans secured by Small Mixed-Use Properties) who is a party to
the Mortgage Note and the Mortgage in an individual capacity, and not in
the capacity of a trustee or otherwise;
(o) Any and all requirements of any federal, state or local law,
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws, applicable to the Mortgage Loan have been
complied with, and the Seller has and shall maintain in its possession,
available for the Trustee's inspection, and shall deliver to the Trustee
upon demand, evidence of compliance with all such requirements;
(p) The proceeds of the Mortgage Loan have been fully disbursed,
there is no requirement for future advances thereunder and any and all
requirements as to completion of any on-site or off-site improvements and
as to disbursements of any escrow funds therefor have been complied with.
All costs, fees and expenses incurred in making, closing or recording the
Mortgage Loan were paid;
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(q) Any future advances made after the date of origination of each
Mortgage 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 Mortgage Loan Schedule. The
lien of the Mortgage securing the consolidated principal amount is
expressly insured as having Senior Lien priority, except in the case of a
Junior Mortgage Loan where such lien is expressly insured as having second
lien priority subject only to the lien of the related Senior Lien, by a
title insurance policy or an endorsement to the policy insuring the
mortgagee's consolidated interest. The consolidated principal amount does
not exceed the original principal amount of the Mortgage Loan. The Seller
shall not be obligated to make future advances after the Cut-Off Date;
(r) Each Mortgage Loan is covered by an ALTA mortgage title
insurance policy or such other form of policy acceptable to FNMA or FHLMC,
issued by and constituting the valid and binding obligation of a title
insurer generally acceptable to prudent mortgage lenders that regularly
originate or purchase mortgage loans comparable to the Mortgage Loans for
sale to prudent investors in the secondary market that invest in mortgage
loans such as the Mortgage Loans and qualified to do business in the
jurisdiction wherein the Mortgaged Property is located, insuring the
Seller, its successors and assigns, as to the first priority lien of the
Mortgage in the case of a First Mortgage Loan and the second priority lien
of the Mortgage in the case of a Junior Mortgage Loan, in the original
principal amount of the Mortgage Loan. The Seller is the sole payee of
such mortgage title insurance policy, the assignment to the Trustee of the
Seller's interest in such mortgage title insurance policy does not require
the consent of or notification to the insurer or the same has been
obtained, and such mortgage title insurance policy is in full force and
effect and will be in full force and effect and inure to the benefit of
the Trustee upon the consummation of the transactions contemplated by this
Agreement. No claims have been made under such mortgage title insurance
policy and no prior holder of the related Mortgage, including the Seller,
has done, by act or omission, anything that would impair the coverage of
such mortgage title insurance policy;
(s) All improvements upon the Mortgaged Property are insured by an
insurer who meets FNMA and/or FHLMC guidelines against loss by fire,
hazards of extended coverage and such other hazards as are customary in
the area wherein the Mortgaged Property is located pursuant to insurance
policies conforming to the requirements of Section 3.13 hereof. If the
Mortgaged Property was, at the time of origination of the related Mortgage
Loan, in an area identified on a Flood Hazard Boundary Map or Flood Hazard
Rate Map issued by the Federal Emergency Management Agency as having
special flood hazards (and if the flood insurance policy referenced herein
has been made available), a flood insurance policy is in
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effect with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage described in Section 3.13. All
individual insurance policies (collectively, the "hazard insurance
policy") are the valid and binding obligation of the insurer and contain a
standard mortgagee clause naming the Seller, its successors and assigns,
as mortgagee. All premiums thereon have been paid. The Mortgage obligates
the Mortgagor thereunder to maintain all such insurance at the Mortgagor's
cost and expense, and upon the Mortgagor's failure to do so, authorizes
the holder of the Mortgage to obtain and maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(t) The Mortgage Loan is not subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor will
the operation of any of the terms of the Mortgage Note or the Mortgage, or
the exercise of any right thereunder, render either the Mortgage Note or
the Mortgage unenforceable, in whole or in part, or subject to any right
of rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or defense
has been asserted with respect thereto;
(u) The Mortgage Loan was originated or purchased and
re-underwritten by the Seller in accordance with the Seller's underwriting
guidelines attached hereto as Exhibit L. No Mortgage Loan has been
modified except as such modification may be reflected in the related
Mortgage File;
(v) The Mortgage Loan is a closed-end First Mortgage Loan or
closed-end Junior Mortgage Loan having an original term of not more than
30 years to maturity. Except with respect to any Balloon Loan, each
Mortgage Loan is payable in equal monthly installments of principal and
interest which would be sufficient, in the absence of late payments, to
fully amortize such loan within the term thereof, beginning no later than
60 days after disbursement of the proceeds of the Mortgage Loan and, if
the Mortgage Loan is a Fixed Rate Mortgage Loan, bears a fixed interest
rate for the term of the Mortgage Loan. As of the Cut-Off Date,
approximately __% of the Initial Mortgage Loans that are Fixed Rate
Mortgage Loans and __% of the Initial Mortgage Loans that are Adjustable
Rate Mortgage Loans, measured by outstanding principal balances, are
Balloon Loans, each of which has an original term of not less than fifteen
(15) years and which provides for level monthly payments based on a thirty
(30) year amortization schedule and a final Monthly Payment substantially
greater than the preceding Monthly Payments;
(w) The Mortgage contains a customary provision for the acceleration
of the payment of the unpaid principal balance of the Mortgage Loan in the
event the related Mortgaged Property is sold without the prior consent of
the holder thereunder;
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(x) With respect to ___%, ___%, ___% and ___% of the Initial Pool I
Mortgage Loans, Initial Pool II Mortgage Loans, Initial Pool III Mortgage
Loans and Initial Pool IV Mortgage Loans, respectively, at the time that
each Mortgage Loan was originated, the related Mortgagor represented that
such Mortgagor would occupy the related Mortgaged Property as Mortgagor's
primary residence, and the Seller has no reason to believe that such
representation of the Mortgagor is no longer true. No Mortgage Loan is a
construction loan. Each Mortgaged Property is lawfully occupied under
applicable law;
(y) The Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage and the security interest of any applicable
security agreement or chattel mortgage referred to in Section 2.05(c);
(z) The Mortgage contains customary and enforceable provisions which
render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the
security, including, (i) in the case of a Mortgage designated as a deed of
trust, by trustee's sale, and (ii) otherwise by judicial or non-judicial
foreclosure. Other than applicable homestead provisions which may delay
the realization against the Mortgaged Property, or exemptions that may
arise in the event a petition under the Bankruptcy Code is filed with
respect to the Mortgagor, there is no homestead or other exemption
available to the Mortgagor that would interfere with the right to sell the
Mortgaged Property at a trustee's sale or the right to foreclose the
Mortgage;
(aa) 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 Trustee or the
Certificateholders to the trustee under the deed of trust, except in
connection with a trustee's sale after default by the Mortgagor, which
fees and expenses shall constitute [SERVICING ADVANCES];
(bb) The Mortgaged Property is located in the state identified in the
Mortgage Loan Schedule for the related Pool and consists of at least one
parcel of real property with a one family residence erected thereon, a
two- to four-family dwelling, a Small Mixed-Use Property or an individual
condominium unit; provided, however, that no residence or dwelling is a
co-operative unit or a mobile home, but may be a pre-fabricated
manufactured unit affixed to a permanent foundation. With respect to Pool
I Mortgage Loans, Pool II Mortgage Loans, Pool III Mortgage Loans and Pool
IV Mortgage Loans, as of the Cut-Off Date with respect to the aggregate
Loan Balance of all Mortgage Loans in such Pools, (i) no more than ____%
___%, ___% and ___%, respectively, are secured by real property improved
by two- to four-
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family dwellings, (ii) no more than ___%, ___%, ___% and ___%,
respectively, are secured by real property improved by individual
condominium or townhouse units, (iii) at least ____%, ___%, ___% and ___%,
respectively, are secured by real property with a detached one family
residence erected thereon, (iv) not more than ___%, ___%, ___% and ___%,
respectively, are secured by real property with an attached one-family
residence erected thereon, (v) not more than ___%, ___%, ___% and ___%,
respectively, are subject to a ground lease and the remainder of the
Mortgaged Properties are fee simple estates, (vi) not more than ___%,
___%, ___% and ___% are Junior Mortgage Loans; (vii) not more than ___%,
___%, ___% and ___% are secured by Small Mixed-Use Properties; (viii) none
is secured by multifamily Mortgaged Properties; (ix) not more than ___%,
___%, ___% and ___% have been originated under a non-income verification
program; and (x) [INSERT APPLICABLE POOLS OF MORTGAGE LOANS] Mortgage Loan
secured by a Small Mixed-Use Property is a first lien on such Mortgaged
Property. With respect to each Mortgaged 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 Mortgage 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; (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 Mortgaged Property;
(cc) With respect to Initial Pool I Mortgage Loans, Pool II Mortgage
Loans, Pool III Mortgage Loans and Pool IV Mortgage Loans, the Combined
Loan-to-Value Ratio as of the date of origination of each Mortgage Loan
was not more than ___%, ___%, ___% and ___%, respectively. The weighted
average Combined Loan-to-Value ratios of the Initial Pool I Mortgage
Loans, Initial Pool II Mortgage Loans, Initial Pool III Mortgage Loans and
Initial Pool IV Mortgage Loans is approximately ___%, ___%, ___%, and
___%, respectively;
(dd) Other than as provided by this Agreement, there is no
obligation on the part of Initial Pool IV;
(ee) There exist no deficiencies with respect to escrow deposits and
payments, if such are required, for which customary arrangements for
repayment thereof have not been made, and no escrow deposits or payments
of other charges or payments due the Seller have been capitalized under
the Mortgage or the related Mortgage Note;
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(ff) No Mortgage Loan was originated under a buydown plan;
(gg) Other than as provided by this Agreement, there is no obligation
on the part of the Seller or any other party to make payments in addition
to those made by the Mortgagor;
(hh) Subject to Section 2.01, the Mortgage Note, the Mortgage, the
Assignment of Mortgage and any other documents required to be delivered
have been delivered to the Trustee. The Seller is in possession of a
complete Mortgage File, except those documents delivered to the Trustee,
and there are no custodial agreements in effect adversely affecting the
right or ability of the Seller to make the document deliveries required
hereby. Each original Mortgage was recorded, and all subsequent
Assignments of the original Mortgage have been recorded in the appropriate
jurisdictions wherein such recordation is necessary to perfect the lien
thereof as against creditors of the Seller (subject to the provisions of
Section 2.01 hereof with respect to Mortgages which are in the process of
being recorded);
(ii) No Mortgage Loan was selected for inclusion under this Agreement
on any basis which was intended to have a material adverse effect on the
Certificateholders;
(jj) No Mortgage Loan has a shared appreciation or other contingent
interest feature;
(kk) No more than 0.__%, 0.__%, 0.__% and 0.__% of the aggregate Loan
Balance of the Pool I Mortgage Loans, Pool II Mortgage Loans, Pool III
Mortgage Loans or Pool IV Mortgage Loans, respectively, as of the Cut-Off
Date is secured by Mortgaged Properties located within any single zip code
area;
(ll) The weighted average Mortgage Loan Rate of all the Fixed Rate
Mortgage Loans as of the Cut-Off Date is approximately ___%, and no Fixed
Rate Mortgage Loan had a Mortgage Loan Rate that was greater than ___% or
less than __%;
(mm) With respect to each Junior Mortgage Loan:
(i) if the related Senior Lien provides for negative
amortization the Combined Loan-to-Value Ratio was calculated at the
maximum principal balance of such Senior Lien that could result upon
application of such negative amortization feature;
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(ii) either no consent for the Junior Mortgage Loan is required
by the holder of the related Senior Lien or such consent has been
obtained and is contained in the Mortgage File; and
(iii) no notice of default has been delivered to the Seller that
has not been cured with respect to the related Senior Lien.
(nn) The Seller has caused or will cause to be performed any and all
acts required to be performed to preserve the rights and remedies of the
Trustee in any insurance policies applicable to the Mortgage Loans,
including, without limitation, any necessary notifications of insurers,
assignments of policies or interests therein, and establishments of
co-insured, joint loss payee and mortgagee rights in favor of the Trustee.
(oo) All amounts received after the Cut-Off Date (and all interest
payments received on or before the Cut-Off Date that are due after the
Cut-Off Date) with respect to the Mortgage Loans to which the Seller is
not entitled are, as of the Closing Date in the Collection Account;
(pp) Each Initial Mortgage Loan and all such Mortgage Loans in the
aggregate conform, and each Subsequent Mortgage Loan and all Subsequent
Mortgage Loans in the aggregate will conform, to the description thereof
set forth in the Prospectus Supplement;
(qq) Except with respect to Pool III Mortgage Loans, for which no
such representation or warranty is made pursuant to this clause, a full
appraisal on forms approved by FNMA or FHLMC was performed in connection
with the origination of the related Mortgage Loan. Each appraisal meets
guidelines that would be generally acceptable to prudent mortgage lenders
that regularly originate or purchase mortgage loans comparable to the
Mortgage Loans for sale to prudent investors in the secondary market that
invest in mortgage loans such as the Mortgage Loans;
(rr) To the best of the Seller's knowledge, no Mortgaged Property
was, as of the Cut-Off Date located within a one-mile radius of any site
listed in the National Priorities List as defined under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended, or on any similar state list of hazardous waste sites which are
known to contain any hazardous substance or hazardous waste;
(ss) None of the Mortgage Loans is subject to a bankruptcy plan;
(tt) No more than ___%, ___%, ___%, and ___% of the aggregate Loan
Balance of the Pool I Mortgage Loans, Pool II Mortgage Loans, Pool III
Mortgage
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Loans and Pool IV Mortgage Loans, respectively, as of the Cut-Off Date
relates to Mortgage Loans originated or purchased under the Seller's
Sav*-A-Loan program;
(uu) To the best of the Seller's knowledge, no statement, report or
other document constituting a part of the Mortgage File contains any
untrue statement of fact or omits to state a fact necessary to make the
statements contained therein not misleading;
(vv) The range of points financed or "net funded" on Mortgage Loans
originated after January 1, 1994 is __% to ___%;
(ww) Each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code;
(xx) The Seller has the full authority to sell and transfer each
Mortgage Note and Mortgage and such transfer and sale will not impair the
enforceability of any Mortgage;
(yy) With respect to each Mortgage Loan secured by a Mortgaged
Property which is a Small Mixed-Use Property, (i) such Mortgaged Property
is in compliance with all environmental laws, statutes, ordinances,
regulation, orders, rules, decrees and similar requirements of federal,
state, municipal and any other governmental authorities relating thereto,
(ii) no hazardous material or oil was or is incorporated in, stored on,
transported to or from, or disposed of on or from (except if the same was
or is in compliance with all laws, ordinances, and regulations pertaining
thereto), the Mortgaged Property, (iii) neither the Seller nor, to the
best of its knowledge, any Mortgagor has received notification from any
federal, state or other governmental authority of any potential, known, or
threat of, release of hazardous material on or from the Mortgaged Property
or any potential or known liability that has resulted in or may result in
a lien on the Mortgaged Property, (iv) the Mortgaged Property is a
separate tax parcel, separate and apart from any other property owned by
the Mortgagor or any other Person, (v) the liability and rent coverage
insurance is consistent with Accepted Servicing Procedures and (vi) except
for no more than _____% of such Mortgage Loans, the security documentation
includes an assignment of leases and rents. For purposes of this
representation, the term hazardous material (a) shall have the meaning
defined under any applicable federal, state, municipal, or other
jurisdictions, laws, rules or regulations and (b) shall include asbestos;
(zz) The Mortgage Loan Rate for each Adjustable Rate Mortgage Loan
will be adjustable on each related Adjustment Date and will equal the sum,
rounded upward to the nearest three decimal places, of the Index plus the
related Gross Margin, rounded to the nearest 0.125%, subject to any
related Minimum Rates,
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Maximum Rates or any limitations or periodic adjustments, in each case as
specified in the related Mortgage Loan Schedule. The Mortgage Notes for
the Adjustable Rate Mortgage Loans provide that in no event shall the
Mortgage Loan Rate of any Adjustable Rate Mortgage Loan increase or
decrease on any Adjustment Date by more than (i) ____% per annum with
respect to ____% of the Adjustable Rate Mortgage Loans; Adjustable Rate
Mortgage Loans representing approximately ____%, ____%, ____% and ____% of
the aggregate Adjustable Rate Mortgage Loan Cut-Off Date Loan Balance have
Lifetime Caps of ____%, ____%, ____% and ____%, respectively. The Gross
Margins on the Adjustable Rate Mortgage Loans range from ____% to ____%,
and the weighted average of such Gross Margins as of the Cut-Off Date was
approximately ____%. No Adjustable Rate Mortgage Loan is subject to
negative amortization;
(aaa) With respect to any Adjustable Rate Mortgage Loan, no related
Mortgage Note contains any provision permitting the Mortgagor thereunder,
at his option, to convert the Mortgage Loan to a fixed interest rate;
(bbb) Each Adjustable Rate Mortgage Loan has an initial Adjustment
Date no later than _______________ ___, ______;
(ccc) With respect to each Adjustable Rate Mortgage Loan, all of the
terms of the Mortgage pertaining to interest rate adjustments, payment
adjustments and adjustments of the outstanding principal balance are in
accordance with applicable law;
(ddd) Approximately __% and __% of the initial Home Improvement Loans
(measured by outstanding principal balance as of the Closing Date) were
FHA Loans and Conventional Home Improvement Loans, respectively;
(eee) Except for the related FHA Premium Account in connection with
any FHA Loan, there is no obligation on the part of the Seller or any
other party to make payments in addition to those made by the Mortgagor;
(fff) Each initial FHA Loan is, and each Subsequent Mortgage Loan that
is an FHA Loan will be, an FHA Title I property improvement loan (as
defined in the FHA Regulations) underwritten in accordance with applicable
FHA requirements and submitted to the FHA for insurance;
(ggg) Each initial FHA Loan has been, and each Subsequent Mortgage
Loan that is an FHA Loan will be, submitted to the FHA for insurance
pursuant to the FHA Title I loan program and, except for no more than 30%
of the initial FHA Loans (measured by outstanding principal balance as of
the Closing Date) (the "Non-acknowledged FHA Loans"), each initial FHA
Loan has been acknowledged by the
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FHA for the FHA Title I loan program; each Non-acknowledged FHA Loan will
be acknowledged by the FHA within 180 days of the Closing Date and each
subsequent FHA Loan will be acknowledged by the FHA within 180 days after
the Funding Period; within 165 days of the Closing Date or, with respect
to the subsequent FHA Loans, within 165 days after the Funding Period, the
Seller will inform [THE CERTIFICATE INSURER], in writing, which
Non-acknowledged FHA Loans have been acknowledged by the FHA and which
have not;
(hhh) The Reserve Amount with respect to each initial FHA Loan will be
transferred to the Trustee's FHA Reserve Account within 180 days after the
Closing Date, the Reserve Amount with respect to each Subsequent Mortgage
Loan that is an FHA Loan will be transferred to the Trustee's FHA Reserve
Account within 180 days after the Funding Period, and the Seller will give
[THE CERTIFICATE INSURER,] the Trustee and the Rating Agencies prompt
notice of its receipt of confirmation of such transfers;
(iii) Assuming sufficient coverage remains available in the Reserve
Amount, each Claim filed by the Claims Administrator with respect to a 90
Day Delinquent FHA Loan will be honored by the FHA in accordance with the
FHA Regulations;
(jjj) Substantially all the proceeds of each Pool III Mortgage Loan
(including each Subsequent Pool III Mortgage Loan) have been or will be
used to acquire or to improve or protect an interest in real property
that, at the origination date of such Pool III Mortgage Loan, was the only
security for such Pool III Mortgage Loan;
(kkk) Each Pool IV Mortgage is a Jumbo Loan, of which ___% of the
related Mortgaged Properties are single-family Residential Dwellings;
(lll) Each Initial Pool I Mortgage Loan and Initial Pool III Mortgage
Loan, and each Subsequent Pool I Mortgage Loan and Subsequent Pool III
Mortgage Loan, will bear a fixed rate of interest and each Initial Pool II
Mortgage Loan and Initial Pool IV Mortgage Loan, and each Subsequent Pool
II Mortgage Loan and Subsequent Pool IV Mortgage Loan, will bear an
adjustable rate of interest;
(mmm) With respect to Pool I, Pool II, Pool III and Pool IV,
approximately ___%, ___%, ___% and ___%, respectively, of the Mortgage
Loans for such Pool were originated by the Seller and approximately ___%,
___%, ___% and ___%,
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respectively, of the Mortgage Loans for such Pool were purchased and
re-underwritten by the Seller in accordance with the Seller's underwriting
criteria.
(nnn) The information set forth in the Mortgage Loan Schedule relating
to any Subsequent Mortgage Loan will be complete, true and correct in all
material respects as of the related Cut-Off Date; and
(ooo) Each of the Mortgage Loans (other than Mortgage Loans accruing
interest in accordance with the "simple interest" method) provides for the
calculation of interest on the basis of a 360-day year consisting of
twelve 30-day months; each of the "simple interest" Mortgage Loans
provides for the calculation of interest on the basis of the actual number
of days elapsed in a year consisting of 365 or 366 days, as applicable.
It is understood and agreed that the representations and warranties set
forth in this Section shall survive the sale and assignment of the Mortgage
Loans to the Trust and the issuance, sale and delivery of the Certificates. Upon
discovery by the Seller, the Servicer or a Responsible Officer of the Trustee of
a breach of any of the foregoing representations and warranties, without regard
to any limitation set forth in such representation or warranty concerning the
knowledge of the Seller as to the facts stated therein, which breach materially
and adversely affects the interests of the Certificateholders in the related
Mortgage Loan or Mortgage Loans, the party discovering such breach shall give
prompt written notice to the other parties hereto[, TO THE CERTIFICATE INSURER]
and to each of the Rating Agencies.
Within 60 days of its discovery or its receipt of notice of breach, the
Seller shall use all reasonable efforts to cure such breach in all material
respects. Unless, prior to the expiration of such 60-day period, such breach has
been cured in all material respects or otherwise does not exist or continue to
exist, the Seller shall, not later than the Deposit Date in the month following
the related Due Period in which any such cure period expired, but in all events
within 90 days of the discovery of such breach (or at the election of the
Seller, an earlier Due Period), either (1) repurchase such Mortgage Loan (or, in
the case of a representation and warranty of the nature specified in clauses
(ll) and (uu), repurchase the smallest number of Mortgage Loans such that, after
giving effect to such repurchase, the related representation and warranty would
be complied with) (including any property acquired in respect thereof and any
insurance policy or insurance proceeds with respect thereto) from the Trust in
the same manner and subject to the same conditions as set forth in Section 2.03
or (2) remove such Mortgage Loan and substitute in its place a Qualified
Replacement Mortgage Loan (or, in the case of a representation and warranty of
the nature specified in clauses (dd) and (uu), remove the smallest number of
Mortgage Loans and substitute in their place Qualified Replacement Mortgage
Loans such that, after giving effect to such substitution, the related
representation and warranty would be complied with) in the same manner and
subject to the same conditions as set forth in Section 2.03. Upon making
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any such repurchase or substitution, the Seller shall be entitled to receive an
instrument of assignment or transfer from the Trustee, without recourse to the
Trustee, to the same extent as set forth in Section 2.03 with respect to the
repurchase of or substitution for Defective Mortgage Loans under that Section.
It is understood and agreed that the obligation of the Seller to repurchase or
substitute any such Defective Mortgage Loan (or property acquired in respect
thereof or insurance policy or insurance proceeds with respect thereto) shall
constitute the sole remedy against it respecting such breach of the foregoing
representations or warranties available to the Certificateholders or the
Trustee, as the case may be, and such obligation shall survive any resignation
or termination of the Company as Servicer under this Agreement. Notwithstanding
the foregoing, a substitution of a Mortgage Loan by the Seller for a breach will
not be made unless the Trustee receives an Officer's Certificate certifying that
the Qualified Replacement Mortgage Loan conforms to the requirements of this
Agreement and an Opinion of Counsel that such substitution will not be a
"prohibited transaction" as defined in Section 860F(a)(2) of the Code. Any
substitution must be effected not later than two years, or such longer period of
time as may be permitted under the REMIC Provisions for substitution of mortgage
loans, after the Closing Date.
Section 2.06. Execution and Authentication of Certificates. The Trustee
shall deliver to or upon the order of the Seller, in exchange for the Initial
Pool I Mortgage Loans, the Initial Pool II Mortgage Loans, the Initial Pool III
Mortgage Loans and the Initial Pool IV Mortgage Loans, and the other assets
comprising the Trust, simultaneously with the sale, assignment and transfer to
the Trustee of the Initial Pool I Mortgage Loans, the Initial Pool II Mortgage
Loans, the Initial Pool III Mortgage Loans and the Initial Pool IV Mortgage
Loans, Certificates duly executed by the Trustee on behalf of the Trust, not in
its individual capacity but solely as Trustee, and authenticated by the Trustee
pursuant to Section 5.01, in authorized denominations, equaling 100% of the
Percentage Interests in each Class and collectively evidencing the entire
ownership of the Trust.
Section 2.07. Designation of Certificates; Designation of Startup Day. The
Seller hereby designates the Class [A] Certificates as "regular interests" and
the Class R Certificates as the single class of "residual interests" in the
REMIC Trust comprising the REMIC established pursuant to Section 3.01 for the
purposes of Code Sections 860G(a)(1) and 860G(a)(2), respectively. The
Pre-Funding Account and the Capitalized Interest Account shall not be part of
the REMIC Trust established pursuant to Section 3.01. The Closing Date is hereby
designated as the "Startup Day" within the meaning of Code Section 860G(a)(9) of
the REMIC established pursuant to Section 3.01. The latest possible maturity
date of the Class [A] Certificates is the Final Maturity Date.
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ARTICLE THREE
ADMINISTRATION AND SERVICING OF MORTGAGE
LOANS; CERTIFICATE ACCOUNT
Section 3.01. Administration of the Trust; Servicing of the Mortgage
Loans.
(a) The parties hereto intend that the REMIC Trust shall constitute, and
that the affairs of the REMIC Trust shall be conducted so as to qualify it as, a
REMIC in accordance with the REMIC Provisions. In furtherance of such intention,
the parties hereto each covenant and agree that they shall not knowingly take
any actions or omit to take any actions that would disqualify the Trust for
REMIC election or status and the Trustee covenants and agrees that it shall act
in its capacity as Tax Matters Person, as agent for the REMIC Trust and as the
"tax matters person" (as defined in the REMIC Provisions) and that in such
capacity it shall: (i) prepare or cause to be prepared, execute and file, in a
timely manner, an annual Tax Return and any other Tax Return required to be
filed by the Trust established hereunder using a calendar year as the taxable
year for the REMIC Trust established hereunder; (ii) in the related first such
Tax Return, make (or cause to be made) an election satisfying the requirements
of the REMIC Provisions, on behalf of the Trust, to be treated as a REMIC; (iii)
prepare and forward, or cause to be prepared and forwarded, to the
Certificateholders all information, reports or Tax Returns required with respect
to the REMIC Trust as, when and in the form required to be provided to the
Certificateholders, and to the Internal Revenue Service and any other relevant
governmental taxing authority in accordance with the REMIC Provisions and any
other applicable federal, state or local laws, including, without limitation,
information reports relating to "interest" required by Section 6049 of the Code
and "original issue discount" as defined in the Code, calculated based upon the
Prepayment Assumption and by using the "issue price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; (iv) not
knowingly take any action or omit to take any action that would cause the
termination of the REMIC status of the REMIC Trust, except as provided under
this Agreement; (v) pay, from the sources specified in the last paragraph of
this Section 3.01(a), the amount of any and all other federal, state and local
taxes imposed on the REMIC Trust, its assets or transactions, including, without
limitation, the tax on "prohibited transactions" imposed by Section 860F of the
Code, the tax on "contributions" imposed by Section 860G(d) of the Code and the
tax on "net income from foreclosure property" imposed by Section 860G(c) of the
Code when and as the same shall be due and payable (but such obligation shall
not prevent the Trustee or any other appropriate Person from contesting any such
tax in appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings); (vi) represent the Trust in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative adjustment as to a taxable year of the
Trust, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax
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item of the Trust, and otherwise act on behalf of the Trust in relation to any
tax matter involving the Trust; (vii) comply with all statutory or regulatory
requirements with regard to its conduct of activities pursuant to the foregoing
clauses of this Section 3.01(a), including, without limitation, providing all
notices and other information to the Internal Revenue Service and Holders of
Class R Certificates required of a "tax matters person" pursuant to subtitle F
of the Code and the Treasury Regulations thereunder; (viii) make available
information necessary for the computation of any tax imposed (A) on a transferor
of residual interests to certain Disqualified Organizations or (B) on
pass-through entities, any interest in which is held by a Disqualified
Organization; and (ix) in connection with any FHA Loan, timely pay to the FHA
the FHA Insurance Premium required to be paid for each FHA Loan. The obligations
of the Trustee pursuant to this Section 3.01(a) shall survive the termination or
discharge of this Agreement.
In order to enable the Trustee to perform its duties as set forth herein,
the Seller shall provide or cause to be provided to the Trustee or its designee,
within ten days after the Closing Date, all information or data that the Trustee
or its designee reasonably determines to be relevant for tax purposes as to the
valuations and offering prices of the Certificates, including, without
limitation, the price, yield, prepayment assumption and projected cash flows of
the Certificates and the Mortgage Loans. Thereafter, the Seller shall provide to
the Trustee, promptly upon request therefor, any such additional information or
data that the Trustee may from time to time reasonably request in order to
enable the Trustee to perform its duties as set forth herein. The Seller shall
indemnify the Trustee and hold it harmless for any loss, liability, damage,
claim or expense of the Trustee arising from any failure of it to provide, or to
cause to be provided, in response to the reasonable requests of the Trustee made
pursuant to this paragraph, accurate information or data to the Trustee on a
timely basis. The indemnification provisions hereunder shall survive the
termination of this Agreement.
In the event that any tax is imposed on "prohibited transactions" of the
REMIC Trust as defined in Section 860F(a)(2) of the Code, on the "net income
from foreclosure property" of the REMIC Trust as defined in Section 860G(c) of
the Code, on any gain recognized by the REMIC Trust pursuant to Section 860F(c)
of the Code, on any contribution to the REMIC Trust after the Startup Day
pursuant to Section 860G(d) of the Code, or any other tax is imposed, if not
paid as otherwise provided for herein, such tax shall be paid by (i) the
Trustee, if any such tax arises out of or results from the willful malfeasance,
bad faith or negligence in the performance by the Trustee of any of its
obligations under this Section 3.01(a), (ii) the Servicer or the Seller, as
applicable, if such tax arises out of or results from a breach by the Servicer
or the Seller of any of their respective obligations under this Agreement or
(iii) in all other cases, or in the event that the Trustee, the Servicer or the
Seller fails to honor its obligations under the preceding clauses (i) or (ii),
any such tax will be paid with amounts otherwise to be distributed to the
Holders of the Class R Certificates pursuant
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to Section 4.04(a)(viii) or, in the event of an insufficiency in such amounts,
such tax shall be paid directly by such Class R Certificateholders.
(b) (i) The Servicer shall service and administer the Mortgage Loans in
accordance with the terms of this Agreement and in accordance with the
respective Mortgage Loans and in accordance with the instructions of the Trustee
[AND THE CERTIFICATE INSURER]. Unless otherwise specified herein with respect to
specific obligations of the Servicer, the Servicer shall service and administer
the Mortgage Loans in the best interests of and for the benefit of the Pool I,
Pool II, Pool III or Pool IV Certificateholders, as the case may be, and [THE
CERTIFICATE INSURER] in accordance with Accepted Servicing Procedures. To the
extent consistent with the foregoing, the Servicer also shall seek to maximize
the timely and complete recovery of principal and interest on the Mortgage
Notes. Subject only to the above-described servicing standards and the terms of
this Agreement and of the respective Mortgage Loans, the Servicer shall have
full power and authority, acting alone and/or through Sub-Servicers as provided
in Section 3.02, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable. The
Servicer shall promptly notify the Seller, [THE CERTIFICATE INSURER,] the
Trustee and each Rating Agency in writing of (i) any event, circumstance or
occurrence which may materially and adversely affect the ability of the Servicer
to service any Mortgage Loan or to otherwise perform and carry out its duties,
responsibilities and obligations under and in accordance with this Agreement and
(ii) any attempt by a court or by a regulatory authority of which it has actual
knowledge to assert jurisdiction over the Trust.
Without limiting the generality of the foregoing, the Servicer, in its own
name or in the name of a Sub-Servicer, is hereby authorized and empowered when
the Servicer believes it appropriate in its best judgment and subject to the
requirements of Section 3.07 hereof, to execute and deliver, on behalf of the
Certificateholders and the Trust or any of them, and upon notice to the Trustee,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Mortgage Loans and the Mortgaged Properties and to institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and to hold or cause to be held title to such
properties, on behalf of the Trust and Certificateholders. The Servicer shall
service and administer the Mortgage Loans in accordance with applicable state
and federal law and shall provide to the Mortgagors any reports required to be
provided to them thereby. Subject to Section 3.16, the Trustee shall execute, at
the written direction of the Servicer, any limited or special powers of attorney
and other documents reasonably acceptable to the Trustee to enable the Servicer
or any Sub-Servicer to carry out their servicing and administrative duties
hereunder, including, without limitation, limited or special powers of attorney
with respect to any REO Property, and the Trustee shall not be accountable for
the actions of the Servicer or any Sub-Servicers under such powers of attorney
and shall be indemnified by such parties with respect to such actions.
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(ii) Subject to Section 3.24 and in accordance with the standards of
the preceding paragraph, the Servicer shall advance or cause to be advanced
funds as necessary for the purpose of effecting the payment of taxes,
assessments and insurance premiums on the Mortgaged Properties which advances
shall be made in a timely fashion so as to not adversely affect the Appraised
Value of the Mortgaged Property (other than with respect to certain Pool III
Mortgage Loans, for which no such Appraised Value applies) or the interests of
the Certificateholders and which advances shall be reimbursable in the first
instance from related collections from the Mortgagors pursuant to Section 3.09,
and further as provided in Section 3.11; provided that the Servicer shall not be
required to advance such funds to the extent it reasonably believes such funds
will not be recoverable as evidenced by a certification of a Servicing Officer
delivered to the Trustee [AND THE CERTIFICATE INSURER]. Any cost incurred by the
Servicer or by Sub-Servicers in effecting the timely payment of taxes,
assessments and insurance premiums on a Mortgaged Property shall not, for the
purpose of calculating distributions to Certificateholders, be added to the Loan
Balance of the related Mortgage Loan, notwithstanding that the terms of such
Mortgage Loan so permit.
(iii) Notwithstanding anything in this Agreement to the contrary,
the Servicer shall not make any future advances to the Mortgagors with respect
to a Mortgage Loan, and the Servicer shall not permit any modification with
respect to any Mortgage Loan that would change the Mortgage Loan Rate, reduce or
increase the principal balance or change the maturity date on such Mortgage
Loan, unless (x) the Mortgagor is in default with respect to the Mortgage Loan
or such default is, in the judgment of the Servicer, imminent and (y) [THE
CERTIFICATE INSURER] consents to such modification in writing and if
modifications pursuant to this Section 3.01 or Section 3.07 have previously been
made which affect Mortgage Loans having an aggregate Loan Balance in excess of
10% of the Maximum Collateral Amount.
(iv) All accounting and loan servicing records pertaining to each
Mortgage Loan shall be maintained in such manner as will permit the Trustee, the
Seller, [THE CERTIFICATE INSURER,] the Certificateholders or their duly
authorized representatives and designees to examine and audit and make legible
reproductions of records during reasonable business hours. All such records
shall be maintained until the termination of this Agreement or such longer
period as is required under applicable law, including, but not limited to, all
transaction registers and loan ledger histories.
The Servicer may delegate its responsibilities under this Agreement;
provided, however, that no such delegation shall release the Servicer from the
responsibilities or liabilities arising under this Agreement.
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Section 3.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers [ACCEPTABLE TO THE CERTIFICATE INSURER] with notice of any
Sub-Servicing Agreement or amendment thereof promptly sent to the Trustee, for
the servicing and administration of the Mortgage Loans. Each Sub-Servicer shall
(i) be authorized to transact business in the state or states where the related
Mortgaged Properties it is to service are situated, if and to the extent
required by applicable law to enable the Sub-Servicer to perform its obligations
hereunder and under the Sub-Servicing Agreement, (ii) have been designated an
approved seller-servicer by FHLMC or FNMA for second mortgage loans, (iii) have
equity of at least $5,000,000, as determined in accordance with generally
accepted accounting principles and (iv) be approved pursuant to the provisions
of Section 3.26 hereof. Each Sub-Servicing Agreement must impose on the
Sub-Servicer requirements conforming to the provisions set forth in Section 3.08
and provide for servicing of the Mortgage Loans consistent with the terms of
this Agreement and be approved in writing by [THE CERTIFICATE INSURER]. The
Servicer and the Sub-Servicers may enter into and make amendments to the
Sub-Servicing Agreements or enter into different forms of Sub-Servicing
Agreements; provided, however, that any such amendments or different forms shall
be consistent with and not violate the provisions of this Agreement and be
approved in writing by [THE CERTIFICATE INSURER]. [WITHOUT LIMITING THE
FOREGOING, ANY VARIATION WITHOUT THE CONSENT OF THE CERTIFICATE INSURER FROM THE
PROVISIONS SET FORTH IN SECTION 3.08 RELATING TO INSURANCE OR PRIORITY
REQUIREMENTS OF SUB-SERVICING ACCOUNTS, OR CREDITS AND CHARGES TO THE
SUB-SERVICING ACCOUNTS OR THE TIMING AND AMOUNT OF REMITTANCES BY THE
SUB-SERVICERS TO THE SERVICER, ARE CONCLUSIVELY DEEMED TO BE INCONSISTENT WITH
THIS AGREEMENT AND THEREFORE PROHIBITED.]
(b) As part of its servicing activities hereunder, the Servicer, for
the benefit of the Trustee, the Seller[, THE CERTIFICATE INSURER] and the
Certificateholders, shall enforce the obligations of each Sub-Servicer under the
related Sub-Servicing Agreement, including, without limitation, any obligation
of the Sub-Servicer to make advances in respect of delinquent Mortgage Loans as
required by a Sub-Servicing Agreement. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Sub-Servicing
Agreements, and the pursuit of other appropriate remedies, shall be in such form
and carried out to such an extent and at such time as the Servicer, in its good
faith business judgment, would require were it the owner of the related Mortgage
Loans. The Servicer shall pay the costs of such enforcement at its own expense,
and shall be reimbursed therefor only (i) from a general recovery resulting from
such enforcement, to the extent, if any, that such recovery exceeds all amounts
due in respect of the related Mortgage Loans, or (ii) from a specific recovery
of costs, expenses or attorneys' fees against the party against whom such
enforcement is directed. Anything contained in this Agreement which restricts or
prohibits
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the Servicer's right to reimbursement or indemnity shall not apply to any
reimbursement or indemnity of the Servicer by any Sub-Servicer.
Section 3.03. Termination of Sub-Servicing Agreements. The Servicer
shall be entitled to terminate any Sub-Servicing Agreement and the rights and
obligations of any Sub-Servicer pursuant to any Sub-Servicing Agreement in
accordance with the terms and conditions of such Sub-Servicing Agreement and if
such termination is without cause, only with the written consent of [THE
CERTIFICATE INSURER]. In the event of termination of any Sub-Servicer, and
unless a successor Sub-Servicer has otherwise been appointed pursuant to Section
3.26 hereof, all servicing obligations of such Sub-Servicer shall be assumed
simultaneously by the Servicer without any additional act or deed on the part of
such Sub-Servicer or the Servicer, and the Servicer shall service directly the
related Mortgage Loans.
Each Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Trustee in the event that the
Servicer shall, for any reason, no longer be the Servicer (including termination
due to an Event of Default). In no event shall any Sub-Servicing Agreement
require the Trustee, as the successor Servicer, for any reason whatsoever to pay
compensation to a Sub-Servicer in order to terminate such Sub-Servicer.
Section 3.04. Liability of the Servicer. Notwithstanding any
Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a Sub-Servicer, including,
without limitation, any provisions to the effect that the Sub-Servicer is acting
for the benefit of the Certificateholders, or reference to actions taken through
a Sub-Servicer or otherwise, the Servicer shall remain obligated and primarily
liable to the Trustee[, THE CERTIFICATE INSURER] and Certificateholders for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of this Article III without diminution of such obligation or
liability by virtue of such Sub-Servicing Agreements or arrangements, or by
virtue of indemnification from the Sub-Servicer and to the same extent and under
the same terms and conditions as if the Servicer alone were servicing and
administering the Mortgage Loans. The Servicer shall be entitled to enter into
any agreement with a Sub-Servicer for indemnification of the Servicer by such
Sub-Servicer and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
Section 3.05. No Contractual Relationship Between Sub-Servicers and
Trustee or Certificateholders. Any Sub-Servicing Agreement that may be entered
into and any transactions or services relating to the Mortgage Loans involving a
Sub-Servicer in its capacity as such and not as a Seller shall be deemed to be
between the Sub-Servicer and the Servicer alone, and the Trustee[, THE
CERTIFICATE INSURER] and Certificateholders shall not be deemed parties thereto
and shall have no claims, rights, obligations, duties or liabilities with
respect to the Sub-Servicer except as set forth in Section 3.06, notwithstanding
any
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provisions hereof or in any Sub-Servicing Agreement to the effect that the
Sub-Servicer is acting for the benefit of the Certificateholders. The Servicer
shall be solely liable for all fees owed by it to any Sub-Servicer, irrespective
of whether the Servicer's compensation pursuant to this Agreement is sufficient
to pay such fees.
Section 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee. In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or any
designee consented to by the [CERTIFICATE INSURER, EXCEPT THAT IF A CERTIFICATE
INSURER DEFAULT HAS OCCURRED AND IS CONTINUING, THE CONSENT OF THE] Majority
Certificateholders, shall thereupon assume all of the rights and obligations of
the Servicer under each Sub-Servicing Agreement that the Servicer may have
entered into, unless the Trustee elects to terminate any subservicing agreement
or unless the Trustee is directed by [THE CERTIFICATE INSURER] to terminate any
Sub-Servicing Agreement and provided that the Trustee shall not be required to
assume any obligation to pay compensation to any Sub-Servicer in order to
terminate any such Sub-Servicer. To the extent any subservicing agreement is not
so terminated, the Trustee, its designee or the successor servicer for the
Trustee appointed pursuant to Section 7.02 shall be deemed to have assumed all
of the Servicer's interest therein and to have replaced the Servicer as a party
to each Sub-Servicing Agreement to the same extent as if each Sub-Servicing
Agreement had been assigned to the assuming party, except that the Servicer
shall not thereby be relieved of any liability or obligations under any
Sub-Servicing Agreement with regard to events occurring prior to the date the
Servicer ceased to be the servicer hereunder.
The Servicer at its expense shall, upon request of the Trustee,
promptly deliver to the assuming party all documents and records relating to
each Sub-Servicing Agreement and the Mortgage 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 Sub-Servicing
Agreements to the assuming party.
Section 3.07. Collection of Certain Mortgage Loan Payments. The
Servicer shall make reasonably diligent efforts to collect all payments called
for under the terms and provisions of the Mortgage Loans, and shall, to the
extent such procedures shall be consistent with this Agreement, follow Accepted
Servicing Procedures. The Servicer may in its discretion waive or permit to be
waived any penalty interest or any other fee or charge which the Servicer would
be entitled to retain hereunder as servicing compensation and extend the Due
Date on a Mortgage Note for a period (with respect to each payment as to which
the Due Date is extended) not greater than 90 days after the initially scheduled
due date for such payment; provided, however, that such extension shall not
result in the imposition of a tax on a "prohibited transaction" of the Trust or
affect the qualification of the Trust as a REMIC. Notwithstanding anything in
this Agreement to the contrary, the Servicer shall not permit any additional
extension or modification with respect to any Mortgage Loan other than that
permitted by the immediately preceding sentence unless [(I)] the Mortgage Loan
is in default
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or, in the judgment of the Servicer, default is imminent[, AND (II) THE SERVICER
SHALL HAVE GIVEN THE CERTIFICATE INSURER TELEPHONIC AND TELECOPIED NOTICE OF ITS
INTENT TO MAKE SUCH ADDITIONAL EXTENSION OR MODIFICATION AND THE CERTIFICATE
INSURER SHALL NOT, WITHIN TWO BUSINESS DAYS AFTER SUCH NOTICE WAS GIVEN, HAVE
GIVEN TELEPHONIC AND TELECOPIED NOTICE TO THE SERVICER THAT IT DISAPPROVES OF
SUCH EXTENSION OR MODIFICATION].
No such extension or modification shall affect the amortization of any
Mortgage Loan for the purposes of any computation hereunder. In the event of any
such extension or modification, the Servicer shall make timely Delinquency
Advances on the related Mortgage Loan during the period of such extension or
modification.
Section 3.08. Sub-Servicing Accounts. In those cases where a
Sub-Servicer is servicing a Mortgage Loan pursuant to a Sub-Servicing Agreement,
such Sub-Servicer will be required to establish and maintain one or more
accounts (collectively, the "Sub-Servicing Account"). Each Sub-Servicing Account
shall be an Eligible Account. Each Sub-Servicer will be required to deposit into
its Sub-Servicing Account no later than the first Business Day after receipt all
proceeds of Mortgage Loans received by such Sub-Servicer, less its servicing
compensation to the extent permitted by the related Sub-Servicing Agreement and
to remit such proceeds to the Servicer for deposit in the Collection Account not
later than the second Business Day following receipt thereof by the
Sub-Servicer. Notwithstanding anything in this Section 3.08 to the contrary, a
Sub-Servicer shall only be able to withdraw funds from the Sub-Servicing Account
for the purpose of remitting such funds to the Servicer for deposit into the
Collection Account. The Servicer shall require each Sub-Servicer to cause any
collection agent of such Sub-Servicer to send a copy to the Servicer of each
statement of Monthly Payments collected by or on behalf of the Sub-Servicer
within five Business Days after the end of every month, and the Servicer shall
compare the information provided in such reports with the deposits made by the
Sub-Servicer into the Collection Account for the same period. For purposes of
this Agreement other than Section 3.10, the Servicer shall be deemed to have
received payments on the Mortgage Loans on the date on which a Sub-Servicer has
received such payments.
Section 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts. The Servicer may and, if required by the Servicer, the
Sub-Servicers shall, establish and maintain one or more accounts (the "Servicing
Accounts"), into which any collections from the Mortgagors (or related advances
from Sub-Servicers) for the payment of taxes, assessments, hazard insurance
premiums, and comparable items for the account of the Mortgagors shall be
deposited and retained. Servicing Accounts shall be Eligible Accounts.
Withdrawals of amounts so collected from a Servicing Account may be made only to
(i) effect timely payment of taxes, assessments, hazard insurance premiums, and
comparable items; (ii) reimburse the Servicer (or a Sub-Servicer to the extent
provided in the related Sub-Servicing Agreement) out of related collections for
any advances made pursuant to Section 3.01(b) (with respect to taxes,
assessments and insurance premiums) and Section 3.13 (with
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respect to hazard insurance); (iii) refund to Mortgagors any sums as may be
determined to be overages; (iv) pay interest, if required and as described
below, to Mortgagors on balances in the Servicing Account; or (v) clear and
terminate the Servicing Account at the termination of this Agreement in
accordance with Section 10.01. As part of its servicing duties, the Servicer or
Sub-Servicers shall pay to the Mortgagors interest on funds in Servicing
Accounts, to the extent required by law and, to the extent that interest earned
on funds in the Servicing Accounts is insufficient, to pay such interest from
its or their own funds, without any reimbursement from the Trust, the Trustee,
the Seller[, THE CERTIFICATE INSURER] or any Certificateholder therefor. Upon
request of the Trustee[, THE CERTIFICATE INSURER] or the Seller, the Servicer
shall cause the bank, savings association or other depository for each Servicing
Account to forward to the Trustee [AND THE CERTIFICATE INSURER] copies of such
statements or reports as the Trustee, the Seller, the Underwriter[, THE
CERTIFICATE INSURER] or any Certificateholder shall reasonably request.
Section 3.10. Collection Account.
(a) The Servicer shall establish and maintain with respect to each Pool
an account to conform to the definition of Collection Account, held in the name
of the Cityscape Loan Trust 199_-_, on behalf of the Trustee in trust for the
benefit of the Certificateholders [AND THE CERTIFICATE INSURER, AS THEIR
INTERESTS MAY APPEAR]. The establishment of the Collection Account shall be
evidenced by a certification of the Servicer in the form attached hereto as
Exhibit F. The Servicer shall deposit or cause to be deposited in the Collection
Account as soon as practicable, but in no event later than the close of business
on the second Business Day after its receipt thereof, the following payments and
collections received or required to be made by it subsequent to the Cut-Off Date
(other than the amounts described in the penultimate paragraph of this
Sub-Section due and owing on or prior to the Cut-Off Date) with respect to the
related Pool:
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans for such Pool;
(ii) all payments on account of interest on each Mortgage Loan
for such Pool;
(iii) any Delinquency Advances with respect to such Pool, as
required pursuant to Section 4.06;
(iv) any amounts required to be deposited pursuant to Section
3.23 by the Servicer in connection with any Compensating Interest for
such Pool;
(v) all Net Recovery Proceeds with respect to such Pool;
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(vi) any amounts required to be deposited by the Servicer
pursuant to the fourth paragraph of Section 3.13 in respect of any
blanket policy deductibles with respect to such Pool;
(vii) all Purchase Prices paid by the Seller or the Servicer
with respect to such Pool;
(viii) any amounts required to be deposited by the Servicer
pursuant to Section 3.10(b) in respect of investment losses with
respect to such Pool; and
(ix) with respect to Pool III, applicable amounts from the FHA
Premium Account, as permitted in Section 3.30 hereof.
For purposes of the immediately preceding sentence, the Cut-Off Date
with respect to any Qualified Replacement Mortgage Loan shall be deemed to be
the date of substitution, but the unpaid principal balance of such Qualified
Replacement Mortgage Loan shall not include the principal portion of any Monthly
Payment made, or the scheduled principal portion of any Monthly Payment that was
due to be made but was not received by the Servicer, in such month of
substitution.
It being further understood and agreed that the amounts of principal
collected and interest due on the Mortgage Loans on or before the Cut-Off Date,
need not be deposited into the Collection Account by the Servicer.
The foregoing requirements for deposit in the Collection Account shall
be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of prepayment or late
payment charges, penalty interest, extension fees or assumption fees need not be
deposited by the Servicer in the Collection Account.
(b) Not later than 12:00 noon, New York time, on each Deposit Date the
Servicer shall deposit in the Collection Account the amount of any net loss
incurred in connection with the investment of funds in the Collection Account
since the prior Deposit Date; such amounts shall be funded from the Servicer's
own funds without any right to reimbursement. The Servicer shall give prompt
notice to each of the Rating Agencies[, THE CERTIFICATE INSURER] and the
Underwriter of the amount of any such net loss.
(c) Funds in the Collection Account shall be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12. The
Servicer shall give notice to the Trustee, the Underwriter, the
Certificateholders[, THE CERTIFICATE INSURER] and the Seller of the location of
the Collection Account on or before the Closing Date, and prior to any change
thereof.
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(d) Funds held in the Collection Account at any time may be delivered
by the Servicer to the Trustee for deposit in the Certificate Account and for
all purposes of this Agreement shall be deemed to be a part of the Collection
Account.
Section 3.11. Withdrawals from the Collection Account; the Certificate
Account.
(a) The Servicer or the Trustee at the written request of the Servicer
shall, from time to time, make withdrawals from the Collection Account with
respect to each Pool for any of the following purposes:
(i) to deposit into the Certificate Account established with
respect to such Pool on or prior to 12:00 noon, New York time, on the
Deposit Date, and as further provided in Section 4.03 hereof:
(A) an amount with respect to interest (the "Interest
Remittance Amount") equal to (x) the product of (1) the
aggregate Loan Balances of the Mortgage Loans of such Pool as
of the opening of business on the first day of the calendar
month preceding the calendar month in which such Deposit Date
occurs (or as of the Cut-Off Date with respect to the Deposit
Date occurring in ____, 199_) and (2) one-twelfth (or 16/360
with respect to the Deposit Date occurring in ___, 199_) of
the weighted average Net Mortgage Loan Rate on the Mortgage
Loans of such Pool as of the opening of business on the first
day of the calendar month preceding the calendar month in
which such Deposit Date occurs minus (y) the amount, if any,
by which (1) the aggregate of the Compensating Interest
resulting from Principal Prepayments with respect to such Pool
during the Due Period beginning on the first day of the
calendar month preceding the calendar month in which such
Deposit Date occurs exceeds (2) the aggregate Servicing Fee
received by the Servicer with respect to such Pool and such
Due Period; and
(B) an amount with respect to principal (the
"Principal Remittance Amount") equal to (I) the sum, without
duplication, of the amounts described in Sections 3.10(a)(i),
3.10(a)(v) (to the extent remaining after prior application
thereof to all accrued and unpaid interest on the related
Mortgage Loans of such Pool (but not in excess of the
then-outstanding Loan Balance of the related Mortgage Loan)),
3.10(a)(vi) (insofar as such amounts relate to principal),
3.10(a)(vii) (insofar as such amounts relate to principal),
and 3.10(a)(viii), in each case to the extent actually
received in the related Due Period, minus (II) the amounts
described in clause (iii) of this Section 3.11(a) (insofar as
such amounts relate to principal) withdrawn by the Servicer
from such Collection Account since the prior Deposit Date (or,
in the case of the
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first Deposit Date, since the Closing Date), but also
including the Monthly Excess Spread and the
Overcollateralization Reduction Amount with respect to
Mortgage Loans of such Pool;
(ii) to pay to the Servicer (x) when collected on the Mortgage
Loans of such Pool, all recovered and previously unreimbursed
Delinquency Advances, Servicing Advances, prepayment penalties and, as
servicing compensation, the Servicing Fee with respect to such Pool,
(y) any interest or investment income earned on funds deposited in such
Collection Account (net of investment losses) and (z) all amounts in
the nature of prepayment or late payment charges, penalty interest,
extension fees, modification fees, assumption fees or
insufficient-funds charges;
(iii) to pay to the Servicer or the Seller, as the case may
be, with respect to each Mortgage Loan in such Pool that has previously
been purchased or replaced pursuant to Section 2.03 or 2.05 or Section
3.15(c) all amounts received thereon in any month subsequent to the
month of such purchase or substitution, as the case may be;
(iv) to reimburse the Servicer for any Delinquency Advance or
Servicing Advance with respect to such Pool previously made that the
Servicer has determined to be a Nonrecoverable Delinquency Advance or a
nonrecoverable Servicing Advance;
(v) to reimburse the Servicer or the Trustee, as the case may
be, for expenses reasonably incurred in respect of the breach or defect
giving rise to the purchase obligation under Section 2.03 or 2.05 of
this Agreement that were included in the Purchase Price of the Mortgage
Loan of such Pool, including any expenses arising out of the
enforcement of the purchase obligation, but only to the extent included
in the related Purchase Price;
(vi) to pay to the Servicer the excess, if any, of any Net
Recovery Proceeds with respect to such Pool over the sum of (a) the
Loan Balance of the related Mortgage Loans of such Pool and (b) accrued
and unpaid interest on the related Mortgage Loans of such Pool;
(vii) to withdraw any amount not required to be deposited in
the Collection Account, which amount shall include all interest which
has accrued on the Mortgage Loans of such Pool prior to the Cut-Off
Date;
(viii) to clear and terminate such Collection Account pursuant
to Section 10.01;
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(ix) in the event of a prepayment or satisfaction of a
Mortgage Loan in such Pool, to pay the refunds and expenses to which
the Mortgagor is entitled as set forth on requests submitted by the
Servicer which requests shall be substantially in the form of Exhibit M
attached hereto;
(x) to reimburse the Seller, the Servicer and the Claims
Administrator, and any director, officer, employee or agent of the
foregoing, for losses, liabilities, costs and expenses reimbursable to
them pursuant to Section 6.03 hereof; and
(xi) with respect to Pool III, to make deposits into the FHA
Premium Account pursuant to Section 3.30, with respect to any FHA
Premium Amounts paid by the related Mortgagor.
(b) Amounts on deposit in the Certificate Account for each Pool shall
be withdrawn by the Trustee on each Distribution Date in accordance with the
provisions of Section 4.04 hereof.
Section 3.12. Investment of Funds in the Accounts.
(a) The Servicer may direct in writing the Trustee or any depository
institution maintaining the Collection Accounts, Distribution Accounts,
Pre-Funding Account, Capitalized Interest Account or the Certificate Accounts,
to invest the funds held therein in one or more Permitted Investments bearing
interest or sold at a discount, and maturing, unless payable on demand, (i) if
such Permitted Investments are not obligations of the institution maintaining
the account from which the funds are required to be withdrawn, no later than the
Business Day immediately preceding the earliest date on which such funds may be
required to be withdrawn from such account pursuant to this Agreement, but in no
event later than the Business Day immediately preceding the next Distribution
Date, and (ii) if such Permitted Investments are obligations of the institution
maintaining the account from which the funds are required to be withdrawn, no
later than the earliest date on which such funds may be required to be withdrawn
from such account pursuant to this Agreement or, in the case of the Pre-Funding
Account and the Capitalized Interest Account, the date on which the Seller so
designates, but, in either case, in no event later than the next Distribution
Date. All such Permitted Investments shall be held to maturity, unless payable
on demand.
If the Servicer, with respect to the Collection Accounts, the
Distribution Accounts, Pre-Funding Account, Capitalized Interest Account or the
Certificate Accounts, does not provide investment directions to the Trustee or
depository institution with respect to the funds on deposit therein, such funds
shall be invested in the Permitted Investments specified in clause (v) of the
definition thereof, which may be administered by an affiliate of such depository
institution.
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Any investment of funds on deposit in any Account shall be made in the
name of the Trustee, in trust for the benefit of the Certificateholders. With
respect to any Account held by the Trustee, the Trustee shall have sole control
(except with respect to investment direction) over each such investment, and any
certificate or other instrument evidencing any such investment shall be
delivered directly to the Trustee or its agent, together with any document of
transfer necessary to transfer title to such investment to the Trustee or its
nominee. In the event amounts from funds on deposit in any Account are at any
time invested in a Permitted Investment payable on demand, the Trustee shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an amount equal
to the lesser of (1) all amounts then payable thereunder and (2) the
amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly by a
Responsible Officer of the Trustee having actual knowledge that such
Permitted Investment would not constitute a Permitted Investment.
(b) All net income and net gain realized from investment of funds
deposited in the Collection Accounts shall be for the benefit of the Servicer
and shall be subject to its withdrawal in accordance with Section 3.11. Net
income or net gain realized from investment of funds deposited in the
Certificate Accounts shall be treated in accordance with Article IV.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee shall take such action as it is directed in writing by
the Servicer or the Seller, as appropriate, to enforce such payment or
performance, including the initiation and prosecution of appropriate
proceedings; provided, however, that the Trustee shall be indemnified and
reimbursed for any costs, expenses, losses, or liabilities as provided in
Section 8.05.
Section 3.13. Maintenance of Hazard Insurance and Errors and Omissions
and Fidelity Coverage. The Servicer shall cause to be maintained for each
Mortgage Loan, with insurers meeting FNMA or FHLMC guidelines, hazard insurance
with extended coverage on the related Mortgaged Property in an amount which is
at least equal to the least of (a) the Loan Balance of such Mortgage Loan and
any Senior Lien, (b) the maximum insurable value of such Mortgaged Property, and
(c) the amount necessary to fully compensate for any damage or loss to the
improvements which are a part of such property on a replacement cost basis, in
each case in an amount not less than such amount as is necessary to avoid the
application of any co-insurance clause contained in the related hazard insurance
policy. The Servicer shall also cause to be maintained fire insurance with
extended coverage on each
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REO Property in an amount which is at least equal to the lesser of (i) the
maximum insurable value of the improvements which are a part of such property
and (ii) the sum of the Loan Balance of the related Mortgage Loan and any Senior
Lien at the time it became an REO Property, plus (x) accrued interest at the
Mortgage Loan Rate as of the time the Mortgage Loan became an REO Property and
(y) related Servicing Advances as of the time the Mortgage Loan became an REO
Property.
Any amounts to be collected by the Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the property
subject to the related Mortgage or amounts to be released to the Mortgagor in
accordance with Accepted Servicing Procedures, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in the
Collection Account, subject to withdrawal pursuant to Section 3.11.
Any cost incurred by the Servicer in maintaining any such insurance
shall not, for the purpose of calculating distributions to Certificateholders,
be added to the Loan Balance of the related Mortgage Loan, notwithstanding that
the terms of such Mortgage Loan so permit. It is understood and agreed that no
earthquake or other additional insurance is to be required of any Mortgagor
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. If the Mortgaged
Property or REO Property is located at the time of origination of the Mortgage
Loan in a federally designated special flood hazard area (and if the flood
insurance policy referenced herein has been made available), the Servicer will
cause to be maintained flood insurance in respect thereof. Such flood insurance
shall be in an amount equal to the least of (i) the sum of the Loan Balance of
the related Mortgage Loan and any Senior Lien, (ii) the maximum insurable value
of the related Mortgaged Property, and (iii) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).
In the event that the Servicer shall obtain and maintain a blanket
policy with an insurer having a General Policy Rating of A:VIII or better in
Best's Key Rating Guide insuring against fire and hazard losses on all of the
Mortgage Loans, or such other insurer as [THE CERTIFICATE INSURER] may allow, it
shall conclusively be deemed to have satisfied its obligations as set forth in
the first two sentences of this Section 3.13, it being understood and agreed
that such policy may contain a deductible clause that is in form and substance
consistent with standard industry practice for servicers of mortgage loans
comparable to the Mortgage Loans, in which case the Servicer shall, in the event
that there shall not have been maintained on the related Mortgaged Property or
REO Property a policy complying with the first two sentences of this Section
3.13, and there shall have been one or more losses which would have been covered
by such policy, deposit to the Collection Account from its own funds the amount
not otherwise payable under the blanket policy because of such deductible clause
without any right of reimbursement therefor. In connection with its activities
as
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administrator and servicer of the Mortgage Loans, the Servicer agrees to prepare
and present, on behalf of itself, the Trustee[, THE CERTIFICATE INSURER] and
Certificateholders, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.
The Servicer shall keep in force during the term of this Agreement a
policy or policies of insurance covering errors and omissions for failure in the
performance of the Servicer's obligations under this Agreement, which policy or
policies shall be in such form and amount that would meet the requirements of
FNMA or FHLMC if it were the purchaser of the Mortgage Loans. The Servicer shall
also maintain a fidelity bond in the form and amount that would meet the
requirements of FNMA or FHLMC if it were the purchaser of the Mortgage Loans.
The Servicer shall be deemed to have complied with this provision if an
affiliate of the Servicer has such errors and omissions and fidelity bond
coverage and, by the terms of such insurance policy or fidelity bond, the
coverage afforded thereunder extends to the Servicer. Any such errors and
omissions policy and fidelity bond shall not be canceled without thirty days'
prior written notice to the Trustee [AND THE CERTIFICATE INSURER]. Upon the
request of the Trustee, any Certificateholder [OR THE CERTIFICATE INSURER], the
Servicer shall furnish to the requesting party copies of all binders and
policies or certificates evidencing that such bonds and insurance policies are
in full force and effect. The Servicer shall also cause each Sub-Servicer to
maintain a policy of insurance covering errors and omissions and a fidelity bond
which would meet the requirements set forth above.
Section 3.14. Enforcement of Due-On-Sale Clauses; Assumption
Agreements. Except as otherwise provided in the next sentence, the Servicer
will, to the extent it has knowledge of any conveyance or prospective conveyance
of any Mortgaged Property by any Mortgagor (whether by absolute conveyance or by
contract of sale, and whether or not the Mortgagor remains or is to remain
liable under the Mortgage Note and/or the Mortgage), exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause, if
any, applicable thereto. If the Servicer reasonably believes it is unable under
applicable law to enforce such "due-on-sale" clause or enforcement would
materially increase the risk of default or delinquency on, or impair the
security for, the Mortgage Loan, the Servicer will enter into an assumption and
modification agreement from or with the person to whom such property has been
conveyed or is proposed to be conveyed, pursuant to which such person becomes
liable under the Mortgage Note and, to the extent permitted by applicable state
law, the Mortgagor remains liable thereon. The Servicer is also 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 the Mortgagor and becomes liable under the Mortgage Note,
provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Servicer as of the date of
substitution which shall not be less restrictive than such criteria as set forth
on Exhibit L hereof. In connection with any assumption or
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substitution, the Servicer shall apply Accepted Servicing Procedures. Any fee
collected by the Servicer in respect of an assumption or substitution of
liability agreement will be retained by the Servicer as Additional Servicing
Compensation. In connection with any such assumption, no material term of the
Mortgage Note (including, but not limited to, the related Mortgage Loan Rate and
the amount of the Monthly Payment) may be amended or modified, except as
otherwise required pursuant to the terms thereof. The Servicer shall notify the
Trustee that any such substitution or assumption agreement has been completed by
forwarding to the Trustee the original copy of such substitution or assumption
agreement, which copy shall be added to the related Mortgage File and shall, for
all purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof.
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
Mortgage Loan by operation of law or by the terms of the Mortgage Note or any
assumption which the Servicer believes in good faith that it may be restricted
by law from preventing, for any reason whatever. For purposes of this Section
3.14, the term "assumption" is deemed to also include a sale (of the Mortgaged
Property) subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.
Section 3.15. Realization Upon Defaulted Mortgage Loans.
(a) The Servicer shall, consistent with the servicing standards set
forth in Section 3.01(b), foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.07, and, in the case of
FHA Loans, for which a Claim is not required to be submitted to the FHA pursuant
to Section 3.31. In connection with realization upon defaulted Mortgage Loans,
the Servicer shall follow such practices and procedures as it shall deem
necessary or advisable, as shall be normal and usual in accordance with Accepted
Servicing Practices and the requirements of insurers under any insurance policy
required to be maintained hereunder with respect to the related Mortgage Loan.
The Servicer shall be responsible for all costs and expenses incurred by it in
any such proceedings; provided, however, that such costs and expenses will be
recoverable as Servicing Advances by the Servicer as contemplated in this
Section 3.15.
The Servicer shall not be required to make any Servicing Advance, to
foreclose upon any Mortgaged Property, or otherwise expend its own funds toward
the restoration of any Mortgaged Property that shall have suffered damage from
an Uninsured Cause, unless it shall determine in its reasonable judgment, as
evidenced by a certificate of a Servicing Officer, that such foreclosure or
restoration, as the case may be, will increase the proceeds of liquidation of
the related Mortgage Loan after reimbursement to itself for Servicing
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Advances. Any Servicing Advances made with respect to a Mortgage Loan shall be
recoverable by the Servicer only from recoveries on such Mortgage Loan.
(b) The Servicer may at its option purchase from the Trust any Mortgage
Loan which is 90 days or more Delinquent and which the Servicer determines in
good faith will otherwise become subject to foreclosure proceedings at a price
equal to the Purchase Price (evidence of such determination to be delivered in
writing to the Trustee, the Seller [AND THE CERTIFICATE INSURER] prior to
purchase). The Purchase Price for any Mortgage Loan purchased hereunder shall be
deposited into the Collection Account and the Trustee, upon (i) receipt of an
Officer's Certificate of the Servicer as to the making of such deposit and (ii)
confirmation that such deposit has been made, shall release or cause to be
released to the Servicer the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment as are furnished by the Servicer, in
each case without recourse, as shall be necessary to vest in the Servicer title
to any Mortgage Loan released pursuant hereto, and the Trustee shall have no
further responsibility or liability (except as to its own acts) with regard to
such Mortgage Loan.
(c) Unless otherwise required pursuant to the Mortgage Note, any
Property Insurance Proceeds or Liquidation Proceeds received with respect to a
Mortgage Loan or REO Property (other than received in connection with a purchase
by the Class R Certificateholders of all the Mortgage Loans and REO Properties
in the Trust Estate pursuant to Section 10.01) will be allocated in the
following order of priority, in each case to the extent of available funds:
first, to reimburse the Servicer or any Sub-Servicer for any related
unreimbursed Servicing Advances, and any related unreimbursed Delinquency
Advances theretofore funded by the Servicer or any Sub-Servicer from its own
funds, in each case, with respect to the related Mortgage Loan; second, to
accrued and unpaid interest on the Mortgage Loan, at the Mortgage Loan Rate (or
at such lesser rate as may be in effect for such Mortgage
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Loan pursuant to application of the Civil Relief Act) on the Loan Balance of
such Mortgage Loan, to the date of the Final Recovery Determination if one has
been made, or to the Due Date in the Due Period prior to the Distribution Date
on which such amounts are to be distributed if a Final Recovery Determination
has not been made, minus any accrued and unpaid Servicing Fees with respect to
such Mortgage Loan, to be distributed to the Pool I, Pool II, Pool III or Pool
IV Certificateholders, as the case may be; third, to the extent of the Loan
Balance of the Mortgage Loan outstanding immediately prior to the receipt of
such proceeds, as a recovery of principal of the related Mortgage Loan, to be
distributed to the Pool I, Pool II, Pool III or Pool IV Certificateholders, as
the case may be; and fourth, to any prepayment or late payment charges or
penalty interest payable in connection with the receipt of such proceeds and to
all other fees and charges due and payable with respect to such Mortgage Loan.
(d) The Servicer shall deliver to the Trustee[, THE CERTIFICATE
INSURER] and the Seller on each Deposit Date a Liquidation Report in the form
annexed as Exhibit G hereto as well as an electromagnetic tape in computer
readable format (along with the Officer's Certificate referenced in the
definition of Final Recovery Determination) with respect to each Mortgage Loan
as to which the Servicer made a Final Recovery Determination during the related
Due Period.
Section 3.16. Trustee to Cooperate; Release of Mortgage Files. Upon the
payment in full of any Mortgage Loan, or the receipt by the Servicer of a
notification that payment in full shall be escrowed in a manner customary for
such purposes, the Servicer will notify the Trustee by a certification in the
form of Exhibit D-2 (which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment
which are required to be deposited in the Collection Account pursuant to Section
3.10 have been or will be so deposited) of a Servicing Officer and shall request
delivery to it of the Mortgage File. Upon receipt of such certification and
request, the Trustee shall promptly release the related Mortgage File to the
Servicer. The Servicer shall provide for preparation of the appropriate
instrument of satisfaction covering any Mortgage Loan which pays in full and the
Trustee shall cooperate in the execution and return of such instrument to
provide for its delivery or recording as may be required. No expenses incurred
in connection with any instrument of satisfaction or deed of reconveyance shall
be chargeable to any Account or shall be otherwise chargeable to the Trust, the
Trustee, the Certificateholders [OR THE CERTIFICATE INSURER].
From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, the Trustee shall, upon request of the Servicer and
delivery to the Trustee of a Request for Release in the form of Exhibit D-1,
release the related Mortgage File to the Servicer, and the Trustee shall, at the
direction of the Servicer, execute such documents as shall be necessary to the
prosecution of any such proceedings. Such Request for Release shall obligate the
Servicer to return each and every document previously requested from the
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Mortgage File to the Trustee when the need therefor by the Servicer no longer
exists, unless the Mortgage Loan has been liquidated and the Net Recovery
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Mortgage File or such document has been delivered to an attorney,
or to a public trustee or other public official as required by law, for purposes
of initiating or pursuing legal action or other proceedings for the foreclosure
of the Mortgaged Property either judicially or non-judicially, and the Servicer
has delivered to the Trustee a certificate of a Servicing Officer certifying as
to the name and address of the Person to which such Mortgage File or such
document was delivered and the purpose or purposes of such delivery. Upon
receipt of a certificate of a Servicing Officer stating that such Mortgage Loan
was liquidated and that all amounts received or to be received in connection
with such liquidation which are required to be deposited into the Collection
Account have been so deposited, a copy of the Request for Release shall be
released by the Trustee to the Servicer.
Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Servicer any court pleadings, requests for trustee's
sale or other documents necessary to the foreclosure or trustee's sale in
respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by the
Mortgage Note or Mortgage or otherwise available at law or in equity. Each such
certification shall include a request that such pleadings or documents be
executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage, except
for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
Section 3.17. Servicing Compensation. As compensation for the
activities of the Servicer hereunder, the Servicer shall be entitled to the
Servicing Fee with respect to each Mortgage Loan, subject to Section 3.23 and
Section 3.27, payable from payments of interest, Property Insurance Proceeds or
Liquidation Proceeds in respect of such Mortgage Loan and from amounts
distributable in accordance with Section 4.04(a)(v). 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, although any portion thereof may be paid to a Sub-Servicer
as provided in the related Sub-Servicing Agreement.
Additional servicing compensation in the form of Net Recovery Proceeds
in excess of the Loan Balance of the related Mortgage Loan, prepayment charges,
penalty interest, assumption fees, late payment charges or otherwise shall be
retained by the Servicer only to the extent such fees or charges are received by
the Servicer (such amounts, "Additional Servicing Compensation"). The Servicer
shall also be entitled pursuant to Section 3.11(a)(ii) to interest or other
investment income earned from the investment of funds on deposit in the
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Collection Account as additional servicing compensation. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including, without limitation, (x) payment of premiums for
the insurance required by Section 3.13, to the extent such premiums are not paid
by the related Mortgagors or by a Sub-Servicer and (y) servicing compensation of
each Sub-Servicer) and shall not be entitled to reimbursement therefor except as
specifically provided herein.
Section 3.18. Reports to the Trustee; Collection Account Statement.
(a) On or before each Determination Date, the Servicer shall deliver to
the Trustee (i) a computer-readable magnetic tape setting forth the payments and
collections received with respect to the Mortgage Loans during the Due Period
for the month immediately preceding the month in which such Determination Date
occurs (such tape, a "Servicer Remittance Report") and (ii), if not included in
the Servicer Remittance Report, a report and an electromagnetic tape in computer
readable format, setting forth the information described in clauses (A)-(G) of
Section 4.05 for the month immediately preceding the month in which such
Determination Date occurs and such other information as the Trustee may request
in order to fulfill its obligations hereunder (such report, a "Delinquency
Report").
(b) If funds in the Collection Accounts during a Due Period have been
invested in investments other than bank deposits of the depository institution
maintaining the Collection Accounts or money market funds (as described in the
definition of Permitted Investments), then, on or before the related
Distribution Date, the Servicer shall forward to the Trustee, [THE CERTIFICATE
INSURER,] each Certificateholder and the Seller a statement in the form annexed
hereto as Exhibit H setting forth the activity in the Collection Accounts during
the preceding calendar month.
Section 3.19. Statement as to Compliance and Financial Statements. The
Servicer will deliver to the Trustee[, THE CERTIFICATE INSURER] and the Seller
not later than 90 days following the end of each fiscal year of the Servicer, an
Officer's Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Servicer and the Claims Administrator during the
preceding year and of performance under this Agreement has been made under such
officer's supervision and (ii) to the best of such officer's knowledge, based on
such review, the Servicer and the Claims Administrator have fulfilled all of
their obligations under this Agreement throughout such year, or, if there has
been a default in the fulfillment of any such obligation by either the Servicer
or the Claims Administrator, specifying each such default known to such officer
and the nature and status thereof and the action being taken by the Servicer and
the Claims Administrator, as applicable, to cure such default.
Contemporaneously with the submission of the Officer's Certificate
required by the preceding paragraph, the Servicer shall deliver to the Trustee[,
THE CERTIFICATE INSURER] and
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the Seller a copy of its annual audited financial statements prepared in the
ordinary course of business. The Servicer shall, upon the request of any
Certificateholder, deliver to the requesting party a copy of such annual audited
financial statements or any unaudited quarterly financial statements of the
Servicer.
The Servicer agrees to make available on a reasonable basis to the
Seller [AND THE CERTIFICATE INSURER] a knowledgeable officer of the Servicer for
the purpose of answering reasonable questions respecting recent developments
affecting the Servicer or the financial statements of the Servicer and to permit
any Certificateholder, prospective Certificateholder[, THE CERTIFICATE INSURER]
or the Seller or the Underwriter on reasonable notice to inspect the Servicer's
servicing facilities during normal business hours for the purpose of satisfying
such Certificateholder, prospective Certificateholder[, THE CERTIFICATE INSURER]
or the Seller that the Servicer has the ability to service the Mortgage Loans in
accordance with this Agreement.
The Servicer shall also furnish and certify to the requesting party
such other information as to (i) its organization, activities and personnel
relating to the performance of the obligations of the Servicer hereunder, (ii)
its financial condition, (iii) the Mortgage Loans and (iv) the performance of
the obligations of any Sub-Servicer under the related Sub-Servicing Agreement,
in each case as the Trustee, the Seller[, THE CERTIFICATE INSURER] or any Class
[A] Certificateholder who has a greater than 10% Percentage Interest may
reasonably request from time to time.
Section 3.20. Independent Public Accountants' Servicing Report. Not
later than 90 days following the end of each fiscal year of the Servicer, the
Servicer at its expense shall cause any nationally recognized firm of
Independent Certified Public Accountants (which may also render other services
to the Servicer) reasonably acceptable to the Trustee [AND THE CERTIFICATE
INSURER] to furnish a statement to the Trustee, [THE CERTIFICATE INSURER,] the
Seller and the Rating Agencies to the effect that such firm has with respect to
the Servicer's overall servicing operations examined such servicing operations
in accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers, and stating such firm's conclusions relating thereto.
Section 3.21. Access to Certain Documentation. The Servicer shall
provide to the OTS, the FDIC, and any other federal or state banking or
insurance regulatory authority that may exercise authority over any
Certificateholder [OR THE CERTIFICATE INSURER], access to the documentation
regarding the Mortgage Loans of the related Pool required by applicable state
and federal laws and regulations. The Servicer shall similarly provide to the
Trustee, the Seller, any Certificateholder, any prospective Certificateholder
[AND THE CERTIFICATE INSURER] such access to the documentation regarding the
Mortgage Loans of the related Pool as such Persons may reasonably require. Such
access shall in each case be afforded without charge,
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but only upon reasonable request and during normal business hours at the offices
of the Servicer or of a Sub-Servicer, as applicable, designated by it.
Section 3.22. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be taken
in the name of the Trustee, on behalf of the Certificateholders. The Servicer,
on behalf of the Trust, shall sell any REO Property within two years after the
Trust acquires ownership of such REO Property for purposes of Section 860G(a)(8)
of the Code, unless the Servicer has delivered to the Trustee, the Seller [AND
THE CERTIFICATE INSURER] an Independent Opinion of Counsel, addressed to the
Trustee, [THE CERTIFICATE INSURER,] the Seller and the Servicer, to the effect
that holding such REO Property for more than two years after its acquisition
will not result in the imposition of taxes on "prohibited transactions" of the
Trust as defined in Section 860F of the Code or cause the REMIC Trust to fail to
qualify as a REMIC under federal law at any time that any Certificates are
outstanding. The Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders solely for the purpose of its prompt
disposition and sale in a manner which does not cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or result in the receipt by the REMIC of any "income from non-permitted
assets" within the meaning of Section 860F(a)(2)(B) of the Code or any "net
income from foreclosure property" which is subject to taxation under the REMIC
Provisions.
(b) The Servicer shall have full power and authority, subject only to
the specific requirements and prohibitions of this Agreement, to do any and all
things in connection with any REO Property as are consistent with the manner in
which the Servicer manages and operates similar property owned by the Servicer
or any of its affiliates, all on such terms and for such period as the Servicer
deems to be in the best interests of [THE CERTIFICATE INSURER] and the Pool I,
Pool II, Pool III or Pool IV Certificateholders, as the case may be.
Notwithstanding the foregoing, the Servicer shall not:
(i) permit the Trust to enter into, renew or extend any New
Lease with respect to any REO Property, if the New Lease by its terms
will give rise to any income that does not constitute Rents from Real
Property;
(ii) permit any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iii) authorize or permit any construction on any REO
Property, other than the completion of a building or other improvement
thereon, and then only if more than ten percent of the construction of
such building or other improvement was completed before default on the
related Mortgage Loan became imminent, all within the meaning of
Section 856(e)(4)(B) of the Code; or
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(iv) allow any Person to Directly Operate any REO Property on
any date more than 90 days after its date of acquisition by the Trust;
unless, in any such case, the Servicer has obtained an Independent Opinion of
Counsel, addressed to itself, the Trustee [AND THE CERTIFICATE INSURER], to the
effect that such action will not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code at
any time that it is held by the Trust, in which case the Servicer may take such
actions as are specified in such Opinion of Counsel.
The Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(A) the terms and conditions of any such contract shall not be
inconsistent herewith;
(B) any such contract shall require, or shall be administered
to require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including those listed above and remit all related revenues
(net of such costs and expenses) to the Servicer as soon as
practicable, but in no event later than thirty days following the
receipt thereof by such Independent Contractor;
(C) none of the provisions of this Section 3.22(b) relating to
any such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Servicer of any of its duties
and obligations to the Trustee on behalf of the Certificateholders with
respect to the operation and management of any such REO Property; and
(D) the Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and
obligations in connection with the operation and management of such REO
Property.
The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall be solely liable for all fees owed by
it to any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.17 is sufficient to pay such fees.
(c) Subject to the time constraints set forth in Section 3.22(a), each
liquidation of an REO Property shall be carried out by the Servicer at such
price and upon such terms and conditions as the Servicer shall deem necessary or
advisable, as shall be normal and usual in
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its general servicing activities, and the resulting Liquidation Proceeds shall
be distributed in accordance with Section 3.15(d).
(d) The Servicer shall prepare and file reports of foreclosure and
abandonment in accordance with Section 6050J of the Code and shall provide
written notice to the Trustee that such reports have been filed or that no
filing was required.
Section 3.23. Compensating Interest. The Servicer shall deposit into
each Collection Account on or before 12:00 noon, New York time, on each Deposit
Date an amount equal to the lesser of (i) the aggregate of the Compensating
Interest resulting from Principal Prepayments on the Mortgage Loans of the
related Pool during the related Due Period and (ii) its aggregate Servicing Fee
received in such Due Period with respect to the related Pool.
Section 3.24. Superior Liens. The Servicer shall file (or cause to be
filed) of record a request for notice of any action by a superior lienholder
under a Senior Lien for the protection of the Trustee's interest, if (i) local
law provides that the filing of such a request will result in notification of
junior lienholders in the event foreclosure proceedings are instituted and (ii)
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. The Servicer shall also notify any such
superior lienholder in writing of the existence of the Mortgage Loan and request
notification of any action (as described below) to be taken against the
Mortgagor or the Mortgaged Property by the superior lienholder.
Subject to the remainder of this Section 3.24, if the Servicer is
notified that any superior lienholder has accelerated or intends to accelerate
the obligations secured by the Senior Lien, or has declared or intends to
declare a default under the mortgage or the promissory note secured thereby, or
has filed or intends to file an election to have the Mortgaged Property sold or
foreclosed, the Servicer shall take, on behalf of the Trust, whatever actions
are necessary to protect the interests of the Certificateholders, and/or to
preserve the security of the related Mortgage Loan, subject to the application
of the REMIC Provisions. The Servicer shall advance the necessary funds to cure
the default or reinstate the superior lien, if such advance would have the
effect of increasing the Net Recovery Proceeds.
No advance shall be required to be made hereunder if such advance
would, if made, constitute a nonrecoverable Servicing Advance. The determination
by the Servicer that it has made a nonrecoverable Servicing Advance or that any
proposed advance, if made, would constitute a nonrecoverable Servicing Advance,
shall be evidenced by a certification of a Servicing Officer delivered to [THE
CERTIFICATE INSURER,] the Seller, the Rating Agencies and the Trustee no later
than the Business Day following such determination.
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Section 3.25. Indemnification.
(a) The Servicer shall indemnify the Seller, [THE CERTIFICATE INSURER,]
each Certificateholder and the Trustee (each an "Indemnified Party") and hold
harmless each of them against any and all claims, losses, damages, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and
other costs and expenses resulting from any claim, demand, defense or assertion
based on or grounded upon, or resulting from, a breach of any of the Servicer's
representations and warranties and covenants contained in this Agreement or in
any way relating to the failure of the Servicer to perform its duties and
service the Mortgage Loans in compliance with the terms of this Agreement;
provided, however, that if the Servicer is not liable pursuant to the provisions
of Section 6.03 hereof for its failure to perform its duties and service the
Mortgage Loans in compliance with the terms of this Agreement, then the
provisions of this Section 3.25 shall have no force and effect with respect to
such failure.
(b) The Seller, [THE CERTIFICATE INSURER,] any Certificateholder or the
Trustee, as the case may be, shall promptly notify the Servicer if a claim is
made by a third party with respect to a breach of any of the Servicer's
representations and warranties and covenants contained in this Agreement or in
any way relating to the failure of the Servicer to perform its duties and
service the Mortgage Loans in compliance with the terms of this Agreement. The
Servicer shall promptly notify [THE CERTIFICATE INSURER,] the Trustee and the
Certificateholders of any claim of which it has been notified pursuant to this
Section 3.25 [BY A PERSON OTHER THAN THE CERTIFICATE INSURER, AND, IN ANY EVENT,
SHALL PROMPTLY NOTIFY THE CERTIFICATE INSURER OF ITS INTENDED COURSE OF ACTION
WITH RESPECT TO ANY CLAIM]. [IF THE CERTIFICATE INSURER SO DIRECTS THE SERVICER
IN WRITING WITHIN TEN BUSINESS DAYS OF SUCH NOTICE TO THE CERTIFICATE INSURER,
THE SERVICER SHALL REFRAIN FROM DEFENDING, AND IN ANY CASE WHERE THE CERTIFICATE
INSURER SO DIRECTS IN WRITING AT ANY TIME, THE SERVICER SHALL CEASE DEFENDING
(BUT ONLY IF THE SERVICER IS NOT JUDICIALLY OR LEGALLY PROHIBITED FROM DOING
SO), SUCH CLAIM OR SHALL SETTLE SUCH CLAIM ON TERMS ACCEPTABLE TO THE
CERTIFICATE INSURER; PROVIDED, HOWEVER, THAT THE SERVICER NEED NOT COMPLY WITH
THE CERTIFICATE INSURER'S DIRECTIONS UNLESS IT IS INDEMNIFIED TO ITS REASONABLE
SATISFACTION BY THE CERTIFICATE INSURER AGAINST ANY LIABILITY THAT THE SERVICER
MAY INCUR AS A CONSEQUENCE OF SUCH COMPLIANCE.]
(c) The Servicer shall be entitled to participate in and, upon notice
to the Indemnified Party, assume the defense of any such action or claim in
reasonable cooperation with, and with the reasonable cooperation of, the
Indemnified Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to the counsel of the Servicer, but the
fees and expenses of such counsel will be at the expense of such Indemnified
Party, unless (a) the employment of counsel by the Indemnified Party at its
expense has been authorized in writing by the Servicer, (b) the Servicer has not
in fact employed counsel to assume the defense of such action within a
reasonable time after
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receiving notice of the commencement of the action, or (c) the named parties to
any such action or proceeding (including any impleaded parties) include both the
Servicer and one or more Indemnified Parties, and the Indemnified Parties shall
have been advised by counsel that there may be one or more legal defenses
available to them which are different from or additional to those available to
the Servicer (it being understood, however, that the Servicer shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys for the Class [A]
Certificateholders at any time). The Servicer shall not be liable for any
settlement of any such claim or action unless the Servicer shall have consented
thereto or be in default on its obligations hereunder. Any failure by an
Indemnified Party to comply with the provisions of this Section shall relieve
the Servicer of liability only if such failure is materially prejudicial to the
position of the Servicer and then only to the extent of such prejudice.
Section 3.26. Certain Procedures Relating to Successor Sub-Servicers
and Successor Servicers.
(a) The Servicer shall be entitled to terminate any Sub-Servicing
Agreement in accordance with the terms and conditions of such Sub-Servicing
Agreement and (i) to service directly the related Mortgage Loans, as provided in
Section 3.03, or (ii) to enter into a Sub-Servicing Agreement with a successor
Sub-Servicer that qualifies under the provisions of this Agreement.
(b) In the event that the Servicer is to be replaced and the Trustee is
unwilling to so act or is unable to so act (it being acknowledged that the
Trustee is obligated to act as successor Servicer pursuant to Section 7.02
hereof, if no other successor Servicer is appointed pursuant to this Section),
[THE CERTIFICATE INSURER AND] the Trustee, and, if the Majority
Certificateholders so request, the Class [A] Certificateholders, shall consult
among themselves with respect to the appointment of a successor Servicer. In the
event that such parties cannot, with reasonable promptness (but in no event
later than 30 days), agree on the identity of the successor Servicer, the
decision of the [CERTIFICATE INSURER SHALL CONTROL EXCEPT THAT IF A CERTIFICATE
INSURER DEFAULT HAS OCCURRED AND IS CONTINUING, THE DECISION OF THE] Trustee
shall control.
(c) In connection with any change in the Servicer's servicing software,
the Servicer shall promptly deliver to the Trustee [AND THE CERTIFICATE INSURER]
an Officer's Certificate detailing the substance of such change and the Servicer
shall cooperate fully with the Trustee in any manner as the Trustee reasonably
deems necessary with respect to such change.
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Section 3.27. Additional Servicing Responsibilities for the Adjustable
Rate Mortgage Loans and the FHA Loans.
(a) The Servicer shall enforce each Adjustable Rate Mortgage Loan and
shall timely calculate, record, report and apply all Mortgage Loan Rate
adjustments in accordance with the related Mortgage Note. The Servicer's record
shall, at all times, reflect the then-current Mortgage Loan Rate and Monthly
Payment and the Servicer shall timely notify the Mortgagor of any changes to the
Mortgage Loan Rate and the Monthly Payment. If the Servicer fails to adjust the
Mortgage Loan Rate or the Monthly Payment in accordance with the terms of the
Mortgage Note for the related Adjustable Rate Mortgage Loan, or if the Servicer
fails to notify the related Mortgagor of any such adjustment as required under
the terms of such Mortgage Note, or if any liability, claim or defense arises
with respect to any Adjustable Rate Mortgage Loan solely as a result of any such
failure, the Servicer shall pay, from its own funds and without right of
reimbursement therefor, any shortage in amounts collected or collectible on the
related Adjustable Rate Mortgage Loan that results. The Servicer shall deposit
any amounts in respect of such shortage in the Certificate Account for the
related Pool on the Deposit Date with respect to the related Due Period.
(b) After the Closing Date, the Servicer shall confirm, or cause to be
confirmed, whether all on-site or off-site improvements on the Mortgaged
Properties relating to the FHA Loans have been completed and, if such
improvements have not been completed, to submit the appropriate filings to the
FHA.
Notwithstanding any other provision of this Agreement, the Servicer
shall not take any action which would adversely affect the coverage of an FHA
Loan for insurance by the FHA under Title I.
Section 3.28. Pre-Funding Account.
(a) The Trustee will establish and maintain the Pre-Funding Account. No
later than the Closing Date, the Trustee will deposit in the Pre-Funding Account
the Pre-Funding Account Deposit from the proceeds of the sale of the
Certificates. On any Subsequent Transfer Date, the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
Subsequent Purchase Price for the Subsequent Mortgage Loans sold to the Trust on
such Subsequent Transfer Date, and make a corresponding reduction in the amount
of the Pre-Funding Account Deposit, and pay such amounts to or upon the order of
the Seller upon satisfaction of the conditions set forth in Section 2.02 of this
Agreement with respect to such transfers. In connection with such instruction,
the Seller shall additionally inform the Trustee whether such Subsequent
Mortgage Loans are being transferred in respect of Pool I, Pool II, Pool III or
Pool IV.
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(b) The Pre-Funding Account will be part of the Trust Estate but not
part of the REMIC Trust. Amounts held in the Pre-Funding Account shall be
invested in Permitted Investments of the type specified in clause (v) of the
definition of Permitted Investments, which Permitted Investments shall mature on
the Business Day next succeeding the date the Trustee receives the Addition
Notice that such monies will be needed. The Trustee shall not be liable for any
losses on amounts invested in accordance with the provisions hereof. Any losses
realized in connection with any such investment shall be for the account of the
Seller and the Seller shall deposit the amount of such loss (to the extent not
offset by income from other investments) in the Pre-Funding Account immediately
upon the realization of such loss. All interest and any other investment
earnings on amounts held in the Pre-Funding Account shall be taxed to the Seller
and for federal, state and local income tax purposes the Seller shall be deemed
to be the owner of the Pre-Funding Account. All interest and any other
investment earnings on amounts held in the Pre-Funding Account shall be paid by
the Trustee to the Seller on the __________ 199_ Distribution Date.
(c) If the Pre-Funding Account Deposit has not been reduced to zero by
the close of business on __________ __, 199_, any amounts remaining in the
Pre-Funding Account in respect of the Pre-Funding Account Deposit at such time
(net of reinvestment earnings payable to the Seller) shall be deposited at such
time into the appropriate Certificate Account relating to the Pool I, Pool II,
Pool III and Pool IV Mortgage Loans, as the case may be, for distribution as
part of the Principal Distribution Amount for the related Pool on the __________
199_ Distribution Date.
Section 3.29. Capitalized Interest Account.
(a) The Trustee shall establish and maintain the Capitalized Interest
Account. On the Closing Date, the Trustee will deposit in the Capitalized
Interest Account the Capitalized Interest Account Deposit. The Trustee shall
hold the Capitalized Interest Account Deposit for the benefit of the Class [A]
Certificates. Each Class of the Class [A] Certificateholders will be entitled to
the full Interest Distribution Amount for such Class, respectively, during the
Funding Period. On the __________ 199_ Deposit Date, (a) an amount equal to [30]
days interest on the Pre-Funding Account Deposit (and for Pool II and Pool IV,
interest calculated at the actual number of days since the last Distribution
Date, but not including the current Distribution Date), computed at a per annum
rate equal to the weighted average of the Pass-Through Rates for each Class,
shall be withdrawn from the Capitalized Interest Account and deposited into the
appropriate Certificate Account in respect of Available Funds of the related
Pool for such Distribution Date.
(b) The Capitalized Interest Account will be part of the Trust Estate
but not part of the REMIC Trust. Amounts held in the Capitalized Interest
Account shall be invested in Permitted Investments of the type specified in
clause (iv) of the definition of Permitted Investments, which Permitted
Investments shall mature no later than the next succeeding
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Deposit Date. The Trustee shall not be liable for any losses on amounts invested
in accordance with the provisions hereof. All interest and other investment
earnings on amounts held in the Capitalized Interest Account shall be paid by
the Trustee to the Seller on the __________ 199_ Distribution Date. All amounts
earned on deposit in the Capitalized Interest Account shall be taxed to the
Seller, and for federal, state and local income tax purposes the Seller shall be
deemed to be the owner of the Capitalized Interest Account. Any losses realized
in connection with any such investment shall be for the account of the Seller,
and the Seller shall deposit the amount of such loss (to the extent not offset
by income from other investments) in the Capitalized Interest Account
immediately upon the realization of such loss.
Section 3.30. Establishment of FHA Premium Account; Deposits in FHA
Premium Account; Permitted Withdrawals from FHA Premium Account.
(a) No later than the Closing Date, the Trustee will establish the FHA
Premium Account. The FHA Premium Account shall not be available for payment of
Certificates. The Trustee shall deposit into the FHA Premium Account:
(i) on each Distribution Date, prior to making the
distributions required pursuant to Section 4.04, upon receipt an amount
equal to the FHA Premium Amount;
(ii) upon receipt, amounts required to be paid by the Servicer
pursuant to Section 3.30(b) in connection with losses on investments of
amounts in the FHA Premium Account; and
(iii) amounts from the Collection Account for Pool III as
described in the next following sentence.
If the Servicer fails to pay the FHA Insurance Premium with respect to
an FHA Loan in accordance with Section 5.01 hereof, the Trustee shall, upon
written instructions from the Servicer [OR THE CERTIFICATE INSURER], withdraw an
amount from the FHA Premium Account sufficient to pay in full the FHA Insurance
Premium then due. If the amount on deposit in the FHA Premium Account is
insufficient to pay the FHA Insurance Premium then due, the Trustee shall
transfer an amount from the Collection Account for Pool III to the FHA Premium
Account sufficient to pay in full the FHA Insurance Premium then due. In the
event that there are insufficient funds in the Collection Account for Pool III,
the Trustee shall immediately notify [THE CERTIFICATE INSURER] of the amount of
the remaining insufficiency. [THE CERTIFICATE INSURER] shall have the option to
advance such insufficiency to the Trustee for payment of the FHA Insurance
Premium then due.
(b) The Trustee may invest amounts on deposit in the FHA Premium
Account in Permitted Investments to the same extent, and with the same rights
and liabilities, as the
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Certificate Account pursuant to Section 3.12(e) and the Trustee shall withdraw
amounts on deposit in the FHA Premium Account to:
(i) remit, upon certification of payment made to the FHA,
funds requested by the Servicer (including any successor to the
Servicer appointed pursuant hereto) [OR THE CERTIFICATE INSURER] as
reimbursement for the FHA Insurance Premiums paid by the Servicer [OR
THE CERTIFICATE INSURER], as the case may be, or remit to the FHA
amounts payable in respect of FHA Insurance Premiums pursuant to the
last paragraph of clause (a) above;
(ii) pay on a monthly basis to the Servicer as additional
servicing compensation interest paid and earnings realized on Permitted
Investments;
(iii) withdraw amounts not required to be deposited in the FHA
Premium Account or deposited therein in error;
(iv) clear and terminate the FHA Premium Account upon the
termination of this Agreement in accordance with the terms of Section
10.01 hereof; and
(v) deposit in the Collection Account for amounts withdrawn
from it pursuant to the last paragraph of clause (a) above.
Section 3.31. Duties of the Claims Administrator.
(a) In connection with each FHA Loan, the Seller, the Servicer and the
Claims Administrator will comply at all times with the provisions of Title 1 and
the rules and regulations promulgated thereunder in servicing each FHA Loan and
making claims for reimbursement with respect to each FHA Loan, and will at all
times hold a valid Contract of Insurance from the FHA for such purposes (unless
such Contract of Insurance is terminated so as not to affect the obligation of
FHA to provide insurance coverage with respect to the FHA Loans).
(b) If any FHA Loan becomes a 90 Day Delinquent FHA Loan, and if
sufficient coverage is available in the Reserve Amount to make an FHA Payment
with respect to such FHA Loan, the Claims Administrator may, in its sole
discretion, during any subsequent Due Period, determine to file a Claim with the
FHA with respect to such 90 Day Delinquent FHA Loan. If the Claims Administrator
determines to file such a Claim, the Claims Administrator will notify the
Trustee no later than the Determination Date following such determination by an
Officer's Certificate in the form of Exhibit O hereto and shall request delivery
of the related Mortgage File. Upon receipt of such certification and request,
the Trustee shall, no later than the related Distribution Date, release to the
Claims Administrator the related Mortgage File and the Trustee shall execute and
deliver such instruments necessary to enable the Claims Administrator to file a
Claim with the FHA on behalf of the Trustee. Within 120
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days of its receipt of the related Mortgage File, the Claims Administrator
shall, in its sole discretion, either file a Claim with the FHA for an FHA
Payment with respect to such 90 Day Delinquent FHA Loan or, if the Claims
Administrator determines not to file such a Claim, return to the Trustee the
related Mortgage File.
(c) With respect to any 90 Day Delinquent FHA Loan transferred to the
Claims Administrator pursuant to clause (b) above, the Claims Administrator
shall deposit (or, if the Claims Administrator is not also the Servicer, the
Claims Administrator shall instruct the Servicer to deposit) in the Collection
Account within 24 hours of receipt the following amounts (such amounts to be net
of any amounts that would be reimbursable to the Servicer under Section 3.10
with respect to amounts in the Collection Account): (i) any FHA Payments; (ii)
the amount, if any, by which the FHA Payment was reduced in accordance with FHA
Regulations due to the Claims Administrator enforcing a lien on the Mortgage
Property prior to the lien of the related 90 Day Delinquent FHA Loan; and (iii)
any principal and interest payments received with respect to a 90 Day Delinquent
FHA Loan after the Due Period in which the FHA Loan is transferred to the Claims
Administrator and before either the related FHA Payment is paid or the related
Mortgage File is returned to the Trustee, as the case may be (the amounts
referred to in (ii) and (iii) above are referenced to herein as "Related
Payments").
(d) If an FHA Loan becomes a 90 Day Delinquent FHA Loan when there is
insufficient coverage in the Reserve Amount, or if the Claims Administrator
determines not to file a Claim with the FHA with respect to such 90 Day
Delinquent FHA Loan, the Trustee will not transfer such FHA Loan to the Claims
Administrator, no Claim will be made to the FHA and the Servicer may take other
action, including the commencement of foreclosure proceedings, on the related
Mortgaged Property.
(e) If a Claim is rejected by the FHA and if the Claims Administrator
is no longer the Company, the Claims Administrator shall promptly notify the
Servicer and the Seller of such rejection. Further, if a Claim is rejected by
the FHA, other than as a result of depletion of the Reserve Amount, the Seller
shall be deemed to have breached its representation and warranty contained in
Section 2.05(jjj) and the Seller shall be required to repurchase the related 90
Day Delinquent FHA Loan by depositing in the Collection Account, on the next
succeeding Determination Date, an amount and in the manner specified in Section
2.03.
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Section 3.32. Trustee Not to Hold Other FHA Insured Title I Loans. For
so long as any Certificates remain outstanding under this Agreement, the Trustee
shall not own, whether as a result of its origination or by purchase, in its own
name or in any trust capacity, any other loans insured by the FHA under the
Title I program other than the FHA Loans; provided, however, that the Trustee
may own other loans insured by the FHA under the Title I program if such loans
(i) were originated or purchased by the Seller or its affiliates, (ii) are part
of a pool formed for the purpose of issuing certificates and (iii) such
certificates are insured by [THE CERTIFICATE INSURER] and receive from each
Rating Agency the same rating assigned the same rating assigned to the
Certificates.
ARTICLE FOUR
FLOW OF FUNDS
Section 4.01. Establishment of Accounts. The Trustee shall establish on
the Closing Date, and thereafter maintain the Certificate Accounts, the
Distribution Accounts and the Policy Payments Accounts, each of which shall
conform to the definition of an Eligible Account and shall be held by the
Trustee for the benefit of the Certificateholders of the related Pool [AND THE
CERTIFICATE INSURER, AS THEIR INTERESTS MAY APPEAR].
[SECTION 4.02. THE CERTIFICATE INSURANCE POLICY.
(a) NOT LATER THAN 3:00 P.M., NEW YORK TIME, ON THE THIRD BUSINESS DAY
IMMEDIATELY PRECEDING EACH DISTRIBUTION DATE, THE TRUSTEE SHALL DETERMINE THE
AMOUNT TO BE ON DEPOSIT IN THE DISTRIBUTION ACCOUNT FOR EACH POOL ON SUCH
DISTRIBUTION DATE AFTER TAKING INTO ACCOUNT THE DEPOSITS DESCRIBED IN SECTIONS
4.03 AND 4.04 HEREOF RELATING TO SUCH POOL AND SUCH DISTRIBUTION DATE (INCLUDING
NET INVESTMENT EARNINGS, IF ANY) BUT NET OF, WITHOUT DUPLICATION, (x) THE AMOUNT
OF ANY INSURED PAYMENTS WITH RESPECT TO SUCH POOL AND (y) THE AMOUNT OF ANY
INSURANCE PREMIUM, ANY TRUSTEE'S FEE, TOGETHER WITH ANY OTHER AMOUNT REQUIRED TO
BE PAID TO THE TRUSTEE PURSUANT TO SECTION 4.04(a), AND, IN THE EVENT IT IS SO
REQUIRED, THE SERVICING FEE REQUIRED TO BE PAID TO A SUCCESSOR SERVICER PURSUANT
TO SECTION 4.04(a)(v) PAID ON SUCH DISTRIBUTION DATE WITH RESPECT TO SUCH POOL
(SUCH NET AMOUNT, THE "AVAILABLE FUNDS" WITH RESPECT TO SUCH POOL).
IF THE INSURED DISTRIBUTION AMOUNT WITH RESPECT TO ANY POOL FOR ANY
DISTRIBUTION DATE EXCEEDS THE AVAILABLE FUNDS OF SUCH POOL FOR SUCH DISTRIBUTION
DATE (SUCH EVENT BEING AN "AVAILABLE FUNDS SHORTFALL"), THE TRUSTEE SHALL
COMPLETE A NOTICE IN THE FORM ATTACHED TO THE CERTIFICATE INSURANCE POLICY (THE
"NOTICE") AND SHALL SUBMIT SUCH NOTICE TO THE CERTIFICATE INSURER NO LATER THAN
10:00 A.M., NEW YORK TIME, ON THE SECOND BUSINESS DAY PRECEDING SUCH
DISTRIBUTION DATE. SUCH NOTICE MAY BE DELIVERED BY
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ELECTRONIC FACSIMILE (IN WHICH CASE THE ORIGINAL SHALL BE SENT BY OVERNIGHT
COURIER). THE NOTICE SHALL CONSTITUTE A CLAIM FOR AN INSURED PAYMENT PURSUANT TO
THE CERTIFICATE INSURANCE POLICY FOR AN AMOUNT EQUAL TO THE AVAILABLE FUNDS
SHORTFALL. UPON RECEIPT OF INSURED PAYMENTS ON BEHALF OF THE CLASS [A]
CERTIFICATEHOLDERS OF THE RELATED POOL, THE TRUSTEE SHALL DEPOSIT SUCH INSURED
PAYMENTS IN THE POLICY PAYMENTS ACCOUNT FOR SUCH POOL, AND SHALL THEREAFTER
TRANSFER SUCH INSURED PAYMENTS TO THE DISTRIBUTION ACCOUNT FOR SUCH POOL FOR
DISTRIBUTION SOLELY TO THE CLASS [A] CERTIFICATEHOLDERS IN ACCORDANCE WITH
SECTION 4.04(B).
(b) THE TRUSTEE SHALL ESTABLISH AND MAINTAIN, IN ACCORDANCE WITH
SECTION 4.01, WITH RESPECT TO EACH POOL A SEPARATE SPECIAL PURPOSE TRUST ACCOUNT
FOR THE BENEFIT OF THE HOLDERS OF THE CLASS [A] CERTIFICATES OF THE RELATED POOL
AND THE CERTIFICATE INSURER (EACH, A "POLICY PAYMENTS ACCOUNT") OVER WHICH THE
TRUSTEE SHALL HAVE EXCLUSIVE CONTROL AND SOLE RIGHT OF WITHDRAWAL. THE TRUSTEE
SHALL DEPOSIT ANY AMOUNT PAID UNDER THE CERTIFICATE INSURANCE POLICY WITH
RESPECT TO ANY POOL IN THE POLICY PAYMENTS ACCOUNT FOR SUCH POOL AND DISTRIBUTE
SUCH AMOUNT ONLY FOR PURPOSES OF PAYMENT TO THE HOLDERS OF CLASS [A]
CERTIFICATES OF SUCH POOL OF THE INSURED PAYMENT FOR WHICH A CLAIM WAS MADE AND
SUCH AMOUNT MAY NOT BE APPLIED TO SATISFY ANY COSTS, EXPENSES OR LIABILITIES OF
THE SERVICER, THE TRUSTEE OR THE TRUST. AMOUNTS PAID UNDER THE CERTIFICATE
INSURANCE POLICY WITH RESPECT TO ANY POOL SHALL BE TRANSFERRED TO THE
DISTRIBUTION ACCOUNT OF THE RELATED POOL IN ACCORDANCE WITH THE NEXT SUCCEEDING
PARAGRAPH AND THEREAFTER DISBURSED BY THE TRUSTEE TO THE HOLDERS OF THE CLASS
[A] CERTIFICATES OF SUCH POOL IN ACCORDANCE WITH SECTION 4.04(b). IT SHALL NOT
BE NECESSARY FOR SUCH PAYMENTS TO BE MADE BY CHECKS OR WIRE TRANSFERS SEPARATE
FROM THE CHECKS OR WIRE TRANSFERS USED TO PAY ANY CLASS [A] DISTRIBUTION AMOUNT
WITH RESPECT TO SUCH POOL WITH OTHER FUNDS AVAILABLE TO MAKE SUCH PAYMENT.
HOWEVER, THE AMOUNT OF ANY PAYMENT OF PRINCIPAL OF OR INTEREST ON THE CLASS [A]
CERTIFICATES OF SUCH POOL TO BE PAID FROM FUNDS TRANSFERRED FROM THE POLICY
PAYMENTS ACCOUNT OF SUCH POOL SHALL BE NOTED IN THE STATEMENT TO BE FURNISHED TO
RELATED HOLDERS OF THE CLASS [A] CERTIFICATES PURSUANT TO SECTION 4.05. FUNDS
HELD IN THE POLICY PAYMENTS ACCOUNTS SHALL NOT BE INVESTED BY THE TRUSTEE.
ON ANY DISTRIBUTION DATE WITH RESPECT TO WHICH A CLAIM HAS BEEN MADE
UNDER THE CERTIFICATE INSURANCE POLICY WITH RESPECT TO ANY POOL, THE AMOUNT OF
ANY FUNDS RECEIVED BY THE TRUSTEE AS A RESULT OF ANY CLAIM UNDER THE CERTIFICATE
INSURANCE POLICY WITH RESPECT TO SUCH POOL, TO THE EXTENT REQUIRED TO SATISFY
FULLY THE CLASS [A] DISTRIBUTION AMOUNT FOR SUCH POOL ON SUCH DISTRIBUTION DATE,
SHALL BE WITHDRAWN FROM THE POLICY PAYMENTS ACCOUNT FOR SUCH POOL AND DEPOSITED
IN RELATED DISTRIBUTION ACCOUNT FOR SUCH POOL AND APPLIED BY THE TRUSTEE,
TOGETHER WITH THE OTHER FUNDS TO BE DEPOSITED IN SUCH DISTRIBUTION ACCOUNT,
DIRECTLY TO THE PAYMENT OF THE CLASS [A] DISTRIBUTION AMOUNT DUE ON THE CLASS
[A] CERTIFICATES FOR SUCH POOL. FUNDS RECEIVED BY THE TRUSTEE AS A RESULT OF ANY
CLAIM UNDER THE CERTIFICATE INSURANCE POLICY WITH RESPECT TO ANY POOL SHALL BE
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DEPOSITED BY THE TRUSTEE IN THE POLICY PAYMENTS ACCOUNT FOR SUCH POOL AND THEN
TRANSFERRED TO THE RELATED DISTRIBUTION ACCOUNT AND USED SOLELY FOR PAYMENT TO
THE RELATED HOLDERS OF THE CLASS [A] CERTIFICATES OF SUCH POOL AND MAY NOT BE
APPLIED TO SATISFY ANY COSTS, EXPENSES OR LIABILITIES OF THE SERVICER, THE
TRUSTEE OR THE TRUST. ANY FUNDS REMAINING IN THE POLICY PAYMENTS ACCOUNT OF SUCH
POOL ON THE FIRST BUSINESS DAY FOLLOWING A DISTRIBUTION DATE SHALL BE REMITTED
TO THE CERTIFICATE INSURER, PURSUANT TO THE INSTRUCTIONS OF THE CERTIFICATE
INSURER, BY THE END OF SUCH BUSINESS DAY.
(c) THE TRUSTEE SHALL KEEP A COMPLETE AND ACCURATE RECORD OF THE AMOUNT
OF INTEREST AND PRINCIPAL PAID IN RESPECT OF ANY CERTIFICATE FROM MONEYS
RECEIVED UNDER THE CERTIFICATE INSURANCE POLICY. THE CERTIFICATE INSURER SHALL
HAVE THE RIGHT TO INSPECT SUCH RECORDS AT REASONABLE TIMES DURING NORMAL
BUSINESS HOURS UPON ONE BUSINESS DAY'S PRIOR NOTICE TO THE TRUSTEE.
(d) THE TRUSTEE SHALL RECEIVE, AS ATTORNEY-IN-FACT OF EACH HOLDER OF A
CLASS [A] CERTIFICATE, ANY INSURED PAYMENT WITH RESPECT TO THE RELATED POOL FROM
THE CERTIFICATE INSURER AND DISBURSE THE SAME TO EACH HOLDER OF A CLASS [A]
CERTIFICATE OF SUCH POOL IN ACCORDANCE WITH THE PROVISIONS OF THIS ARTICLE IV.
WITH RESPECT TO ANY POOL, INSURED PAYMENTS DISBURSED BY THE TRUSTEE FROM
PROCEEDS OF THE CERTIFICATE INSURANCE POLICY SHALL NOT BE CONSIDERED PAYMENT BY
THE TRUST NOR SHALL SUCH PAYMENTS DISCHARGE THE OBLIGATION OF THE TRUST WITH
RESPECT TO THE RELATED CLASS [A] CERTIFICATES, AND THE CERTIFICATE INSURER SHALL
BE ENTITLED TO RECEIVE THE REIMBURSEMENT AMOUNT WITH RESPECT TO SUCH POOL
PURSUANT TO SECTION 4.04(a)(vi). BY ACCEPTANCE OF A CERTIFICATE, EACH HOLDER OF
A CERTIFICATE AGREES AND RECOGNIZES THAT TO THE EXTENT THE CERTIFICATE INSURER
MAKES INSURED PAYMENTS WITH RESPECT TO THE RELATED POOL, EITHER DIRECTLY OR
INDIRECTLY (AS BY PAYING THROUGH THE TRUSTEE), TO THE CLASS [A]
CERTIFICATEHOLDERS OF SUCH POOL, THE CERTIFICATE INSURER WILL BE ENTITLED TO
RECEIVE THE REIMBURSEMENT AMOUNT WITH RESPECT TO SUCH POOL PURSUANT TO SECTION
4.04(a)(vi).
(e) THE TRUSTEE SHALL PROMPTLY NOTIFY THE CERTIFICATE INSURER OF ANY
PROCEEDING OR THE INSTITUTION OF ANY ACTION, OF WHICH A RESPONSIBLE OFFICER OF
THE TRUSTEE HAS ACTUAL KNOWLEDGE, SEEKING THE AVOIDANCE AS A PREFERENTIAL
TRANSFER UNDER APPLICABLE BANKRUPTCY, INSOLVENCY, RECEIVERSHIP OR SIMILAR LAW (A
"PREFERENCE CLAIM") OF ANY DISTRIBUTION MADE WITH RESPECT TO THE CLASS [A]
CERTIFICATES. EACH HOLDER OF A CLASS [A] CERTIFICATE, BY ITS PURCHASE OF SUCH
CERTIFICATE, THE SERVICER AND THE TRUSTEE AGREE THAT, THE CERTIFICATE INSURER
(SO LONG AS NO CERTIFICATE INSURER DEFAULT EXISTS) MAY AT ANY TIME DURING THE
CONTINUATION OF ANY PROCEEDING RELATING TO A PREFERENCE CLAIM DIRECT ALL MATTERS
RELATING TO SUCH PREFERENCE CLAIM, INCLUDING, WITHOUT LIMITATION, (i) THE
DIRECTION OF ANY APPEAL OF ANY ORDER RELATING TO SUCH PREFERENCE CLAIM AND (ii)
THE POSTING OF ANY SURETY, SUPERSEDEAS OR PERFORMANCE BOND PENDING ANY SUCH
APPEAL. IN ADDITION AND WITHOUT LIMITATION OF THE FOREGOING, THE CERTIFICATE
INSURER SHALL BE SUBROGATED TO, AND EACH HOLDER, THE SERVICER AND THE TRUSTEE
HEREBY DELEGATE AND
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ASSIGN TO THE CERTIFICATE INSURER, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHTS OF THE SERVICER, THE TRUSTEE AND EACH HOLDER IN THE CONDUCT OF ANY SUCH
PREFERENCE CLAIM, INCLUDING, WITHOUT LIMITATION, ALL RIGHTS OF ANY PARTY TO ANY
ADVERSARY PROCEEDING OR ACTION WITH RESPECT TO ANY COURT ORDER ISSUED IN
CONNECTION WITH ANY SUCH PREFERENCE CLAIM.
(f) IT IS UNDERSTOOD AND AGREED THAT THE INTENTION OF THE PARTIES IS
THAT THE CERTIFICATE INSURER SHALL NOT BE ENTITLED TO REIMBURSEMENT ON ANY
DISTRIBUTION DATE FOR AMOUNTS PREVIOUSLY PAID BY IT UNLESS ON SUCH DISTRIBUTION
DATE THE CLASS [A] CERTIFICATEHOLDERS WITH RESPECT TO ANY POOL SHALL ALSO HAVE
RECEIVED THE FULL AMOUNT OF THE INSURED DISTRIBUTION AMOUNT WITH RESPECT TO SUCH
POOL FOR SUCH DISTRIBUTION DATE.]
Section 4.03. Deposits to, and Transfers Among, the Accounts.
(a) The Trustee shall deposit to the Certificate Account with respect
to each Pool, upon receipt, the Interest Remittance Amount, the Principal
Remittance Amount, the Termination Price received by the Trustee in connection
with a termination of the Trust pursuant to Article X hereof and any amounts
received by the Trustee from the Servicer pursuant to Section 4.04(a) hereof, in
each case, with respect to such Pool. The Servicer shall deposit to the
Certificate Accounts amounts required to be paid by the Servicer pursuant to
Section 3.27.
(b) Prior to 1:00 p.m. New York time on any Distribution Date, the
Trustee shall make all transfers required in order to make the payments required
pursuant to Section 4.04.
Section 4.04. Flow of Funds and Distributions.
(a) No later than 1:00 p.m., New York time, on each Distribution Date
(or as described below) the Trustee shall apply the amounts on deposit in the
Certificate Account for each Pool in the following order of priority:
(i) first, [FROM AMOUNTS THEN ON DEPOSIT IN SUCH CERTIFICATE
ACCOUNT, THE TRUSTEE SHALL PAY TO THE CERTIFICATE INSURER THE INSURANCE
PREMIUM WITH RESPECT TO SUCH POOL, PROVIDED THAT NO CERTIFICATE INSURER
DEFAULT HAS OCCURRED AND IS CONTINUING];
(ii) second, from amounts then on deposit in the Certificate
Account, the Trustee shall pay itself the Trustee's Fee then due with
respect to such Pool and any related payments required to be paid from
the Trust pursuant to Section 8.05, up to $_______________ in
cumulative payments for the preceding 12 month period[, AND ANY
EXPENSES INCURRED AT THE DIRECTION OF THE CERTIFICATE INSURER];
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(iii) third, the Trustee shall distribute, from funds then on
deposit in the Certificate Account as follows:
(A) to the Distribution Account for such Pool, an
amount equal to the Interest Distribution Amount with respect
to such Pool for such Distribution Date (other than any
portion thereof to be funded from transfers directly to the
Distribution Account pursuant to Section 4.02(b)); and
(B) to the Distribution Account for such Pool, the
Principal Distribution Amount with respect to such Pool (other
than any portion thereof to be funded from transfers directly
to the Distribution Account pursuant to Section 4.02(b));
(iv) fourth, to the Trustee any payments required to be paid
from the Trust pursuant to Section 8.05 which are not paid pursuant to
(ii) above;
(v) fifth, [TO THE CERTIFICATE INSURER, THE AMOUNT OF ANY
REIMBURSEMENT AMOUNT WITH RESPECT TO SUCH POOL THEN OWED TO THE
CERTIFICATE INSURER];
(vi) sixth, to the Servicer, reimbursement for any indemnity
payments made by it hereunder with respect to such Pool, to the extent
the Servicer has certified to the Trustee that such amounts are owing
to it;
(vii) seventh, to the Trustee for deposit in the Distribution
Accounts of the other Pools, amounts equal to the deficiencies on such
Distribution Date, if any, in the amounts available in the Certificate
Accounts related to such other Pools to make the payments set forth in
clauses (i) through (iii) above with respect to such other Pools (if
the aggregate amount of such deficiencies exceeds the amount to be
distributed pursuant to this clause (vii), such amount shall be
distributed pro rata according to the amount of such deficiencies); and
(viii) eighth, pro rata to the Holders of the Class R
Certificates, the amount remaining, if any, in the Certificate Account
after making the distributions in (i) through (vii) above.
(b) After making the transfers to the Distribution Account with respect
to each Pool pursuant to Section 4.04(a)(iii) above and, if an Insured Payment
was made with respect to such Pool on such Distribution Date, such amount is
deposited to the Distribution Account for such Pool from the related Policy
Payments Account pursuant to Section 4.02(b) above, the Trustee shall distribute
such amounts as follows:
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(i) to the Holders of each Class of Class [A] Certificates in
such Pool, pro rata, an amount equal to the portion of the Interest
Distribution Amount with respect to such Pool and for such Distribution
Date that each such Class is entitled to receive; and
(ii) sequentially, to the Holders of each Class of Class [A]
Certificates in such Pool, an amount equal to the Principal
Distribution Amount for such Pool, to each such Class in the order of
the number of such Class (the lowest numbered Class in such Pool
first), until the Certificate Principal Balance of each such Class has
been reduced to zero.
[NOTWITHSTANDING THE FOREGOING SUBCLAUSE (ii), IN THE EVENT THAT AN
OVERCOLLATERALIZATION DEFICIT WITH RESPECT TO ANY POOL EXISTS ON ANY
DISTRIBUTION DATE AND THE PRINCIPAL DISTRIBUTION AMOUNT WITH RESPECT TO ANY
CLASS OF SUCH POOL ON SUCH DISTRIBUTION DATE IS NOT SUFFICIENT TO REDUCE SUCH
OVERCOLLATERALIZATION DEFICIT TO ZERO, THEN THE PRINCIPAL DISTRIBUTION AMOUNT
WITH RESPECT TO THE CERTIFICATES OF SUCH POOL ON SUCH DISTRIBUTION DATE, AS
OTHERWISE PROVIDED IN SUBCLAUSE (ii) ABOVE, WILL FIRST BE ALLOCATED CONCURRENTLY
TO THE OUTSTANDING CLASSES OF SUCH POOL CERTIFICATES, PRO RATA, ON THE BASIS OF
THEIR RESPECTIVE CLASS CERTIFICATE PRINCIPAL BALANCES.]
(c) Notwithstanding Section 4.04(b)(ii) above, the aggregate amounts
distributed on all Distribution Dates to the Holders of each Class of Class [A]
Certificates on account of principal shall not exceed the related Original Class
Certificate Principal Balance for each such Class existing on the Closing Date.
(d) Whenever in the administration of the Trust the Trustee comes into
possession of money or other property not otherwise required to be paid to the
Class [A] Certificateholders, [THE CERTIFICATE INSURER,] the Servicer or any
other Person, or not required to be otherwise applied at any time pursuant to
the provisions of this Agreement, the Trustee shall promptly distribute such
money or other property to the Class R Certificateholders pro rata.
(e) Payments to the Certificateholders of each Class on each
Distribution Date will be made to the Certificateholders of record of the
respective Class on the related Record Date (other than as provided in Section
4.04(g) or Section 10.01 respecting the final distribution on such Class), and
shall be made to each such Certificateholder (x) by wire transfer of immediately
available funds to the account of such Certificateholder at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
have so notified the Trustee in writing in the case of the first Distribution
Date, by the Closing Date, and, in the case of all subsequent Distribution
Dates, at least five Business Days prior to the Record Date immediately prior to
such Distribution Date and is the registered owner of a Class R Certificate, or
the registered owner of Class [A] Certificates evidencing a Percentage
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Interest aggregating at least 10%; or (y) otherwise by check mailed by first
class mail to the address of such Certificateholder appearing in the Certificate
Register. [PAYMENTS TO THE CERTIFICATE INSURER ON ANY DISTRIBUTION DATE WILL BE
MADE BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO THE ACCOUNT DESIGNATED
BY THE CERTIFICATE INSURER.]
(f) The rights of the Certificateholders to receive distributions from
the proceeds of the Trust in respect of the Certificates, and all interests of
the Certificateholders in and to such distributions, shall be as set forth in
this Agreement. In no event shall the Holders of any Class of Certificates, the
Trustee, [THE CERTIFICATE INSURER,] the Seller or the Servicer in any way be
responsible or liable to the Holders of any other Class of Certificates in
respect of amounts previously distributed properly on the Certificates.
(g) Except as otherwise provided in Section 10.01, whenever the Trustee
expects that the final distribution with respect to any Class of Certificates
will be made on the next Distribution Date, the Trustee shall, no later than
four days prior to the related Distribution Date, send, by overnight delivery or
by registered mail, to each Holder on such date of such Class of Certificates
[AND TO THE CERTIFICATE INSURER] a notice to the effect that:
(i) the Trustee expects that the final distribution with
respect to such Class of Certificates will be made on such Distribution
Date, and requesting that such Holder send its Certificates to the
Trustee immediately following such final Distribution Date, and
(ii) no interest shall accrue on such Certificates from and
after the end of the related Due Period, and upon the Trustee's making
of such final distribution with respect to such Class of Certificates,
such Certificates will be absolutely null and void and of no further
effect thereafter.
(h) [THE TRUSTEE SHALL DISTRIBUTE TO THE RESPECTIVE CLASS [A]
CERTIFICATEHOLDER ANY PAYMENT DISBURSED TO IT BY THE CERTIFICATE INSURER IN
RESPECT OF ANY PREVIOUS DISTRIBUTION TO A CLASS [A] CERTIFICATEHOLDER THAT WAS
AVOIDED AS A PREFERENCE PURSUANT TO A FINAL, NON-APPEALABLE ORDER OF A COURT OF
COMPETENT JURISDICTION UNDER APPLICABLE BANKRUPTCY, INSOLVENCY, RECEIVERSHIP OR
SIMILAR LAW, AND THAT SUCH CERTIFICATEHOLDER HAS REPAID TO THE RECEIVER,
CONSERVATOR, DEBTOR-IN-POSSESSION OR TRUSTEE IN BANKRUPTCY, AS THE CASE MAY BE.]
(i) With respect to the Certificate Account with respect to any Pool,
the Servicer shall deliver to the Trustee for deposit in such Certificate
Account the amount of any losses incurred in connection with the investment of
funds in such Certificate Account within one Business Day of receipt from the
Trustee of notice of any such losses. The Trustee shall not be responsible for
and shall be indemnified by the Servicer for any expenses or liability incurred
with respect to such investment losses.
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Section 4.05. Statements to Certificateholders. On each Distribution
Date the Trustee shall forward by mail to each Holder of a Class [A] Certificate
[AND TO THE CERTIFICATE INSURER], a statement, parts of which shall be based
upon Servicer Information and upon which the Trustee shall conclusively rely
without independent verification, as to the distributions made on such
Distribution Date setting forth the following information:
(a) the Class [A] Distribution Amount with respect to each
Pool;
(b) the Principal Distribution Amount for each Pool,
separately identifying in the aggregate and listed separately for the
portions relating to each Class of Class [A] Certificates the amount of
any Principal Prepayments or other recoveries of principal included
therein and any Overcollateralization Increase Amounts;
(c) the Interest Distribution Amount for each Pool;
(d) the amount of any Insured Payment included in the Class
[A] Distribution Amount on such Distribution Date for each Pool;
(e) the Class Certificate Principal Balance for each Class of
Class [A] Certificate (based on a Certificate in the original principal
amount of $1,000) which will be outstanding and the Class [A]
Certificate Principal Balance, in each case after giving effect to any
payment of principal on such Distribution Date;
(f) the amount of any Overcollateralization Reduction Amount
with respect to each Pool;
(g) the amount of any Overcollateralization Deficit with
respect to each Pool;
(h) the amount of any Specified Overcollateralization
Deficiency Amount with respect to each Pool;
(i) the amount, if any, of any Realized Losses with respect to
each Pool for the related Due Period;
(j) the Overcollateralized Amount with respect to each Pool,
if any, remaining after giving effect to all distributions on such
Distribution Date;
(k) the total of any Purchase Price amounts paid or received
by the Servicer with respect to the related Due Period;
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(l) the weighted average Mortgage Loan Rates for each Pool, as
of the last day of the calendar month preceding the month of such
Distribution Date;
(m) the current weighted average of the remaining terms of the
Mortgage Loans in each Pool;
(n) the number of Mortgage Loans outstanding in each Pool;
(o) the cumulative number and Loan Balances of Liquidated
Mortgage Loans in each Pool;
(p) the amount of cumulative Realized Losses, stated
separately for each Pool, and its percentage of the Maximum Collateral
Amount and total dollar amount;
(q) the sum of the outstanding Loan Balances of the three
Mortgage Loans having the largest Loan Balances as of the last day of
the immediately preceding Due Period with respect to each Pool;
(r) the amount of the Monthly Excess Spread with respect to
each Pool for such Distribution Date;
(s) the current outstanding aggregate Loan Balances of the
Mortgage Loans in each Class of Class [A] Certificates and in each
Pool, as of the last day of the related Due Period;
(t) the Remittance Report (defined in Section 4.06);
(u) the Reimbursement Amount with respect to each Pool, if
any;
(v) with respect to Pool III, the amount to be deposited into
the FHA Premium Account on the related Distribution Date and the amount
reimbursable to the Servicer [AND/OR THE CERTIFICATE INSURER] from the
FHA Premium Account pursuant to Section 3.30(b)(i);
(w) the amount of FHA Payments and Related Payments received
during the related Due Period;
(x) the Reserve Amount for the related Distribution Date;
(y) Claims filed during the Due Period;
(z) Claims paid during the Due Period;
(aa) Claims denied by the FHA during the Due Period;
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(bb) Claims pending payment by the FHA during the Due Period;
(cc) with respect to Pool II and Pool IV, the Index and the
Gross Margin;
(dd) the Carry-Forward Amount with respect to each Pool; and
(ee) such other information as [THE CERTIFICATE INSURER] and
the Certificateholders may reasonably require.
Items (a), (b), (c), (e), (l), (o) and (s) above shall be expressed in
a separate section of the report on the basis of a certificate having a $1,000
denomination.
In addition, on each Distribution Date the Trustee shall distribute to
each Holder, together with the information described above, the following
information based solely upon Servicer Information provided to the Trustee
pursuant to Section 3.18(a) hereof upon which the Trustee may conclusively rely
without independent verification:
(A) with respect to each Pool, the number, percent of the
aggregate Loan Balance of such Mortgage Loans to the aggregate Loan
Balances of all Mortgage Loans in such Pool and aggregate Loan Balances
of Mortgage Loans (i) 30-59 days Delinquent, (ii) 60-89 days Delinquent
and (iii) 90 days or more Delinquent (which statistics shall include
Mortgage Loans in foreclosure but which shall exclude REO Properties),
as of the close of business on the last day of the calendar month next
preceding such Distribution Date and the aggregate Loan Balances of all
Mortgage Loans in such Pool as of such date;
(B) the number of and aggregate Loan Balance of all Mortgage
Loans in foreclosure proceedings for each Pool (other than any Mortgage
Loans described in clause (C)) and the percent of the aggregate Loan
Balances of such Mortgage Loans to the aggregate Loan Balances of all
Mortgage Loans in such Pool, all as of the close of business on the
last day of the calendar month next preceding such Distribution Date;
(C) with respect to each Pool, the number of and the aggregate
Loan Balance of the related Mortgage Loans in bankruptcy proceedings
(other than any Mortgage Loans described in clause (B)) and the percent
of the aggregate Loan Balances of such Mortgage Loans to the aggregate
Loan Balances of all Mortgage Loans in such Pool, all as of the close
of business on the last day of the calendar month next preceding such
Distribution Date;
(D) with respect to each Pool, the number of REO Properties,
the aggregate Loan Balances of the related Mortgage Loans, the book
value of such REO Properties and the percent of the aggregate Loan
Balances of such Mortgage Loans to
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the aggregate Loan Balances of all Mortgage Loans in such Pool, all as
of the close of business on the last day of the calendar month next
preceding such Distribution Date;
(E) for each Mortgage Loan which is an REO Property, the Loan
Balance of such Mortgage Loan, the Appraised Value of the Mortgaged
Property, the value established by any new appraisal, the estimated
cost of disposing of the Mortgage Loan and the amount of any
unreimbursed Delinquency Advances and Servicing Advances;
(F) for each Mortgage Loan which is in foreclosure, the Loan
Balance of such Mortgage Loan, the Appraised Value of the Mortgaged
Property, the Combined Loan-to-Value Ratio as of the date of
origination, the Combined Loan-to-Value Ratio as of the close of
business on the last day of the calendar month next preceding such
Distribution Date and the last paid-to-date; and
(G) the Loan Balance of each Mortgage Loan that was modified
or extended pursuant to Section 3.01 hereof.
Within a reasonable period (which shall not be more than 45 days) of
time after the end of each calendar year, the Trustee shall furnish to each
Person who at any time during the calendar year was a Holder of a Class [A]
Certificate a statement containing the information set forth in subclauses
(a)-(c) above, aggregated for such calendar year or applicable portion thereof
during which such person was a Class [A] Certificateholder. Such obligation of
the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee pursuant
to any requirements of the Code as from time to time are in force.
On each Distribution Date the Trustee shall forward [TO THE CERTIFICATE
INSURER,] to the Seller, to each Holder of a Class R Certificate and to the
Servicer a copy of the reports forwarded to the Class [A] Certificateholders on
such Distribution Date, and a report of the amounts, if any, actually
distributed with respect to the Class R Certificates on such Distribution Date.
Within a reasonable period of time after the end of each calendar year,
the Trustee shall furnish to any Person who at any time during the calendar year
was a Holder of a Class R Certificate a statement containing the information
provided pursuant to the previous paragraph aggregated for such calendar year or
applicable portion thereof during which such Person was a Certificateholder.
The Trustee shall forward to each Certificateholder within five
Business Days after the furnishing or receipt thereof by the Trustee, as the
case may be, copies of any (i) directions, notices, certificates, opinions or
reports furnished hereunder by the Trustee to the Servicer, the Seller[, THE
CERTIFICATE INSURER] or to the Rating Agencies, (ii) directions,
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notices, certificates, reports, opinions or any other information or document
furnished to the Trustee by the Servicer, the Seller[, THE CERTIFICATE INSURER]
or the Rating Agencies and (iii) anything requested in writing by any
Certificateholder which the Trustee otherwise sends to some other Person
pursuant to this Agreement (excluding, however, routine items sent to
Mortgagors, taxing or local property records authorities and similar items)
which, in the case of clause (iii), such Certificateholder is not otherwise
receiving; provided, however, that any such documents or information requested
under clause (iii) shall be at the expense of the requesting Certificateholder;
provided, further, that the Trustee shall not be required to provide any
document or information which it is otherwise legally prohibited from providing.
Section 4.06. Remittance Reports; Delinquency Advances by the Servicer
and Insurance Claims.
(a) The Trustee shall, not later than four Business Days prior to each
Distribution Date, prepare and furnish by telecopy a statement (with respect to
such Distribution Date, the "Remittance Report") to the Seller[, THE CERTIFICATE
INSURER] and the Servicer setting forth: (i) [THE INSURED DISTRIBUTION AMOUNT
FOR EACH POOL AND SUCH DISTRIBUTION DATE, SEPARATELY IDENTIFYING THE PORTIONS
THEREOF ALLOCABLE TO PRINCIPAL AND INTEREST]; (ii) [WHETHER THE AVAILABLE FUNDS
FOR EACH POOL EXPECTED TO BE ON DEPOSIT IN THE RELATED CERTIFICATE ACCOUNT FOR
SUCH POOL ON SUCH DISTRIBUTION DATE WILL BE SUFFICIENT TO COVER THE RELATED
INSURED DISTRIBUTION AMOUNT AND, IF NOT, THE AMOUNT OF THE RESULTING AVAILABLE
FUNDS SHORTFALL FOR SUCH POOL]; (iii) the amount of Delinquency Advances to be
made by the Servicer for each Pool in respect of the related Distribution Date,
the aggregate amount of Delinquency Advances for each Pool outstanding after
giving effect to such Delinquency Advances, and the aggregate amount of
Nonrecoverable Delinquency Advances for each Pool in respect of such
Distribution Date; (iv) [THE REIMBURSEMENT AMOUNT WITH RESPECT TO EACH POOL DUE
AND OWING TO THE CERTIFICATE INSURER ON SUCH DISTRIBUTION DATE]; (v) [WITH
RESPECT TO ANY REIMBURSEMENT TO BE MADE TO THE CERTIFICATE INSURER FOR ANY PART
OR ALL OF THE REIMBURSEMENT AMOUNT FOR EACH POOL ON SUCH DISTRIBUTION DATE, THE
AMOUNT, IF ANY, ALLOCABLE TO PRINCIPAL AND THE AMOUNT ALLOCABLE TO INTEREST];
(vi) the aggregate amount of payments in respect of Compensating Interest for
each Pool to be deposited in the Collection Account by the Servicer on the
related Deposit Date pursuant to Section 3.23; and (vii) for each Pool, the
amount of any Overcollateralization Increase Amount to be paid from Monthly
Excess Spread for such Pool on such Distribution Date and the Overcollateralized
Amount for each Pool after giving effect to all distributions on such
Distribution Date.
(b) On or before 12:00 noon, New York time, on the Deposit Date, the
Servicer shall deposit to each Collection Account, for inclusion in the Interest
Remittance Amount with respect to the related Pool on such Deposit Date, in
immediately available funds, the amount necessary to make (x) the sum of (i) the
amount then on deposit in such Collection Account with respect to interest
collections received on the Mortgage Loans for such Pool
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during the immediately preceding Due Period, (ii) with respect to the
_______________ 1997 Distribution Date, the Closing Date Deposit relating to
such Distribution Date and the related Pool and (iii) with respect to any
subsequent transfer date, any Subsequent Transfer Deposit relating to the
related Distribution Date, if applicable, (y) equal to the Interest Remittance
Amount with respect to such Pool and for such Due Period, after taking into
account all amounts in respect of Compensating Interest for such Pool paid by
the Servicer pursuant to Section 3.23 (any such deposit made by the Servicer, a
"Delinquency Advance"). The Servicer is permitted to fund its payment of
Delinquency Advances with respect to each Pool from amounts then on deposit in
the related Collection Account representing collections on the Mortgage Loans of
such Pool relating to the then-current or any subsequent Due Period; any such
amounts shall be replaced by Servicer on or prior to the next Deposit Date. The
Servicer shall be required to make Delinquency Advances from its own funds
(subject to reimbursement from subsequent collections on the Mortgage Loans,
when available) to the extent that amounts in the related Collection Account are
insufficient.
(c) The obligation of the Servicer to make Delinquency Advances is
mandatory, notwithstanding any other provision of this Agreement and, with
respect to any Mortgage Loan or REO Property, shall continue until a Final
Recovery Determination or an REO Disposition in connection therewith or the
purchase or repurchase thereof from the Trust pursuant to any applicable
provision of this Agreement.
Section 4.07. Compliance with Withholding Requirements. Notwithstanding
any other provision of this Agreement, the Trustee shall comply with all federal
withholding requirements respecting payments to Certificateholders of interest
or original issue discount that the Trustee reasonably believes are applicable
under the Code. The consent of Certificateholders shall not be required for such
withholding. In the event the Trustee does withhold any amount from interest or
original issue discount payments or advances thereof to any Certificateholder
pursuant to federal withholding requirements, the Trustee shall indicate to such
Certificateholders the amount withheld. Any amounts so withheld shall be deemed
to have been distributed to the related Certificateholders for all purposes of
this Agreement [AND THE CERTIFICATE INSURANCE POLICY].
Section 4.08. Excess Claim Amounts.
(a) If Claims filed by the Claims Administrator with respect to FHA
Loans exceed 10% of the aggregate Loan Balances of the FHA Loans measured as of
the Cut-off Date or related Subsequent Cut-off Date, as the case may be, at the
termination of the Trust, the Trustee shall withdraw from the Pool III
Collection Account the lesser of (x) the Excess Claim Amount and (y) the amount
remaining in such Collection Account and deposit such amount on behalf of the
Class R Certificateholders as directed by [THE CERTIFICATE INSURER] into an
account for the remaining outstanding Title I transactions of the Company which
are insured by [THE CERTIFICATE INSURER]. The "Excess Claim Amount" will equal
90% of the
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excess of (x) the total Claims filed with respect to FHA Loans over (y) 10% of
the aggregate Loan Balances of the FHA Loans measured as of the Cut-off Date or
related Subsequent Cut-off Date, as the case may be.
(b) At the direction of the Class R Certificateholders, the Trustee
shall immediately deposit into the Pool III Collection Account any Excess Claim
Amounts received from any other Title I transaction of the Company which is
insured by [THE CERTIFICATE INSURER]; provided that the Trustee receives an
Opinion of Counsel at the expense of the Class R Certificateholders that such
deposit will not adversely affect the REMIC status of the REMIC Trust.
(c) The Class R Certificateholders hereby consent to funds being
withdrawn from or deposited in the Pool III Collection Account at the direction
of [THE CERTIFICATE INSURER] pursuant to subsections (a) and (b) above.
(d) The Class R Certificateholders are deemed to have directed the
Trustee to withdraw funds from the Pool III Collection Account pursuant to
subsection (a) above and to deposit such funds into such Collection Account
pursuant to subsection (b) above.
ARTICLE FIVE
THE CERTIFICATES
Section 5.01. The Certificates. The Certificates consist of the Class
[A] Certificates and the Class R Certificates. The Certificates in the aggregate
will represent the entire beneficial ownership interest in the Mortgage Loans
and all other assets included in the Trust Estate.
The Certificates will be substantially in the forms annexed hereto as
Exhibits A, B and C. The Certificates of each Class will be issuable in
registered form only, in denominations of authorized Percentage Interests as
described in the definition thereof. Each Certificate will share ratably in all
rights of the related Class.
Upon original issue, the Certificates shall be executed, authenticated
and delivered by the Trustee upon the Written Order to Authenticate and upon
receipt of the documents specified in Section 2.01. The Certificates shall be
executed by manual or facsimile signature on behalf of the Trustee by an
authorized signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Trustee shall bind
the Trustee, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates. No Certificate
shall be entitled to any benefit under this Agreement or be valid for any
purpose, unless there appears on such Certificate a certificate of
authentication substantially in the form provided herein executed
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by the Trustee by manual signature, and such certificate of authentication shall
be conclusive evidence, and the only evidence, that such Certificate has been
duly authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication.
Interest shall accrue on the Pool I and Pool III Certificates on the
basis of a 360-day year consisting of twelve 30-day months except as otherwise
provided herein. Interest shall accrue on the Pool II and Pool IV Certificates
on the basis of the actual number of days elapsed in the related interest
accrual period. The interest accrual period with respect to the Certificates
shall be the related Due Period.
Section 5.02. Registration of Transfer and Exchange of Certificate.
(a) The Trustee shall cause to be kept at the office or agency
appointed by the Trustee in accordance with the provisions of Section 8.12 a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The Seller, each
Certificateholder [AND THE CERTIFICATE INSURER] shall have the right to inspect
the Certificate Register or to obtain a copy thereof at all reasonable times,
and to rely conclusively upon a certificate of the Trustee as to the information
set forth in the Certificate Register. The Trustee shall furnish or cause to be
furnished to the Seller [AND TO THE CERTIFICATE INSURER] and to any
Certificateholder a listing of the names and addresses of the Certificateholders
on reasonable request.
(b) (i) The Class R Certificates have not been registered or qualified
under the Securities Act or any state securities laws or "Blue Sky" laws. No
transfer, sale, pledge or other disposition of any Class R Certificate shall be
made unless such disposition is made pursuant to an effective registration
statement under the Securities Act and effective registration or qualification
under applicable state securities laws or "Blue Sky" laws, or is made in a
transaction which does not require such registration or qualification. In the
event that a transfer is to be made in reliance upon an exemption from the
Securities Act, the Trustee shall not register such transfer unless:
(A) the Class R Certificateholder desiring to effect
such disposition and such Class R Certificateholder's
prospective transferee each certify to the Trustee in writing
the facts surrounding such disposition, which certification
shall be substantially in the form of Exhibit I hereto; or
(B) the Class R Certificateholder desiring to effect
such disposition delivers to the Trustee an Opinion of Counsel
satisfactory to the Trustee that such transfer may be made
pursuant to an exemption from the Securities Act, which
Opinion of Counsel shall not be an expense of the Trustee.
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Neither the Seller, the Servicer nor the Trustee are obligated under this
Agreement to register the Class R Certificates under the Securities Act or any
other securities law or to take any action not otherwise required under this
Agreement to permit the transfer of Class R Certificates without such
registration or qualification. Any such Class R Certificateholder desiring to
effect such transfer shall, and does hereby agree to, promptly indemnify and
reimburse the Trustee, the Seller and the Servicer for costs and expenses
incurred in connection with any liability that results if the transfer is not so
exempt or is not made in accordance with such applicable federal and state laws.
(ii) Notwithstanding anything to the contrary herein, the
Trustee shall not register the transfer of any Certificate unless it shall have
received (a) a representation letter substantially in the form of Exhibit I
hereto or (b) in the case of a transfer to an insurance company general account,
either a representation letter as described in (a) above or, if such
representation letter does not contain the representation provided for in item D
of such Exhibit I, then in lieu thereof, an Opinion of Counsel from the
prospective transferee of such Certificate, acceptable to, and in form and
substance satisfactory to, the Trustee and the Seller, to the effect that the
acquisition and holding of the Certificate and the servicing, management and
operation of the Trust with respect to such prospective transferee are exempt
from the "prohibited transaction" provisions of ERISA and the Code pursuant to
Prohibited Transaction Class Exemption 95-60 (relating to insurance company
general accounts).
(c) Notwithstanding anything to the contrary contained herein, except
for the transfer on the Closing Date of the Class R Certificates to the Seller,
prior to registration of any transfer, sale or other disposition of a Class R
Certificate, the proposed transferee shall provide to the Servicer, the Seller,
the Class R Certificateholders and the Trustee: (i) an affidavit substantially
in the form of Exhibit J hereto to the effect that such transferee is not a
Disqualified Organization or a non-U.S. Person or an agent or a non-U.S. Person
(including a broker, nominee or middleman) of a Disqualified Organization; and
(ii) a certificate which acknowledges that (A) the Class R Certificates have
each been designated as a residual interest in a REMIC, (B) it will include in
its income the entire net income of the REMIC Trust and that such income may be
an "excess inclusion", as defined in the Code, that, with certain exceptions,
cannot be offset by other losses or benefits from any tax exemption, (C) it
expects to have the financial means to satisfy all of its tax obligations
including those relating to holding Class R Certificates, and (D) no purpose of
the acquisition of a Class R Certificate is to avoid or impede the assessment or
collection of tax. Notwithstanding the registration in the Certificate Register
of any transfer, sale or other disposition of a Class R Certificate to a
Disqualified Organization or an agent or a non-U.S. Person (including a broker,
nominee or middleman) of a Disqualified Organization, such registration shall be
deemed to be of no legal force or effect whatsoever and such Person shall not be
deemed to be a Certificateholder for any purpose hereunder, including, but not
limited to, the receipt of distributions in respect of such Class R Certificate.
If any purported transfer shall be in
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violation of the provisions of this Section 5.02(c), then the prior Holder of
the Class R Certificate purportedly transferred shall, upon discovery that the
transfer of the Class R Certificate was not in fact permitted by this Section
5.02(c), be restored to all rights as Holder thereof retroactive to the date of
the purported transfer of the Class R Certificate. The Trustee, the Seller
(except in its capacity as transferor of such Certificate), the Seller and the
Servicer shall have no liability to any Person for any registration or transfer
of a Class R Certificate that is not permitted by this Section 5.02(c) or for
making payments due on such Class R Certificate to the purported Holder thereof
or taking any other action with respect to such purported Holder under the
provisions of this Agreement if the Trustee, the Seller and the Servicer have
received the affidavit and certificate referenced above. The prior Holder shall
be entitled to recover from any purported Holder of a Class R Certificate that
was in fact not a permitted transferee under this Section 5.02(c) at the time it
became a Holder, all payments made on the Class R Certificate. The Holder of a
Class R Certificate, by its acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section 5.02(c) and to any amendment
of this Agreement deemed necessary by counsel to the Seller to ensure that the
transfer of a Class R Certificate to a Disqualified Organization or any other
Person will not cause the REMIC Trust to cease to qualify as a REMIC or cause
the imposition of a tax upon the REMIC Trust.
(d) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Certificate (duly endorsed, or accompanied by an
executed assignment, as specified in the Certificate) at any agency or office
appointed by the Trustee for such purpose pursuant to Section 8.12, the Trustee
or its agent shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class of a like aggregate Percentage Interest.
(e) At the option of the Certificateholders, each Certificate may be
exchanged for other Certificates of the same Class with authorized denominations
and a like aggregate Percentage Interest, upon surrender of such Certificate to
be exchanged at any office or agency appointed by the Trustee for such purpose
pursuant to Section 8.12. Whenever any Certificates are so surrendered for
exchange the Trustee shall execute, authenticate and deliver the Certificates
which the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee or its agent) be duly endorsed by, or be accompanied by
an assignment in the form attached to the Certificate or by a written instrument
of transfer in the form reasonably satisfactory to the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing.
(f) No service charge to the Certificateholders shall be made for any
transfer or exchange of Certificates, but the Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
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(g) All Certificates surrendered for transfer and exchange shall be
canceled and destroyed by the Trustee in accordance with its customary
procedures.
(h) The Trustee shall not register any Class [A] Certificate in the
name of the Trust, the Servicer, the Seller, any Sub-Servicer or any of their
respective affiliates, (the Trustee may require any prospective transferee of
any Class [A] Certificate to certify that it is not such an affiliate).
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Trustee or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee [AND THE CERTIFICATE
INSURER] such security or indemnity (provided that an unsecured letter of
indemnity in a form reasonably satisfactory to the Trustee from a Holder which
is an insurance company having long-term unsecured debt which is rated at least
investment grade (or having a comparable claim-paying ability rating) and having
a minimum net worth of $100,000,000 shall satisfy such requirement) as may be
required by them to save each of them harmless, then, in the absence of actual
knowledge by a Responsible Officer of the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of the same Class and of like denomination
and Percentage Interest. Upon the issuance of any new Certificate under this
Section, the Trustee may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee) connected
therewith. Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
Section 5.04. Persons Deemed Certificateholders. The Seller, the
Servicer, the Trustee[, THE CERTIFICATE INSURER] and any agent of any of them
may treat the Person in whose name any Certificate is registered in the
Certificate Register as the Certificateholder for the purpose of receiving
distributions pursuant to Section 4.04 and for all other purposes whatsoever,
and neither the Seller, the Servicer, the Trustee[, THE CERTIFICATE INSURER] nor
any agent of any of them shall be affected by notice to the contrary.
Section 5.05. Book-Entry Certificates. Each Class of Class [A]
Certificates, upon original issuance, shall be issued in the form of one or more
typewritten Certificates representing the Book-Entry Certificates, to be
delivered to the Seller. Such Certificates shall initially be registered on the
Certificate Register in the name of the Seller or its nominee, and no
Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in such Certificates, except as provided in Section
5.07. Unless
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and until definitive, fully registered Certificates ("Definitive Certificates")
have been issued to the Certificate Owners of such Certificates pursuant to
Section 5.07:
(a) the provisions of this Section shall be in full force and
effect;
(b) the Seller, the Servicer[, THE CERTIFICATE INSURER] and
the Trustee may deal with the Seller and the Depository Participants
for all purposes (including the making of distributions) as the
authorized representative of the respective Certificate Owners of such
Certificates;
(c) registration of the Book-Entry Certificates may not be
transferred by the Trustee except to another Depositary;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depositary and the
Depository Participants and shall be limited to those established by
law and agreements between such Certificate Owners and the Depositary
and/or the Depository Participants. Pursuant to the Depository
Agreement, unless and until Definitive Certificates are issued with
respect to any Class of Class [A] Certificates pursuant to Section
5.07, the Depositary will make book-entry transfers among the
Depository Participants and receive and transmit distributions of
principal and interest on the related Certificates to such Depository
Participants;
(e) the Depositary may collect its usual and customary fees,
charges and expenses from its Depository Participants;
(f) the Trustee may rely and shall be fully protected in
relying upon information furnished by the Depositary with respect to
its Depository Participants; and
(g) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the Voting Interests such direction or
consent may be given by Certificate Owners (acting through the Depositary and
the Depository Participants) owning Book-Entry Certificates evidencing the
requisite percentage of Class Certificate Principal Balance of such Class.
Section 5.06. Notices to Depositary. Whenever any notice or other
communication is required to be given to Certificateholders of any Class with
respect to which Book-Entry Certificates have been issued, unless and until
Definitive Certificates shall have been issued
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to the related Certificate Owners, the Trustee shall give all such notices and
communications to the Depositary.
Section 5.07. Definitive Certificates. If after Book-Entry Certificates
have been issued with respect to the Class [A] Certificates, (a) the Seller
advises the Trustee that the Depositary is no longer willing or able to
discharge properly its responsibilities under the Depository Agreement with
respect to such Certificates and the Trustee or the Seller is unable to locate a
qualified successor, (b) the Seller, at its sole option, advises the Trustee
that it elects to terminate the book-entry system with respect to such
Certificates through the Depositary or (c) after the occurrence and continuation
of an Event of Default, Certificate Owners of any Class of Certificates
evidencing at least 51% of the Voting Interests of such Class advise the Trustee
and the Depositary in writing through the Depository Participants that the
continuation of a book-entry system with respect to such Certificates through
the Depositary (or its successor) is no longer in the best interests of the
Certificate Owners with respect to such Certificates, then the Trustee shall
notify all Certificate Owners of such Certificates, through the Depositary, of
the occurrence of any such event and of the availability of Definitive
Certificates to Certificate Owners requesting the same. The Seller shall provide
the Trustee with an adequate inventory of certificates to facilitate the
issuance and transfer of Definitive Certificates. Upon surrender to the Trustee
of any such Certificates by the Depositary, accompanied by registration
instructions from the Depositary for registration, the Trustee shall
authenticate and deliver such Definitive Certificates. Neither the Seller nor
the Trustee shall be liable for any delay in delivery of such instructions and
each may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of such Definitive Certificates, all references
herein to obligations imposed upon or to be performed by the Depositary shall be
deemed to be imposed upon and performed by the Trustee, to the extent applicable
with respect to such Definitive Certificates and the Trustee shall recognize the
Holders of such Definitive Certificates as Certificateholders hereunder.
ARTICLE SIX
THE SELLER, THE SERVICER AND THE CLAIMS ADMINISTRATOR
Section 6.01. Liability of the Seller, the Claims Administrator and the
Servicer. The Seller, the Claims Administrator and the Servicer each shall be
severally liable in accordance herewith only to the extent of the obligations
specifically imposed by this Agreement and undertaken hereunder by the Seller,
the Claims Administrator and the Servicer, respectively, herein.
Section 6.02. Merger or Consolidation of the Seller, the Claims
Administrator or the Servicer. Subject to the following paragraph, the Seller
will keep in full effect its existence, rights and franchises as a corporation
under the laws of the jurisdiction of its incorporation.
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The Claims Administrator and Servicer will each keep in full effect its
existence, rights and franchises as a corporation organized under the laws of
the State of New York (or under the laws of such other jurisdiction as may in
the future issue a charter for the Servicer). The Seller, Claims Administrator
and the Servicer each will (and the Servicer will require each Sub-Servicer in
the related Sub-Servicing Agreement to) obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
The Seller, the Claims Administrator or the Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Seller, the Claims Administrator or the Servicer
shall be a party, or any Person succeeding to the business of the Seller, the
Claims Administrator or the Servicer, shall be the successor of the Seller, the
Claims Administrator or the Servicer, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Servicer shall satisfy
the requirements of Sections 6.06 and 7.02 hereof with respect to the
qualifications of a successor Servicer.
Section 6.03. Limitation on Liability of the Seller, the Servicer and
Others. Neither the Seller, the Claims Administrator or the Servicer nor any of
the directors, officers, employees or agents of the Seller, the Claims
Administrator or the Servicer shall be under any liability to the Trust or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Seller, the Claims
Administrator, the Servicer or any such person against the remedies provided
herein for the breach of any warranties, representations or covenants made
herein, or against any specific liability imposed on the Seller, the Claims
Administrator or the Servicer herein, or against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties of the Servicer, the Claims Administrator or the
Seller, as the case may be, or by reason of reckless disregard of obligations
and duties of the Servicer, the Claims Administrator or the Seller, as the case
may be, hereunder. The Seller, the Claims Administrator, the Servicer and any
director, officer, employee or agent of the Seller, the Claims Administrator or
the Servicer may rely in good faith on any document of any kind which, prima
facie, is properly executed and submitted by any Person respecting any matters
arising hereunder.
The Servicer, the Seller and the Claims Administrator and any director,
officer, employee or agent of the Servicer, the Seller or the Claims
Administrator shall be indemnified by the Trust and held harmless against any
loss, liability or expense incurred in
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connection with any audit, controversy or judicial proceeding relating to a
governmental taxing authority or any legal action relating to this Agreement or
the Certificates, other than any loss, liability or expense related to any
specific Mortgage Loan or Mortgage Loans (except as any such loss, liability or
expense shall be otherwise reimbursable pursuant to this Agreement) and any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder. Except as otherwise provided
herein, neither of the Seller, the Claims Administrator nor the Servicer shall
be under any obligation to appear in, prosecute or defend any legal action that
is not related to its respective duties under this Agreement; provided, however,
that, except as otherwise provided herein, any of the Seller, the Claims
Administrator, or the Servicer may, with the prior consent of the Trustee [AND
THE CERTIFICATE INSURER], in its discretion undertake any such action which it
may deem necessary or desirable with respect to this Agreement and the rights
and duties of the parties hereto and the interests of the Certificateholders
[AND THE CERTIFICATE INSURER] hereunder. In such event, the legal expenses and
costs of such action, with the prior written consent of [THE CERTIFICATE
INSURER], and any liability resulting therefrom shall be, expenses, costs and
liabilities of the Trust, and the Seller, the Claims Administrator and the
Servicer shall be entitled to be reimbursed therefor out of the Certificate
Account.
Section 6.04. Limitation on Resignation of the Servicer or the Claims
Administrator; No Assignment or Delegation of Duties by Servicer. Neither the
Servicer nor the Claims Administrator shall resign from the obligations and
duties hereby imposed on it except [(a) BY THE MUTUAL CONSENT OF THE CERTIFICATE
INSURER (EXCEPT THAT IF A CERTIFICATE INSURER DEFAULT HAS OCCURRED AND IS
CONTINUING, THE DECISION OF THE TRUSTEE AND THE MAJORITY CERTIFICATEHOLDERS
SHALL CONTROL), THE TRUSTEE AND THE MAJORITY CERTIFICATEHOLDERS OR (b)] upon
determination that its duties hereunder are no longer permissible under
applicable law. Any such determination [PURSUANT TO CLAUSE (b) OF THE PRECEDING
SENTENCE PERMITTING THE RESIGNATION OF THE SERVICER OR THE CLAIMS ADMINISTRATOR]
shall be evidenced by an Independent Opinion of Counsel to such effect delivered
(at the expense of the Servicer or the Claims Administrator, as the case may be)
to the Trustee [AND THE CERTIFICATE INSURER]. No resignation of the Servicer
shall become effective until the Trustee or a successor Servicer, appointed
pursuant to the provisions of 3.26(b) and satisfying the requirements of
Sections 6.06 and 7.02 hereof with respect to the qualifications of a successor
Servicer, shall have assumed the Servicer's responsibilities, duties,
liabilities (other than those liabilities arising prior to the appointment of
such successor) and obligations under this Agreement.
Except as expressly provided herein, the Servicer shall not assign or
transfer any of its rights, benefits or privileges hereunder to any other
Person, or (except as permitted by Section 3.02) delegate to or subcontract
with, or authorize or appoint any other Person to perform any of the duties,
covenants or obligations to be performed by the Servicer hereunder, without the
prior written consent of [EACH OF THE CERTIFICATE INSURER, EXCEPT THAT
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IF A CERTIFICATE INSURER DEFAULT HAS OCCURRED AND IS CONTINUING, THE WRITTEN
CONSENT OF THE CERTIFICATE INSURER SHALL NOT BE REQUIRED, AND] the Trustee, and
absent such written consent, any agreement, instrument or act purporting to
effect any such assignment, transfer, delegation or appointment shall be void.
Section 6.05. Rights of the Seller, the Certificateholders and Others
in Respect of the Servicer. The Servicer shall (and shall require any
Sub-Servicer in the related Sub-Servicing Agreement to) afford, the Seller, the
Trustee and any Class [A] Certificateholder who has a greater than 10%
Percentage Interest in the related Class and any representative or agent of the
foregoing [AND THE CERTIFICATE INSURER], upon reasonable notice, during normal
business hours, access to all records maintained by the Servicer in respect of
its rights and obligations hereunder and access to officers of the Servicer and
each Sub-Servicer responsible for such obligations. Upon request and at such
requesting party's expense, the Servicer shall furnish to the Seller, [THE
CERTIFICATE INSURER,] any Certificateholder and the Trustee the Servicer's most
recent publicly available financial statements and each Sub-Servicer's most
recent financial statements (annual or quarterly statements, as the case may be)
and such other information relating to their capacity to perform their
obligations under this Agreement as the Servicer or such Sub-Servicer possesses.
To the extent such information is not otherwise available to the
public, the Seller, the Certificateholders, the Servicer (with respect to
information of any Sub-Servicer) and the Trustee [AND THE CERTIFICATE INSURER]
shall not disseminate any information obtained pursuant to the preceding two
sentences without the Servicer's or the Sub-Servicer's (only with respect to
information of such Sub-Servicer) written consent, except as required pursuant
to this Agreement or to the extent that it is necessary to do so (i) in working
with legal counsel, auditors, taxing authorities or other governmental agencies
for reasons consistent with the performance of their respective duties or (ii)
pursuant to any law, rule, regulation, order, judgment, writ, injunction or
decree of any court or governmental authority, or as may be required in any
report submitted to any regulatory body, having jurisdiction over the Seller,
the Servicer, the Trustee, any Certificateholder or the Trust Estate, as the
case may be, and in any case, the Seller, the Servicer (with respect to
information of any Sub-Servicer) or the Trustee, as the case may be, shall use
its best efforts to assure the confidentiality of any such disseminated
non-public information.
Section 6.06. Eligibility Requirements for Servicer. The Servicer
hereunder shall at all times be a corporation or a state-chartered or national
bank acceptable to [THE CERTIFICATE INSURER EXCEPT THAT IF A CERTIFICATE INSURER
DEFAULT HAS OCCURRED AND IS CONTINUING, SUCH ENTITY SHALL BE ACCEPTABLE TO] the
Trustee. The Servicer shall (i) be organized and doing business under the laws
of any state or the United States of America, (ii) have a net worth of at least
$50,000,000 (other than the original Servicer) (or such lower level as may be
acceptable to [THE CERTIFICATE INSURER], or, if a [CERTIFICATE INSURER] Default
has occurred and is continuing, to the Trustee) and (iii) be a Title I approved
Lender pursuant to the FHA
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Regulations. In case at any time the Servicer shall cease to be eligible in
accordance with the provisions of this Section, the Servicer shall resign
immediately in the manner and with the effect specified in Section 6.04.
ARTICLE SEVEN
DEFAULT
Section 7.01. Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(a) Any failure by the Servicer or the Claims Administrator,
as appropriate, to (i) make the payment of, with respect to any Pool,
an Interest Remittance Amount or a Principal Remittance Amount on any
Deposit Date, (ii) deposit in the Collection Account or the Certificate
Account of the related Pool any other amount required to be deposited
therein under this Agreement, (iii) pay the Trustee Fee or (iv) pay the
FHA Insurance Premium relating to any FHA Loan, which failure, in the
case of only clause (ii) hereof (except with respect to FHA Payments to
which no grace period shall apply), continues unremedied for a period
of two Business Days after the date upon which written notice of such
failure shall have been given to the Servicer or the Claims
Administrator by the Trustee [OR THE CERTIFICATE INSURER] or to the
Servicer or the Claims Administrator[, THE CERTIFICATE INSURER] and the
Trustee by Holders of Certificates evidencing Voting Interests
represented by all Certificates aggregating not less than 51%;
(b) Failure on the part of the Servicer or the Claims
Administrator duly to observe or perform in any material respect any
other covenants or agreements of the Servicer or the Claims
Administrator set forth in the Certificates or in this Agreement, which
failure to observe or perform such covenants or agreements (i)
materially and adversely affects the Certificateholders [OR THE
CERTIFICATE INSURER] and (ii) continues unremedied for a period of 30
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Servicer or the
Claims Administrator by the Trustee [OR THE CERTIFICATE INSURER] (which
notice shall refer specifically to this Section), or to the Servicer or
the Claims Administrator[, THE CERTIFICATE INSURER] and the Trustee by
the Holders of Certificates evidencing Voting Interests represented by
all Certificates aggregating not less than 51%;
(c) The entry against the Servicer or the Claims Administrator
of a decree or order by a court, agency or supervisory authority having
jurisdiction in the premises for the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar
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proceedings, or for the winding up or liquidation of its affairs, and
the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days;
(d) The consent by the Servicer or the Claims Administrator to
the appointment of a trustee, conservator or receiver or liquidator in
any bankruptcy, insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the Servicer
or the Claims Administrator or of or relating to substantially all of
its property; or the Servicer or the Claims Administrator shall admit
in writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations;
(e) [THE PAYMENT BY THE CERTIFICATE INSURER OF ANY INSURED
PAYMENT, UNLESS THE CERTIFICATE INSURER DETERMINES THAT THE RELATED
INSUFFICIENCY IN AVAILABLE FUNDS RESULTED FROM CAUSES BEYOND THE
REASONABLE CONTROL OF THE SERVICER;]
(f) For so long as the Company is the Servicer and/or the
Claims Administrator, failure on the part of the Seller duly to observe
or perform in any material respect any covenants or agreements of the
Seller set forth in the Certificates or in this Agreement, which
failure to observe or perform such covenants or agreements (i)
materially and adversely affects the Certificateholders [OR THE
CERTIFICATE INSURER] and (ii) continues unremedied for a period of 30
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Servicer or the
Claims Administrator by the Trustee [OR THE CERTIFICATE INSURER] (which
notice shall refer specifically to this Section), or to the Servicer or
the Claims Administrator[, THE CERTIFICATE INSURER] and the Trustee by
the Holders of Certificates evidencing Voting Interests represented by
all Certificates aggregating not less than 51%; or
[(g) A FAILURE OF THE SERVICER TO MEET THE SERVICER
TERMINATION TEST.]
then, and in each and every such case, so long as such Event of Default shall
not have been remedied by the Servicer or the Claims Administrator, [EITHER (1)
THE CERTIFICATE INSURER OR (2) WITH THE PRIOR WRITTEN CONSENT OF [THE
CERTIFICATE INSURER],] either the Trustee or the Holders of Certificates
evidencing Voting Interests represented by all Certificates aggregating not less
than 51%, by notice then given in writing to the Servicer or the Claims
Administrator with a copy to [THE CERTIFICATE INSURER AND TO] the Trustee, in
the case of written consent from the Holders of Certificates, may terminate all
of the rights, responsibilities and obligations of the Servicer as servicer or
the Claims Administrator as the claims administrator under this Agreement. On or
after the receipt by the Servicer or the
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Claims Administrator of such written notice, all authority and power of the
Servicer or the Claims Administrator under this Agreement, whether with respect
to the Certificates or the Mortgage Loans or otherwise, shall pass to and be
vested in the Trustee pursuant to and under this Section; and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer or the Claims Administrator, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Mortgage Loans and related documents, or otherwise. The
Servicer and the Claims Administrator agree to cooperate with the Trustee in
effecting the termination of the responsibilities and rights of the Servicer or
the Claims Administrator hereunder, including, without limitation, the transfer
to the Trustee for the administration by it of all cash amounts that shall at
the time be held by the Servicer or the Claims Administrator that have been
deposited by the Servicer or the Claims Administrator in the related Collection
Account or the Certificate Account or thereafter received by the Servicer or the
Claims Administrator with respect to the Mortgage Loans.
All reasonable costs and expenses (including attorneys' fees) incurred
in connection with transferring the Mortgage Files to the successor Servicer,
amending this Agreement to reflect such successor as Servicer or Claims
Administrator pursuant to this Section 7.01 or otherwise in connection with the
successor Servicer or Claims Administrator assuming the duties of the
predecessor Servicer or Claims Administrator hereunder shall be paid by the
predecessor Servicer or Claims Administrator upon presentation of reasonable
documentation of such costs and expenses.
For purposes of this Section 7.01, the Trustee shall not be deemed to
have knowledge of an Event of Default unless a Responsible Officer of the
Trustee has actual knowledge thereof or unless written notice of any event which
is in fact such an Event of Default is received at the notice address of the
Trustee provided herein and such notice references the Certificates, the Seller,
the Trust or this Agreement.
[FOR PURPOSES OF THIS SECTION 7.01, ANY CONSENT OR DETERMINATION BY THE
CERTIFICATE INSURER SHALL BE REPLACED BY CONSENT OR DETERMINATION OF THE
MAJORITY CERTIFICATEHOLDERS IF A CERTIFICATE INSURER DEFAULT HAS OCCURRED AND IS
CONTINUING.]
Section 7.02. Trustee to Act; Appointment of Successor. On and after
the day the Servicer or the Claims Administrator receives a notice of
termination pursuant to Section 7.01 or on and after the day the Servicer
becomes ineligible to act as Servicer due to an inability to meet the
eligibility requirements of Section 6.06, and unless a successor Servicer or
Claims Administrator other than the Trustee has been appointed pursuant to
Section 3.26 hereof, the Trustee shall be the successor in all respects to the
Servicer in its capacity as Servicer or to the Claims Administrator in its
capacity as claims administrator, as the case
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may be, under this Agreement (until replaced by [THE CERTIFICATE INSURER]) and
the transactions set forth or provided for herein and shall be subject to all
the responsibilities, duties and liabilities relating thereto and arising
thereafter placed on the Servicer (except for any representations or warranties
of the Servicer and any obligation to repurchase a Mortgage Loan for any reason
hereunder) or the Claims Administrator by the terms and provisions hereof,
including, without limitation, the Servicer's obligations to make Delinquency
Advances pursuant to Section 4.06 (but only to the extent that it determines
that such Delinquency Advance would not be a Nonrecoverable Delinquency Advance)
and payments of Compensating Interest pursuant to Section 3.23; provided,
however, that if the Trustee is prohibited by law or regulation (as evidenced by
an Independent Opinion of Counsel) from obligating itself to make advances
regarding delinquent Mortgage Loans, then the Trustee shall not be obligated to
make Delinquency Advances or payments in respect of Compensating Interest; and
provided, further, that any failure to perform such duties or responsibilities
caused by the Servicer's failure to provide the documents and records required
by Section 7.01 shall not be considered a default by the Trustee as successor to
the Servicer hereunder.
Notwithstanding the above, if the Trustee shall be unable to so act as
successor Servicer or Claims Administrator or if the Trustee is prohibited by
law from making advances regarding delinquent Mortgage Loans or making payments
in respect of Compensating Interest, and in such event that the procedures
described in Section 3.26 have not commenced within a reasonable period of time,
then the Trustee shall petition a court of competent jurisdiction to appoint, as
the successor to the Servicer under this Agreement in the assumption of all or
any part of the responsibilities, duties or liabilities of the Servicer or the
Claims Administrator, as the case may be, under this Agreement, any established
mortgage loan servicing institution qualified to service mortgage loans such as
the Mortgage Loans which meets the eligibility requirements of Section 6.06
hereof; provided, that such appointment of any such successor Servicer or Claims
Administrator shall not result in the qualification, reduction or withdrawal of
the ratings assigned to the Class [A] Certificates by any Rating Agency.
In connection with such appointment made by such court, the Trustee may
make such arrangements for the compensation of such successor out of payments on
Mortgage Loans as it and such successor shall agree; provided, however, that no
such compensation shall be in excess of that permitted the Servicer as such
hereunder. The Seller, [THE CERTIFICATE INSURER,] the Trustee, and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Upon a successor Servicer's
acceptance of its appointment by such court, the Trustee shall notify in writing
the Seller, each Certificateholder[, THE CERTIFICATE INSURER] and each Rating
Agency of such appointment.
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No appointment of a successor to the Servicer or the Claims
Administrator under this Agreement shall be effective until the assumption by
the successor to the Servicer or the Claims Administrator, as the case may be,
of all the responsibilities, duties and liabilities hereunder, except as
otherwise provided herein.
Any successor to the Servicer, other than a successor appointed by a
court of competent jurisdiction upon the petition of the Trustee, shall be
entitled to receive, as compensation therefor, the Servicing Fee, calculated at
a servicing fee rate to be agreed upon at the time between such successor and
the Seller (it being acknowledged that the Trustee as the successor Servicer
shall be entitled to the Servicing Fee Rate provided for herein), but not in
excess of the Servicing Fee Rate, and all funds relating to the Mortgage Loans
which the Servicer would have been entitled to if the Servicer had continued to
act hereunder.
The successor Servicer (other than the Trustee) shall be solely liable
for any costs and expenses associated with the transfer of servicing to such
successor Servicer.
Section 7.03. Notification to Mortgagors and Certificateholders.
(a) Upon any such termination pursuant to Section 7.02 above or
appointment of a successor to the Servicer, the Trustee shall, at the expense of
the Servicer, give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register and to each Mortgagor
at their respective addresses appearing in the Mortgage Loan Schedule.
(b) Within three Business Days after the occurrence of any event which
constitutes or which, with notice or lapse of time or both, would constitute an
Event of Default, the Trustee shall transmit by mail, at the expense of the
Servicer, to all Holders of Certificates [AND THE CERTIFICATE INSURER], notice
of any Event of Default actually known to a Responsible Officer of the Trustee.
Section 7.04. Additional Remedies of Trustee Upon Event of Default.
Upon any Event of Default, the Trustee shall have the right to the extent
consistent with the rights reserved to [THE CERTIFICATE INSURER] hereunder, in
its own name and as Trustee, to take all actions now or hereafter existing at
law, in equity or by statute to enforce its rights and remedies and to protect
the interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). No remedy provided for by this Agreement shall be exclusive of any
other remedy, and each and every remedy shall be cumulative and in addition to
any other remedy and no delay or omission to exercise any right or remedy shall
impair any such right or remedy or shall be deemed to be a waiver of any Event
of Default.
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Section 7.05. Waiver of Events of Default. The [CERTIFICATE INSURER
AND, SUBJECT TO THE CONSENT OF THE TRUSTEE, WHICH CONSENT MAY NOT BE
UNREASONABLY WITHHELD, THE] Majority Certificateholders, may waive any Event of
Default and its consequences, except that if a default in the making of any
required deposit to the Collection Account or the Certificate Account of any
Pool that would result in a failure of the Trustee to make any required
distribution on the Certificates may be waived only by all of the
Certificateholders. Upon any waiver of a past Event of Default, such Event of
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other Event of Default or impair any
right consequent thereto except to the extent expressly so waived. Notice of any
such waiver shall be given by the Trustee to each Rating Agency and to all
Certificateholders.
ARTICLE EIGHT
THE TRUSTEE
Section 8.01. Duties of the Trustee. The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Event of Defaults
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. During an Event of Default, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they are in
the form specified in this Agreement.
The Trustee may, in accordance with its duties hereunder, do all things
necessary and proper as may be required in connection with any secondary
mortgage licensing laws and similar requirements, including, but not limited, to
consenting to jurisdiction, and the appointment of agents for service of
process, in jurisdictions in which the Mortgaged Properties are located.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct; provided, however, that:
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(i) Prior to the occurrence of an Event of Default, and after
the curing of all such Event of Defaults which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions contained therein (including, but not
limited to, Servicer Information), upon any certificates or opinions
furnished to the Trustee that are in the form specified in this
Agreement;
(ii) The Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of [THE CERTIFICATE INSURER OR] the
Majority Certificateholders issued to the Trustee pursuant to Section
8.13 hereof.
The Trustee shall, upon receipt of the request substantially in the
form of Exhibit M attached hereto, prepare, issue and forward to the Servicer
checks for refunds and expenses indicated on such request.
Section 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely upon and shall be
protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond or other paper or document (including,
but not limited to, Servicer Information) reasonably believed by it to
be genuine and to have been signed or presented by the proper party or
parties;
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to make any
investigation of matters
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arising hereunder to institute, conduct or defend any litigation
hereunder or in relation hereto at the request, order or direction of
any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby (provided that
an unsecured letter of indemnity in a form reasonably satisfactory to
the Trustee from a Holder which is an insurance company having
long-term unsecured debt which is rated at least investment grade (or
having a comparable claim-paying ability rating) and having a minimum
net worth of $100,000,000 shall satisfy such requirement); nothing
contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of an Event of Default of which the Trustee has
actual knowledge (which has not been cured or waived), to exercise such
of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of such
person's own affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) Prior to the occurrence of an Event of Default hereunder
and after the curing of all Event of Defaults which may have occurred,
the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so
by [THE CERTIFICATE INSURER OR BY] the Majority Certificateholders;
provided, however, that if the payment of the costs, expenses or
liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured
to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity (provided that
an unsecured letter of indemnity in a form reasonably satisfactory to
the Trustee from a Holder which is an insurance company having
long-term unsecured debt which is rated at least investment grade (or
having a comparable claim-paying ability rating) and having a minimum
net worth of $100,000,000 shall satisfy such requirement) against such
expense or liability as a condition to taking any such action. The
reasonable expense of every such examination shall be paid by the
Servicer or, if paid by the Trustee, shall be repaid by the Servicer
upon demand;
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys; and
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(vii) The Trustee shall not be personally liable for any loss
resulting from the investment of funds at the direction of the Servicer
or the Seller held in any Account; provided, however, that the Trustee
shall be personally liable on any investment on which it is the
obligor.
(b) Following the Startup Day, and except as otherwise provided in this
Agreement, the Trustee shall not knowingly accept any contribution of assets to
the Trust unless it shall have been provided with an Opinion of Counsel at the
expense of the party delivering such assets acceptable to it and [THE
CERTIFICATE INSURER] to the effect that the inclusion of such assets in the
REMIC Trust will not cause the REMIC Trust to fail to qualify as a REMIC at any
time that any Certificates are outstanding or subject the Trust to any tax under
the REMIC Provisions or other applicable provisions of federal, state and local
law or ordinances.
(c) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the signature
on the Certificates) shall be taken as the statements of the Seller, and the
Trustee assumes no responsibility for their correctness. The Trustee makes no
representations or warranties as to the validity or sufficiency of this
Agreement or of the Certificates (other than the signature of the Trustee on the
Certificates) or of any Mortgage Loan or related document. The Trustee shall not
be accountable for the use or application by the Seller or the Servicer of any
of the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Seller or the Servicer in respect of the
Mortgage Loans or for the use or application of any funds deposited in or
withdrawn from the Collection Account by the Servicer.
Section 8.04. Trustee May Own Certificates. The Trustee in its
individual capacity or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Trustee.
Section 8.05. Expenses of Trustee. The Trustee's Fee shall be paid as
described in Section 4.04. In addition, the Servicer covenants and agrees to pay
or reimburse the Trustee, upon request, all reasonable expenses, disbursements
and advances incurred or made by the Trustee, and any director, officer,
employee or agent acting for and on behalf of the Trustee, in accordance with
any of the provisions of this Agreement (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ, whether or not such expenses are incurred in connection
with any
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Opinion of Counsel acquired or permitted to be obtained by the Trustee) except
any such expense, disbursement or advance as may arise from its negligence or
bad faith. The Trustee and any director, officer, employee or agent of the
Trustee shall be indemnified by the Servicer and held harmless against any loss,
liability or expense incurred in connection with or relating to this Agreement
or the Certificates, or the performance of any of the Trustee's duties
hereunder, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of duties
hereunder; provided that (i) with respect to any such loss, liability or
expense, the Trustee shall have given to the Seller, the Servicer[, THE
CERTIFICATE INSURER] and the Certificateholders written notice thereof promptly
after the Trustee shall have knowledge thereof and (ii) while maintaining
control over its own defense, the Trustee shall cooperate and consult fully with
[THE CERTIFICATE INSURER] in preparing such defense. Such indemnity shall
survive the termination or discharge of this Agreement and the resignation or
removal of the Trustee.
Section 8.06. Trustee Eligibility Requirements. The Trustee hereunder
shall at all times be a corporation or a state-chartered or national bank
acceptable to [THE CERTIFICATE INSURER], which is not an affiliate of the Seller
or the Servicer, organized and doing business under the laws of any state (or
the District of Columbia) or the United States of America, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $100,000,000 and subject to supervision or examination by federal or
state authority. The Trustee shall at all times have and maintain a valid FHA
Contract of Insurance or appoint a co-trustee that is so insured to act as
trustee with respect to FHA Loans. The Trustee shall at all times have ratings
assigned to its long-term, unsecured debt obligations of at least "A" by S&P and
"A2" by ▇▇▇▇▇'▇. If such corporation or association publishes reports of
conditions at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such corporation or association
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of conditions so published. In case at any time any Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.07. The corporation or national banking association serving as Trustee
may have normal banking and trust relationships with the Seller and the Servicer
and the respective affiliates.
Section 8.07. Resignation and Removal of the Trustee. The Trustee may
at any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Seller, [THE CERTIFICATE INSURER,] the Servicer
and to all Certificateholders. Upon receiving such notice of any such
resignation, the Seller shall select a successor Trustee and shall present such
party to [THE CERTIFICATE INSURER AND] the Majority Certificateholders and upon
their joint approval such party shall promptly be appointed successor trustee by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument shall
be delivered to the Certificateholders[,
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THE CERTIFICATE INSURER] and the Seller by the Servicer. If no successor trustee
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor, or if at any time the Trustee shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the Servicer shall solicit and
present to [THE CERTIFICATE INSURER AND] the Majority Certificateholders and
upon their joint written approval, in duplicate, which instrument shall be
delivered to the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the Certificateholders[, THE CERTIFICATE
INSURER] and the Seller by the Servicer.
The Majority Certificateholders may, with the written consent of [THE
CERTIFICATE INSURER] (which shall only be required if no [CERTIFICATE INSURER]
Default has occurred and is continuing), at any time remove the Trustee and
appoint a successor by written instrument or instruments, in triplicate, signed
by such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered to the Seller, one complete set to the
Trustee so removed and one complete set to the successor so appointed.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.
Notwithstanding anything to the contrary contained herein, so long as
no [CERTIFICATE INSURER] Default exists and is continuing, the Trustee may not
be removed by the Certificateholders without the prior written consent of [THE
CERTIFICATE INSURER], which consent shall not be unreasonably withheld.
Section 8.08. Successor Trustee. Any successor trustee appointed as
provided in Section 8.07 shall execute, acknowledge and deliver to the
Certificateholders, [THE CERTIFICATE INSURER,] the Servicer and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements held by it
hereunder (other than any Mortgage Files at the time held by a custodian, which
shall become the agent of any successor trustee hereunder), and
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the Seller, the Servicer and the predecessor trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 8.06.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the predecessor trustee shall mail notice of the succession of
such trustee hereunder to each Holder of Certificates at their respective
addresses as shown in the Certificate Register and to each Rating Agency. If the
predecessor trustee fails to mail such notice within ten (10) days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be mailed at the expense of the resigning trustee.
Section 8.09. Merger or Consolidation of Trustee. Any corporation or
association into which the Trustee may be merged or converted or with which it
may be consolidated or any corporation or association resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation or association succeeding to the business of the Trustee, shall be
the successor of the Trustee hereunder, provided such corporation or association
shall be eligible under the provisions of Section 8.06, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Estate or property securing the same may at the time be located, the
Servicer and the Trustee with the consent of [THE CERTIFICATE INSURER] shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person or Persons, in such
capacity, such title to the Trust Estate, or any part thereof, and, subject to
the other provisions of this Section 8.10, such powers, duties, obligations,
rights and trusts as the Seller and the Trustee may consider necessary or
desirable. If the Trustee shall not have joined in such appointment within 15
days after the receipt by it of a request so to do, [THE CERTIFICATE INSURER]
shall have the power to make such appointment. Any co-trustee with respect to
FHA Loans must at all times have a valid FHA Contract of Insurance. Subject to
[THE CERTIFICATE INSURER]'s prior approval, no co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 8.06 hereunder and no notice to Holders of Certificates of
the appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.08 hereof.
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In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to the Servicer hereunder), the Trustee shall
be incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be exercised and
performed by such separate trustee or co-trustee at the direction of the
Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11. Trustee Records. The Trustee shall afford the Seller, the
Servicer[, THE CERTIFICATE INSURER] and each Certificateholder upon reasonable
notice during normal business hours, access to all records maintained by the
Trustee in respect of its duties hereunder and access to officers of the Trustee
responsible for performing such duties, such inspection to take place at
____________________________ or such other place as designated by the Trustee.
Upon request, the Trustee shall furnish the Servicer[, THE CERTIFICATE INSURER]
and any requesting Certificateholder with its most recent financial statements.
The Trustee shall cooperate fully with the Seller, the Servicer[, THE
CERTIFICATE INSURER] and such Certificateholder and shall make available to the
Seller, the Servicer[, THE CERTIFICATE INSURER] and such Certificateholder for
review and copying such books, documents or records as may be requested with
respect to the Trustee's duties hereunder. The Seller, the Servicer[, THE
CERTIFICATE INSURER] and the Certificateholders shall not have
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any responsibility or liability for any action or failure to act by the Trustee
and are not obligated to supervise the performance of the Trustee under this
Agreement or otherwise.
Section 8.12. Appointment of Office or Agency. The Trustee designates
its office at _________________ as its agency in the City of New York where the
Certificates may be surrendered for registration of transfer or exchange, and
presented for final distribution. The Trustee designates its offices at
____________, as the office at which notices and demands to or upon the Trustee
in respect of the Certificates may be served and will notify [THE CERTIFICATE
INSURER AND] the Certificateholders of any change in the location of such office
or agency.
Section 8.13. Exercise of Trustee Powers by [CERTIFICATE INSURER AND]
Certificateholders. Subject to the provisions of this Article VIII, [THE
CERTIFICATE INSURER, OR] the Majority Certificateholders [WITH THE CONSENT OF
THE CERTIFICATE INSURER, WHICH CONSENT MAY NOT BE UNREASONABLY WITHHELD
(PROVIDED THAT SUCH CONSENT OF THE CERTIFICATE INSURER SHALL NOT BE REQUIRED IF
A CERTIFICATE INSURER DEFAULT HAS OCCURRED AND IS CONTINUING),] may direct the
time, method and place of conducting any proceeding relating to the Trust or the
Certificates or for any remedy available to the Trustee in its capacity as
Trustee (and not in its individual capacity) with respect to the Certificates or
exercising any trust or power conferred on the Trustee with respect to the
Certificates of the Trust [(EXCEPT THAT IF A CERTIFICATE INSURER DEFAULT HAS
OCCURRED AND IS CONTINUING, THEN THE DIRECTION OF THE MAJORITY
CERTIFICATEHOLDERS SHALL CONTROL AND THE CERTIFICATE INSURER SHALL HAVE NO RIGHT
TO ACT)]; provided that:
(i) such direction shall not be in conflict with any rule of
law or with this Agreement; and
(ii) the Trustee shall have been provided with indemnity
satisfactory to it (provided that an unsecured letter of indemnity in a
form reasonably satisfactory to the Trustee from a Holder which is an
insurance company having long-term unsecured debt which is rated at
least investment grade (or having a comparable claim-paying ability
rating) and having a minimum net worth of $100,000,000 shall satisfy
such requirement).
[ARTICLE NINE
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
SECTION 9.01. CERTAIN RIGHTS OF THE CERTIFICATE INSURER. BY ACCEPTING
ITS CERTIFICATE, EACH HOLDER OF A CLASS [A] CERTIFICATE AGREES THAT UNLESS A
CERTIFICATE INSURER DEFAULT EXISTS, THE CERTIFICATE INSURER SHALL HAVE THE
FOLLOWING RIGHTS, WITHOUT ANY CONSENT OF THE HOLDERS OF CLASS [A] CERTIFICATES:
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(a) THE RIGHT TO DIRECT FORECLOSURES UPON MORTGAGE LOANS UPON
FAILURE OF THE SERVICER TO DO SO FOR ANY REASON, EXCEPT THAT IN THE
CASE OF SECTION 3.15(b) HEREOF;
(b) THE RIGHT TO REQUIRE THE SELLER TO REPURCHASE OR
SUBSTITUTE FOR, OR TO REQUIRE THE SERVICER TO PURCHASE, MORTGAGE LOANS
PURSUANT TO SECTION 2.05;
(c) THE RIGHT TO GIVE NOTICES OF BREACH OR TO TERMINATE THE
RIGHTS AND OBLIGATIONS OF THE SERVICER PURSUANT TO SECTION 7.01;
(d) THE RIGHT TO DIRECT THE ACTIONS OF THE TRUSTEE DURING THE
CONTINUANCE OF AN EVENT OF DEFAULT PURSUANT TO SECTIONS 7.01 AND 7.02;
AND
(e) THE RIGHT TO DIRECT THE TRUSTEE TO INVESTIGATE CERTAIN
MATTERS PURSUANT TO SECTION 8.02(a)(v).
IN ADDITION, EACH HOLDER OF A CLASS [A] CERTIFICATE AGREES THAT, UNLESS
A CERTIFICATE INSURER DEFAULT EXISTS, THE RIGHT TO REMOVE THE TRUSTEE PURSUANT
TO SECTION 8.07 HEREOF MAY BE EXERCISED BY THE MAJORITY CERTIFICATEHOLDERS ONLY
WITH THE PRIOR WRITTEN CONSENT OF THE CERTIFICATE INSURER, WHICH CONSENT SHALL
NOT BE UNREASONABLY WITHHELD.
SECTION 9.02. TRUSTEE TO ACT SOLELY WITH CONSENT OF THE CERTIFICATE
INSURER.
(a) UNLESS A CERTIFICATE INSURER DEFAULT EXISTS, THE TRUSTEE SHALL NOT:
(i) TERMINATE THE RIGHTS AND OBLIGATIONS OF THE SERVICER AS
SERVICER PURSUANT TO SECTION 7.01 OR CONSENT TO THE RESIGNATION OF THE
SERVICER PURSUANT TO SECTION 6.04;
(ii) TERMINATE ANY SUB-SERVICING AGREEMENTS PURSUANT TO
SECTION 3.03;
(iii) ASSUME ANY SUB-SERVICING AGREEMENTS PURSUANT TO SECTION
3.06; OR
(iv) UNDERTAKE ANY LITIGATION PURSUANT TO EITHER SECTION 7.04
OR 8.02(a)(iii);
WITHOUT THE PRIOR WRITTEN CONSENT OF THE CERTIFICATE INSURER WHICH CONSENT SHALL
NOT BE UNREASONABLY WITHHELD.
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(b) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, AFTER THE
OCCURRENCE OF AN EVENT OF DEFAULT AND UNTIL SUCH TIME AS ALL EVENT OF DEFAULTS
HAVE BEEN CURED, NO PROVISION OF THIS AGREEMENT SHALL REQUIRE THE TRUSTEE TO
TAKE ANY ACTION OR OMIT TO TAKE ANY ACTION AT THE REQUEST OF THE CERTIFICATE
INSURER OR ANY CERTIFICATEHOLDER TO THE EXTENT THE TRUSTEE BELIEVES IN GOOD
FAITH SUCH ACTION OR OMISSION WOULD CAUSE THE TRUSTEE TO VIOLATE ANY LAW OR
REGULATION APPLICABLE TO IT OR TO BREACH THEIR RESPECTIVE OBLIGATIONS OWED BY IT
TO THE CERTIFICATEHOLDERS AND TO THE CERTIFICATE INSURER, PURSUANT TO THIS
AGREEMENT OR OTHERWISE.
SECTION 9.03. TRUST ESTATE AND ACCOUNTS HELD FOR BENEFIT OF THE
CERTIFICATE INSURER AND THE CERTIFICATEHOLDERS. THE TRUSTEE SHALL HOLD THE TRUST
ESTATE AND THE MORTGAGE FILES, AND SHALL MAINTAIN THE ACCOUNTS, FOR THE BENEFIT
OF THE CERTIFICATEHOLDERS AND THE CERTIFICATE INSURER AND ALL REFERENCES IN THIS
AGREEMENT (INCLUDING, WITHOUT LIMITATION, IN SECTIONS 2.02, 2.03, 3.10 AND 4.02)
AND IN THE CERTIFICATES TO THE BENEFIT OF HOLDERS OF THE CERTIFICATES SHALL BE
DEEMED TO INCLUDE THE CERTIFICATE INSURER. THE TRUSTEE SHALL COOPERATE IN ALL
REASONABLE RESPECTS WITH ANY REASONABLE REQUEST BY THE CERTIFICATE INSURER OR
THE CLASS [A] CERTIFICATEHOLDERS (WHEN OTHER THAN THE SELLER, THE SERVICER OR
ANY AFFILIATE THEREOF), FOR ACTION TO PRESERVE OR ENFORCE THE RESPECTIVE RIGHTS
AND INTERESTS OF THE CERTIFICATE INSURER OR THE CLASS [A] CERTIFICATEHOLDERS
(WHEN OTHER THAN THE SELLER, THE SERVICER OR ANY AFFILIATE THEREOF) UNDER THIS
AGREEMENT AND THE CERTIFICATES.
THE SERVICER HEREBY ACKNOWLEDGES AND AGREES THAT IT SHALL SERVICE AND
ADMINISTER THE MORTGAGE LOANS AND ANY REO PROPERTIES FOR THE BENEFIT OF THE
CERTIFICATEHOLDERS AND FOR THE BENEFIT OF THE CERTIFICATE INSURER, AND ALL
REFERENCES IN THIS AGREEMENT (INCLUDING, WITHOUT LIMITATION, IN SECTIONS 3.01(b)
AND 3.22) TO THE BENEFIT OF OR ACTIONS ON BEHALF OF THE CERTIFICATEHOLDERS SHALL
BE DEEMED TO INCLUDE THE CERTIFICATE INSURER. UNLESS A CERTIFICATE INSURER
DEFAULT EXISTS, THE SERVICER SHALL NOT TERMINATE ANY SUB-SERVICING AGREEMENTS
WITHOUT CAUSE OR UNDERTAKE ANY LITIGATION PURSUANT TO SECTION 3.12(c), WITHOUT
THE PRIOR WRITTEN CONSENT OF THE CERTIFICATE INSURER. UNLESS A CERTIFICATE
INSURER DEFAULT EXISTS, NEITHER THE SERVICER NOR THE SELLER SHALL UNDERTAKE ANY
LITIGATION PURSUANT TO SECTION 6.03 (OTHER THAN LITIGATION TO ENFORCE THEIR
RESPECTIVE RIGHTS HEREUNDER) WITHOUT THE PRIOR WRITTEN CONSENT OF THE
CERTIFICATE INSURER.
SECTION 9.04. EFFECT OF PAYMENTS BY THE CERTIFICATE INSURER;
SUBROGATION. ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, ANY PAYMENT WITH
RESPECT TO PRINCIPAL OF OR INTEREST ON THE CLASS [A] CERTIFICATES WHICH IS MADE
WITH MONEYS RECEIVED PURSUANT TO THE TERMS OF THE CERTIFICATE INSURANCE POLICY
SHALL NOT BE CONSIDERED PAYMENT OF THE CLASS [A] CERTIFICATES FROM THE TRUST
ESTATE AND SHALL NOT RESULT IN THE PAYMENT OF OR THE PROVISION FOR THE PAYMENT
OF THE PRINCIPAL OF OR INTEREST ON THE CLASS [A] CERTIFICATES WITHIN THE MEANING
OF SECTION 4.04. THE SELLER, THE
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SERVICER AND THE TRUSTEE ACKNOWLEDGE, AND EACH HOLDER BY ITS ACCEPTANCE OF A
CLASS [A] CERTIFICATE AGREES, THAT WITHOUT THE NEED FOR ANY FURTHER ACTION ON
THE PART OF THE CERTIFICATE INSURER, THE SELLER, THE SERVICER OR THE TRUSTEE, TO
THE EXTENT THE CERTIFICATE INSURER MAKES PAYMENTS, DIRECTLY OR INDIRECTLY, ON
ACCOUNT OF PRINCIPAL OF OR INTEREST ON THE CLASS [A] CERTIFICATES TO THE HOLDERS
OF SUCH CERTIFICATES, THE CERTIFICATE INSURER WILL BE FULLY SUBROGATED TO THE
RIGHTS OF SUCH HOLDERS TO RECEIVE SUCH PRINCIPAL AND/OR INTEREST FROM THE TRUST
ESTATE.
THE TRUSTEE AND THE SERVICER SHALL REASONABLY COOPERATE IN ALL RESPECTS
WITH ANY REASONABLE REQUEST BY THE CERTIFICATE INSURER OR THE CLASS [A]
CERTIFICATEHOLDERS (WHEN OTHER THAN THE SELLER, THE SERVICER OR ANY AFFILIATE
THEREOF) FOR ACTION TO PRESERVE OR ENFORCE THE RESPECTIVE RIGHTS OR INTERESTS OF
THE CERTIFICATE INSURER OR THE CLASS [A] CERTIFICATEHOLDERS UNDER THIS AGREEMENT
WITHOUT LIMITING THE RIGHTS OR AFFECTING THE INTERESTS OF THE HOLDERS AS
OTHERWISE SET FORTH HEREIN.
SECTION 9.05. NOTICES TO THE CERTIFICATE INSURER. ALL NOTICES,
STATEMENTS, REPORTS, CERTIFICATES OR OPINIONS REQUIRED BY THIS AGREEMENT TO BE
SENT TO ANY OTHER PARTY HERETO OR TO THE CERTIFICATEHOLDERS AND, IF NOT
OTHERWISE REQUIRED TO BE SENT TO THE CERTIFICATE INSURER, SHALL ALSO BE SENT TO
THE CERTIFICATE INSURER.
SECTION 9.06. THIRD-PARTY BENEFICIARY. THE CERTIFICATE INSURER SHALL BE
A THIRD-PARTY BENEFICIARY OF THIS AGREEMENT, ENTITLED TO ENFORCE THE PROVISIONS
HEREOF AS IF A PARTY HERETO.]
ARTICLE TEN
TERMINATION
Section 10.01. Termination
(a) Subject to Section 10.02, this Agreement shall terminate upon
notice to the Trustee of either: (i) the later of the distribution to
Certificateholders of the final payment or collection with respect to the last
Mortgage Loan (or advances of same by the Servicer), or the disposition of all
funds with respect to the last Mortgage Loan and the remittance of all funds due
hereunder and the payment of all amounts due and payable to [THE CERTIFICATE
INSURER] and the Trustee or (ii) mutual consent of the Servicer, the Seller[,
THE CERTIFICATE INSURER,] and all Certificateholders in writing; provided,
however, that in no event shall the Trust established by this Agreement
terminate later than twenty-one years after the death of the last surviving
lineal descendant of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, ▇▇., the late President of Standard
Oil Corporation, alive as of the date hereof.
(b) Subject to Section 10.02, the Majority Class R Certificateholders
may, at their option, terminate this Agreement on any Distribution Date
following the date on which the
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aggregate Loan Balance of the Mortgage Loans is less than 10% of the Original
Class [A] Certificate Principal Balance by purchasing, on the Deposit Date
preceding such Distribution Date, and provided that such purchase occurs
pursuant to a "Qualified Liquidation" of the REMIC Trust as such term is defined
in the REMIC Provisions, all of the outstanding Mortgage Loans and REO
Properties at a price equal to the sum of (x) the greater of (i) 100% of the
Loan Balance of each outstanding Mortgage Loan and each REO Property as of the
last day of the preceding Due Period, including the portion of the Loan Balance
of each 90 Day Delinquent FHA Loan for which the Certificateholders have not
received payment and for which a Claim was submitted to the FHA, and (ii) the
fair market value (disregarding accrued interest) of the Mortgage Loans and REO
Properties, determined as the average of three written bids (copies of which
shall be delivered to the Trustee[, THE CERTIFICATE INSURER] and the Servicer)
made by nationally recognized dealers, (y) 30 days' interest thereon at a rate
equal to the weighted average Mortgage Loan Rate for each Class of Class [A]
Certificates within each Pool (or, with respect to the Pool II Mortgage Loans
and the Pool IV Mortgage Loans, interest for the actual number of days since the
last Distribution Date to but not including the upcoming Distribution Date), and
(z) the aggregate amount of (i) all unreimbursed Delinquency Advances, (ii) all
unreimbursed Servicing Advances relating, in the case of unreimbursed Servicing
Advances, only to the Mortgage Loans and REO Properties then held as part of the
Trust Estate, (iii) any accrued and unpaid Servicing Fees and (iv) the
Reimbursement Amount (the "Termination Price").
(c) In connection with any such purchase pursuant to paragraph (b)
above, the Servicer shall deposit in the applicable Certificate Account all
amounts then on deposit in the Collection Account (less amounts permitted to be
withdrawn by the Servicer pursuant to Section 3.11), which deposit shall be
deemed to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by the deposit of the
Termination Price into the related Certificate Account on the applicable Deposit
Date, which amount shall be applied to the distributions to be made on the
Distribution Date immediately following such Deposit Date. Upon such deposit of
the Termination Price, the Trustee shall pay the Servicer the amount described
in clause (z) of the definition of "Termination Price" from the amounts on
deposit in the Certificate Amount.
(d) [IN CONNECTION WITH ANY SUCH PURCHASE BY THE CLASS R
CERTIFICATEHOLDERS PURSUANT TO PARAGRAPH (b) ABOVE, THE CERTIFICATE INSURER
SHALL PROVIDE TO THE TRUSTEE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE TRUSTEE TO THE EFFECT THAT SUCH PURCHASE CONSTITUTES A
"QUALIFIED LIQUIDATION," AS SUCH TERM IS DEFINED IN THE REMIC PROVISIONS.]
(e) Notice of any termination, specifying the Distribution Date upon
which the Trust will terminate shall, after the Trustee's receipt of any such
notice, be given promptly by
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the Trustee by letter to the Certificateholders by first class mail or overnight
delivery during the month of such final distribution two Business Days after the
Determination Date in such month, specifying (i) the Distribution Date upon
which final payment of the Certificates will be made, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of such Certificates at the office of the Trustee therein
specified. The Servicer shall give such notice to the Trustee at the time such
notice is given to the Certificateholders.
(f) In the event that not all of the Class R Certificateholders pay the
Termination Price, the non-purchasing Class R Certificateholder shall not be
entitled to, and the Trustee shall not distribute to such non-purchasing Class R
Certificateholder, any of the remaining Mortgage Loans, REO Properties or
Mortgage files, or any amount in excess of the amount such Class R
Certificateholder would have been entitled to receive on such Distribution Date
had such termination not occurred.
(g) Each Holder is required, and hereby agrees, to return to the
Trustee any Certificate with respect to which the Trustee has provided notice of
the final distribution thereon. In any event, any such Certificate as to which
the Trustee has made the final distribution thereon shall be deemed canceled and
shall no longer be outstanding for any purpose of this Agreement, whether or not
such Certificate is ever returned to the Trustee.
(h) In the event that any amount due to any Class [A] Certificateholder
remains unclaimed, the Trustee shall, at its expense, use its best efforts to
contact each such Class [A] Certificateholder by mail or telephone and if such
efforts fail shall cause to be published once, in the eastern edition of The
Wall Street Journal, notice that such money remains unclaimed. Such funds may be
invested in Permitted Investments, with the Servicer entitled to the proceeds
thereof. If, within six months after such publication, such amount remains
unclaimed, the Class R Certificateholders shall be entitled to all unclaimed
funds and other assets which remain subject hereto and the Trustee upon transfer
of such funds shall be discharged of any responsibility for such funds, and the
Certificateholders shall look to the Class R Certificateholders for payment.
(i) Following any purchase by the Class R Certificateholders as
described above, the Trustee shall promptly release to the Class R
Certificateholders the Mortgage Files for the remaining Mortgage Loans, and the
Trustee shall execute all assignments, endorsements and other instruments
necessary to effectuate such transfer as are furnished by the Class R
Certificateholders.
(j) The Trustee shall return the [CERTIFICATE INSURANCE POLICY] to [THE
CERTIFICATE INSURER] no later than five Business Days following the termination
of this Agreement.
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Section 10.02. Additional Termination Requirements.
(a) In the event the Class R Certificateholders purchase the Mortgage
Loans as provided in Section 10.01(b), the Trust shall be terminated in
accordance with the following additional requirements, unless an Opinion of
Counsel is furnished, addressed to the Trustee and to the effect that the
failure of the REMIC Trust to comply with the requirements of this Section 10.02
will not (x) result in the imposition of taxes on "prohibited transactions" of
the REMIC Trust as defined in Section 860F of the Code or (y) cause the REMIC
Trust to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(i) Within 90 days prior to the time of the making of the
final payment on the Certificates, the Trustee, on behalf the REMIC
Trust shall adopt a plan of complete liquidation of the REMIC Trust,
meeting the requirements of a qualified liquidation under Section 860F
of the Code and any regulations thereunder and shall specify the first
day of such period in a statement attached to the REMIC Trust's final
Tax Returns pursuant to Treasury Regulations Section 1.860F-1;
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the time of making of the final
payment on the Certificates, the Servicer, with the cooperation of the
Trustee, shall conduct a sale of the assets of the Trust Estate (other
than the [CERTIFICATE INSURANCE POLICY]) to the Class R
Certificateholders for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Holders of the Class R Certificates all
cash on hand in any Account not required to be paid to the Servicer,
the Class [A] Certificateholders, or any other Person, and the Trust
shall terminate at that time.
(b) By their acceptance of Class R Certificates, the Holders thereof
hereby agree to authorize the Trustee on behalf the REMIC Trust to adopt a plan
of complete liquidation of the REMIC Trust, which authorization shall be binding
upon all successor Class R Certificateholders.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment. This Agreement may be amended from time to
time by the Servicer, the Seller and the Trustee, without the consent of any of
the Certificateholders [BUT WITH THE PRIOR WRITTEN CONSENT OF THE CERTIFICATE
INSURER (WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD),] (a) to cure any
error or any ambiguity or to correct or supplement any provisions
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herein which may be inconsistent with any other provisions herein; (b) to add to
the duties or obligations of the Servicer hereunder; (c) to maintain or improve
the rating of the Class [A] Certificates then given by a Rating Agency; (d) to
add any other provisions with respect to matters or questions arising under this
Agreement [OR THE CERTIFICATE INSURANCE POLICY], as the case may be (including
specifically amendments or supplements pursuant to the second paragraph of
Section 5.02(b)); (e) to modify, eliminate or add to any of its provisions to
such extent as shall be necessary to maintain the qualification of the REMIC
Trust as a REMIC at all times that any Certificates are outstanding or to avoid
or minimize the risk of the imposition of any tax on the REMIC Trust pursuant to
the Code that would be a claim against the REMIC Trust; provided that in the
case of this clause (e) the Trustee has received an Opinion of Counsel to the
effect that such action is necessary or desirable to maintain such qualification
or to avoid or minimize the risk of the imposition of any such tax; or (f) to
modify, eliminate or add to the provisions of Section 5.02(c) or any other
provisions hereof restricting transfer of the Class R Certificates; provided
that in all such cases such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder [OR THE CERTIFICATE INSURER].
This Agreement may also be amended from time to time by the Servicer,
the Seller and the Trustee, [WITH THE CONSENT OF THE CERTIFICATE INSURER (WHICH
CONSENT SHALL NOT BE UNREASONABLY WITHHELD) AND] the Holders of Certificates
evidencing Voting Interests of each Class affected thereby aggregating not less
than 51%, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates of such Class; provided,
however, that no such amendment shall (a) reduce in any manner the amount of, or
delay the timing of, collections of payments on Mortgage Loans or distributions
which are required to be made on any Certificate without the consent of the
Holder of such Certificate or (b) reduce the aforesaid percentage of each Class
the Holders of which are required to consent to any such amendment, without the
consent of the Holders of all Certificates of such Class then outstanding.
Promptly after the execution of any such amendment or consent pursuant
to the next preceding paragraph, the Trustee shall furnish written notification
of the substance of such amendment to each Certificateholder and each Rating
Agency.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
[AND THE CERTIFICATE Insurer] shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. The
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Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's own rights, duties or immunities under this Agreement.
Section 11.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public recording
office or elsewhere, such recordation to be effected by the Servicer, at its
expense, but only upon the determination of the Servicer accompanied by an
Opinion of Counsel to the effect that such recordation is legally required to
protect the Trustee's interest in the Mortgage Loans.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement, the Trust or the REMIC established pursuant to Section 3.01, nor
entitle such Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in any court for a
partition or winding up of the Trust or the REMIC established pursuant to
Section 3.01, nor otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them.
Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote or in any manner otherwise control the operation and management of the
Trust or the REMIC established pursuant to Section 3.01, or the obligations of
the parties hereto; nor shall anything herein set forth, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken by the parties to this Agreement pursuant to any
provision hereof.
No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Interest shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity (provided that an unsecured letter of indemnity in a form
reasonably satisfactory to the Trustee from a Holder which is an insurance
company having long-term unsecured debt which is rated at
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least investment grade (or having a comparable claim-paying ability rating) and
having a minimum net worth of $100,000,000 shall satisfy such requirement) as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee for 15 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding. It is understood and intended, and expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates shall have any right in any
manner whatever by virtue of any provision of this Agreement to affect, disturb
or prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
which priority or preference is not otherwise provided for herein, or to enforce
any right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 11.04. Governing Law; Jurisdiction. This Agreement shall be
construed in accordance with the laws of the State of New York (without regard
to conflict of laws principles and the application of the laws of any other
jurisdiction), and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws. With respect to any claim
arising out of this Agreement each party irrevocably submits to the exclusive
jurisdiction of the courts of the state of New York and the United States
District Court located in the borough of Manhattan, city of New York, and each
party irrevocable waives any objection which it may have at any time to the
laying of venue of any suit, action or proceeding arising out of or relating
hereto brought in any such courts, irrevocably waives any claim that any such
suit, action or proceeding brought in any such court has been brought in any
inconvenient forum and further irrevocably waives the right to object, with
respect to such claim, suit, action or proceeding brought in any such court,
that such court does not have jurisdiction over such party; provided that
service of process has been made by any lawful means.
Section 11.05. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered to (a) in the case of the Seller, the Servicer and the Claims
Administrator, at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
___________________ (telecopy number: 914-592-7101); (b) in the case of the
Trustee, at the Corporate Trust Office at _____________________________; [(c) IN
THE CASE OF THE CERTIFICATE INSURER, ______________________________________;]
(d) in the case of S&P, to Standard & Poor's Ratings Group, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Mortgage Surveillance Group; and (e)
in the case of Moody's, to ▇▇▇▇▇'▇ Investors Service Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Residential Mortgage Pass-Through Monitoring,
or, as to each party, at such other address as shall be designated by such
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party in a written notice to each other party. Any notice required or permitted
to be mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at its address shown in the Certificate Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Certificateholder receives such notice.
Notice of any Event of Default shall be given by telecopy and by certified mail.
Any notice or other document required to be delivered or mailed by the Trustee
to any Rating Agency shall be given on a best efforts basis and only as a matter
of courtesy and accommodation and the Trustee shall have no liability for
failure to deliver such notice or document to any such Rating Agency.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or the Certificates or
the rights of the Holders thereof.
Section 11.07. Article and Section References. All article and section
references used in this Agreement, unless otherwise provided, are to articles
and sections in this Agreement.
Section 11.08. Notice to S&P and Moody's.
(a) The Trustee and the Servicer shall each be obligated to use their
best reasonable efforts promptly to provide notice to S&P and Moody's with
respect to each of the following of which a Responsible Officer of the Trustee
or Servicer, as the case may be, has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured or waived;
(iii) The resignation or termination of the Servicer or the
Trustee;
(iv) The final payment to Holders of the Certificates of any
Class;
(v) Any change in the location of any Account; and
(vi) Any event that would result in the inability of the
Trustee to make advances regarding delinquent Mortgage Loans.
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(b) In addition, (i) the Trustee shall promptly furnish to each Rating
Agency copies of the following:
(A) Each annual report to Certificateholders described in
Section 4.05; and
(B) Each Statement to Certificateholders described in Section
4.05; and
(ii) the Servicer shall promptly furnish to each Rating Agency copies of the
following:
(A) Each annual statement as to compliance described in
Section 3.19;
(B) Each annual independent public accountants' servicing
report described in Section 3.20;
(C) Each Collection Account Statement described in Section
3.18;
(D) Each notice delivered pursuant to Section 7.01(a) which
relates to the fact that the Servicer has not made a Delinquency
Advance; and
(E) On a quarterly basis, a report listing each Mortgage Loan
that is 30 days or more Delinquent that is secured by a Small Mixed-Use
Property identifying such Mortgage Loan by loan number and principal
balance and specifying the number of days delinquent.
Section 11.09. Further Assurances. Notwithstanding any other provision
of this Agreement, [NEITHER THE CERTIFICATE INSURER NOR] the Class [A]
Certificateholders nor the Trustee shall have any obligation to consent to any
amendment or modification of this Agreement unless it has been provided
reasonable security or indemnity against its out-of-pocket expenses (including
reasonable attorneys' fees) to be incurred in connection therewith. [TO THE
EXTENT PERMITTED BY LAW, EACH OF THE SELLER, THE TRUSTEE, AND THE SERVICER
AGREES THAT IT WILL, FROM TIME TO TIME, EXECUTE, ACKNOWLEDGE AND DELIVER, OR
CAUSE TO BE EXECUTED, ACKNOWLEDGED AND DELIVERED, SUCH FURTHER INSTRUMENTS AS
THE CERTIFICATE INSURER MAY REASONABLY REQUEST TO EFFECTUATE THE INTENTION OF OR
FACILITATE THE PERFORMANCE OF THIS AGREEMENT.]
Section 11.10. Benefits of Agreement. Nothing in this Agreement or in
the Certificates, expressed or implied, shall give to any Person, other than the
Certificateholders[, THE CERTIFICATE INSURER] and the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
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Section 11.11. Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
agent duly appointed in writing; and such action shall become effective when
such instrument or instruments are delivered to the Trustee, the Seller, [THE
CERTIFICATE INSURER] and the Servicer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "act" of the Certificateholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Agreement and conclusive in
favor of the Trustee and the Trust, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by a signer acting in a capacity other than his or her
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, omitted or suffered to be done by the Trustee or the
Trust in reliance thereon, whether or not notation of such action is made upon
such Certificates.
Section 11.12. Appointment of Tax Matters Person. The Holders of the
Class R Certificates hereby appoint the Trustee to act, as their agent, as the
Tax Matters Person for the REMIC Trust for all purposes of the Code. The Tax
Matters Person will perform, or cause to be performed, such duties and take, or
cause to be taken, such actions as are required to be performed or taken by the
Tax Matters Person under the Code. The Holders of the Class R Certificates may
hereafter appoint a different entity as their agent, or may appoint a Class R
Certificateholder to be the Tax Matters Person for the REMIC Trust.
Section 11.13. Certificates Nonassessable and Fully Paid. The parties
agree that the Certificateholders shall not be personally liable for the
obligations of the Trust, that the beneficial ownership interests represented by
the Certificates shall be nonassessable for any losses or expenses of the Trust
or for any reason whatsoever, and that Certificates upon
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execution, authentication and delivery thereof by the Trustee pursuant to
Section 2.06 are and shall be deemed fully paid.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers, all as of the day and year first
above written.
CITYSCAPE CORP., as Seller, Servicer and
Claims Administrator
By:____________________________________
Name:
Title:
[TRUSTEE], as Trustee and not in its
individual capacity
By:____________________________________
Name:
Title:
153
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF __________ )
On __________ __, 199_ before me, ________________, Notary Public,
personally appeared ________________, proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that [HE/SHE] executed the same in [HIS/HER] authorized
capacity, and that by [HIS/HER] signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
_______________________________
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF __________ )
On __________ __, 199_ before me, ________________, Notary Public,
personally appeared ________________, proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that [HE/SHE] executed the same in [HIS/HER] authorized
capacity, and that by [HIS/HER] signature on the instrument the person, or the
entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
_______________________________
164
Schedule I
List of Sub-Servicers
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Schedule II
Representations and Warranties of Seller
Regarding Subsequent Mortgage Loans
A. The Seller represents and warrants to the Trustee[, THE CERTIFICATE
INSURER] and the Certificateholders as of any Subsequent Transfer Date
(except as otherwise expressly stated) that as to each Subsequent
Mortgage Loan conveyed to the Trust by it:
(i) no Subsequent Mortgage Loan provides for negative
amortization;
(ii) each Subsequent Mortgage Loan which is an Adjustable Rate
Mortgage Loan has a Mortgage Loan Rate based on a ___-month Index and
provides for _____% rate cap every 6 months;
(iii) no Subsequent Mortgage Loan which is an Adjustable Rate
Mortgage Loan has a Gross Margin less than _____%;
(iv) each Subsequent Mortgage Loan will have been serviced
since origination or purchase by the Servicer;
(v) no Subsequent Mortgage Loan has been originated for the
purpose of facilitating the purchase of real estate owned by the
originator;
(vi) no Subsequent Mortgage Loan will have a Cut-off Date of
later than __________ __, 199_; and
(vii) each Subsequent Mortgage Loan which is an FHA Loan is
authorized and approved by the FHA for participation in the FHA Title I
loan program and the Seller holds a valid Contract of Insurance from
the FHA for such purposes.
B. The Seller represents and warrants to the Trustee[, THE CERTIFICATE
INSURER] and the Certificateholders that following the purchase of all
Subsequent Mortgage Loans by the Trust, as of the end of the Funding
Period:
(i) the Pool I and Pool III Mortgage Loans (including the
Subsequent Mortgage Loans with respect to each Pool):
(a) will have a weighted average Mortgage Loan Rate
of at least _____% and _____%, respectively;
(b) will have a weighted average original term to
stated maturity of not more than _____ months and _____
months, respectively;
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(c) will have a weighted average Combined
Loan-to-Value Ratio of not more than _____% and _____%,
respectively, and a weighted average second loan-to-value
ratio of not less than _____% and _____%, respectively;
(d) will have no Mortgage Loan with a Loan Balance
less than $__________ and $__________, respectively, or
greater than $__________ and $__________, respectively;
(e) will not have in excess of _____% and _____%,
respectively, by aggregate Loan Balance Mortgage Loans secured
by non-owner occupied Mortgaged Properties;
(f) will not have a concentration in a single zip
code in excess of _____% and _____%, respectively, by
aggregate Loan Balance;
(g) will not have an aggregate concentration in
excess of ___% in zip codes beginning with the following 3
digits: _________________________;
(h) will not have a concentration in a single State,
other than New York, in excess of _____% and _____%,
respectively, by aggregate Loan Balance;
(i) will not have a concentration in New York in
excess of _____% and _____%, respectively;
(j) with respect to Pool I Mortgage Loans, no more
than _____%, _____% and _____% of the aggregate Loan Balance
of Pool I Mortgage Loans will be secured by Mortgaged
Properties that are two-family properties or condominiums
(less than four stories), three- and four-family properties or
condominiums (greater than four stories), and mobile homes or
manufactured housing treated as real estate under applicable
state law, respectively;
(k) with respect to Pool I Mortgage Loans, at least
_____% by Aggregate Principal Balance Mortgage Loans secured
by fee simple interests in detached single family dwelling
units (including units in de minimis planned unit
developments);
(l) with respect to Pool I Mortgage Loans, will have
no more than _____%, _____% and _____% by Aggregate Principal
Balance Mortgage Loans graded by the originator as Class C,
Class C- and Class D, respectively (_____%, _____% and _____%,
respectively, with respect to Pool III Mortgage Loans), and no
less than _____% and _____% by Aggregate Principal Balance
Mortgage Loans graded by the originator as Class A (including
in Class A any loan graded Class A-) and Class B (including in
Class B any loan graded Class B-),
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respectively (_____% and _____%, respectively, with respect to
Pool III Mortgage Loans);
(m) with respect to Pool I Mortgage Loans, will have
no more than _____% and _____% by Aggregate Principal Balance
Mortgage Loans to self-employed borrowers and non-income
verified Mortgage Loans, respectively (_____% and _____%,
respectively, with respect to Pool III Mortgage Loans);
(n) will have no more than _____% and _____%,
respectively, by Aggregate Principal Balance Mortgage Loans
that are based on a 360-month amortization schedule and has a
balloon payment prior to month 60;
(o) will have no more than _____% and _____%,
respectively, by Aggregate Principal Balance Mortgage Loans
that are based on a 360 month amortization schedule and have a
balloon payment between months 61-120;
(p) will have no more than _____% and _____%,
respectively, by Aggregate Principal Balance Mortgage Loans
that are based on a 360 month amortization schedule and have a
balloon payment between months 121-150;
(q) will have no more than _____% and _____%,
respectively, by Aggregate Principal Balance Mortgage Loans
that are based on a 360 month amortization schedule and have a
balloon payment between months 151-180;
(r) will have no more than _____% and _____%,
respectively, by Aggregate Principal Balance Mortgage Loans
that are based on a 360-month amortization schedule and have a
balloon payment between months 181-240;
(s) will have no less than _____% and _____%,
respectively, by Aggregate Principal Balance Mortgage Loans
that provide for the payment of principal and interest on a
level basis to fully amortize such Mortgage Loan over its
stated maturity; and
(t) will have a weighted average term since
origination not in excess of _____ months and _____ months,
respectively.
(ii) the Pool II and Pool IV Mortgage Loans (including the
Subsequent Mortgage Loans with respect to each Pool):
(a) will have a weighted average Mortgage Loan Rate
of at least _____% and _____%, respectively;
(b) will have a weighted average original term to
stated maturity of not more than 360 months;
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(c) will have a weighted average Combined
Loan-to-Value Ratio of not more than _____% and _____%,
respectively, and a weighted average second loan-to-value
ratio of not less than _____% and _____%, respectively;
(d) will have no Mortgage Loan with a Principal
Balance less than $__________ and $__________, respectively,
or more than $__________ and $__________, respectively;
(e) will have not in excess of _____% and _____%,
respectively, by Aggregate Principal Balance Mortgage Loans
secured by non-owner occupied Mortgage Properties;
(f) will not have a concentration in a single ZIP
code in excess of _____% and _____%, respectively, by
Aggregate Principal Balance;
(g) will not have an aggregate concentration in
excess of ___% in ZIP codes beginning with the following 3
digits: ________________________;
(h) will not have a concentration in a single State,
other than New York, in excess of _____% and _____%,
respectively, by Aggregate Principal Balance;
(i) will not have a concentration in New York in
excess of _____% and _____%, respectively;
(j) with respect to Pool II Mortgage Loans, will not
have in excess of _____%, _____% and _____% by Aggregate
Principal Balance Mortgage Loans secured by Mortgaged
Properties that are two-family properties or condominiums
(less than four stories), three- and four-family properties or
condominiums (greater than four stories) and mobile homes or
manufactured housing treated as real estate under applicable
state law, respectively (_____%, _____% and _____%,
respectively, with respect to Pool IV Mortgage Loans);
(k) will have at least _____% and _____%,
respectively, by Aggregate Principal Balance Mortgage Loans
secured by fee simple interests in detached single-family
dwelling units (including units in de minimis planned unit
development);
(l) will have a weighted average Gross Margin of at
least _____%;
(m) with respect to Pool II Mortgage Loans, will have
no more than _____%, _____% and _____% by Aggregate Principal
Balance Mortgage Loans graded by the originator as Class C,
Class C- and Class D, respectively (_____%, _____% and _____%,
respectively, with respect to Pool IV Mortgage Loans), and
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no less than _____% and _____% by Aggregate Principal Balance
Mortgage Loans graded by the originator as Class A (including
in Class A any loan graded Class A-) and Class B (including in
Class B any loan graded Class B-), respectively (_____%,
_____% and _____%, respectively, with respect to Pool IV
Mortgage Loans);
(n) with respect to Pool II Mortgage Loans, will have
no more than _____% and _____% by Aggregate Principal Balance
Mortgage Loans to self-employed borrowers and non-income
verified Mortgage Loans, respectively (_____% and _____%,
respectively, with respect to Pool IV Mortgage Loans);
(o) will have no more than _____% and _____%,
respectively, by Aggregate Principal Balance Mortgage Loans
that are based on a 360-month amortization schedule and have a
180-month balloon payment;
(p) will have no less than _____% and _____%,
respectively, by Aggregate Principal Balance Mortgage Loans
that have no balloon payment; and
(q) will have a weighted average term since
origination not in excess of _____ months and _____ months,
respectively.
For purposes of this Schedule II, "Aggregate Principal Balance" means
the aggregate of the Loan Balances of each of the Pool I Mortgage Loans, Pool II
Mortgage Loans, Pool III Mortgage Loans and Pool IV Mortgage Loans (determined
as of the Cut-off Date for the Initial Pool I Mortgage Loans, Initial Pool II
Mortgage Loans, Initial Pool III Mortgage Loans and Initial Pool IV Mortgage
Loans, and as of the Subsequent Cut-off Date for the Subsequent Pool I Mortgage
Loans, Subsequent Pool II Mortgage Loans, Subsequent Pool III Mortgage Loans and
Subsequent Pool IV Mortgage Loans), respectively.
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