GREENPOINT MORTGAGE SECURITIES INC.,
as Depositor and Transferor,
GREENPOINT MORTGAGE FUNDING, INC.,
as Seller and Servicer,
and
[TRUSTEE],
as Trustee
---------------------------
POOLING AND SERVICING AGREEMENT
Dated as of __________, 200_
---------------------------
Revolving Home Equity Loan Asset-Backed Certificates
Series 200_-_
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
Section 1.01. Definitions....................................................1
Section 1.02. Interest Calculations.........................................20
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates;
Tax Treatment
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to Fund
Advances Under Credit Line Agreements ........................20
Section 2.02. Acceptance by Trustee; Retransfer of Mortgage Loans...........24
Section 2.03. Representations and Warranties Regarding the Servicer and the
Transferor....................................................26
Section 2.04. Representations and Warranties of the Transferor Regarding
the Mortgage Loans; Retransfer of Certain Mortgage Loans......28
Section 2.05. Covenants of the Depositor and the Transferor.................34
Section 2.06. Retransfers of Mortgage Loans at Election of Transferor.......34
Section 2.07. Execution and Authentication of Certificates..................36
Section 2.08. Tax Treatment.................................................36
Section 2.09. Representations and Warranties of the Depositor...............36
Section 2.10. Conveyance of the Subsequent Mortgage Loans...................37
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Servicer..................................................39
Section 3.02. Collection of Certain Mortgage Loan Payments..................40
Section 3.03. Withdrawals from the Collection Account.......................42
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses.42
Section 3.05. Assumption and Modification Agreements........................43
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans........................................44
Section 3.07. Trustee to Cooperate..........................................44
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer......................................................45
Section 3.09. Annual Statement as to Compliance.............................46
Section 3.10. Annual Servicing Report.......................................46
Section 3.11. Annual Opinion of Counsel.....................................46
i
Section 3.12. Access to Certain Documentation and Information Regarding the
Mortgage Loans................................................46
Section 3.13. Maintenance of Certain Servicing Insurance Policies...........47
Section 3.14. Reports to the Securities and Exchange Commission.............47
Section 3.15. Tax Returns...................................................47
Section 3.16. Information Required by the Internal Revenue Service Generally
and Reports of Foreclosures and Abandonments of Mortgaged
Property......................................................48
ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate.........................................48
Section 4.02. Claims upon the Policy........................................51
Section 4.03. Spread Account................................................52
Section 4.04. Effect of Payments by the Credit Enhancer; Subrogation........52
ARTICLE V
Payments and Statements
to Certificateholders; Rights of Certificateholders
Section 5.01. Distributions.................................................53
Section 5.02. Calculation of the Class A Certificate Rate...................56
Section 5.03. Statements to Certificateholders..............................56
Section 5.04. Rights of Certificateholders..................................58
Section 5.05. Funding Account...............................................58
ARTICLE VI
The Certificates
Section 6.01. The Certificates..............................................59
Section 6.02. Registration of Transfer and Exchange of Investor
Certificates; Appointment of Registrar........................60
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates.............62
Section 6.04. Persons Deemed Owners.........................................62
Section 6.05. Restrictions on Transfer of Transferor Certificates...........62
Section 6.06. Appointment of Paying Agent...................................64
Section 6.07. Acceptance of Obligations.....................................65
ARTICLE VII
The Servicer, the Transferor and the Depositor
Section 7.01. Liability of the Transferor, the Servicer and the Depositor...65
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer, the Transferor or the Depositor.............65
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Section 7.03. Limitation on Liability of the Servicer and Others............65
Section 7.04. Servicer Not to Resign........................................66
Section 7.05. Delegation of Duties..........................................66
Section 7.06. Indemnification of the Trust by the Servicer..................67
Section 7.07. Indemnification of the Trust by the Transferor................67
Section 7.08. Limitation on Liability of the Transferor.....................67
Section 7.09. Limitation on Liability of the Depositor......................68
ARTICLE VIII
Servicing Termination
Section 8.01. Events of Servicing Termination...............................68
Section 8.02. Trustee to Act; Appointment of Successor......................70
Section 8.03. Notification to Certificateholders............................71
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee.............................................71
Section 9.02. Certain Matters Affecting the Trustee.........................72
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.........74
Section 9.04. Trustee May Own Certificates..................................75
Section 9.05. Servicer to Pay Trustee's Fees and Expenses; Servicer to
Indemnify.....................................................75
Section 9.06. Eligibility Requirements for Trustee..........................75
Section 9.07. Resignation or Removal of Trustee.............................75
Section 9.08. Successor Trustee.............................................76
Section 9.09. Merger or Consolidation of Trustee............................77
Section 9.10. Appointment of Co-Trustee or Separate Trustee.................77
Section 9.11. Limitation of Liability.......................................78
Section 9.12. Trustee May Enforce Claims Without Possession of Certificates.78
Section 9.13. Suits for Enforcement.........................................79
ARTICLE X
Termination
Section 10.01. Termination...................................................79
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events.....................................81
Section 11.02. Additional Rights Upon the Occurrence of Certain Events.......83
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ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment.....................................................84
Section 12.02. Recordation of Agreement......................................86
Section 12.03. Limitation on Rights of Certificateholders....................86
Section 12.04. Governing Law.................................................87
Section 12.05. Notices.......................................................87
Section 12.06. Severability of Provisions....................................88
Section 12.07. Assignment....................................................88
Section 12.08. Certificates Nonassessable and Fully Paid.....................88
Section 12.09. Third-Party Beneficiaries.....................................88
Section 12.10. Counterparts..................................................88
Section 12.11. Effect of Headings and Table of Contents......................88
Section 12.12. Insurance Agreement...........................................88
EXHIBIT
EXHIBIT A - FORM OF CERTIFICATE..............................................A-1
EXHIBIT B - FORM OF TRANSFEROR CERTIFICATE...................................B-1
EXHIBIT C - MORTGAGE LOAN SCHEDULE...........................................C-1
EXHIBIT D - RESERVED.........................................................D-1
EXHIBIT E - ANNUAL OPINION OF COUNSEL........................................E-1
EXHIBIT F - FORM OF CREDIT LINE AGREEMENT....................................F-1
EXHIBIT G - RESERVED.........................................................G-1
EXHIBIT H - RESERVED.........................................................H-1
EXHIBIT I - LETTER OF REPRESENTATIONS........................................I-1
EXHIBIT J - RESERVED.........................................................J-1
EXHIBIT K - FORM OF INVESTMENT LETTER........................................K-1
EXHIBIT L - FORM OF REQUEST FOR RELEASE......................................L-1
iv
This Pooling and Servicing Agreement, dated as of __________, 200_, among
GREENPOINT MORTGAGE SECURITIES INC., as Depositor (in such capacity, the
"Depositor") and as Transferor (in such capacity, the "Transferor"), GREENPOINT
MORTGAGE FUNDING, INC., as Seller and Servicer (in such capacities, the "Seller"
and the "Servicer"), and [TRUSTEE], as Trustee (the "Trustee"),
W I T N E S S E T H T H A T:
In consideration of the mutual agreements herein contained, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth in this Article.
Accelerated Principal Distribution Amount: With respect to any Payment
Date, the amount, if any, required to reduce the Class A Certificate Principal
Balance (after giving effect to the distribution of all other amounts actually
distributed on the Class A Certificates on such Payment Date) so that the
Invested Amount (immediately following such Payment Date) exceeds the Class A
Certificate Principal Balance (as so reduced) by the Required
Overcollateralization Amount.
Additional Balance: As to any HELOC Mortgage Loan and day, the aggregate
amount of all Draws conveyed to the Trust pursuant to Section 2.01.
Adjustment Date: With respect to any HELOC Mortgage Loan and Interest
Period, the second LIBOR Business Day preceding the first day of such Interest
Period.
Affiliate: With respect to any specified Person, any other Person
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" means the power to direct the management
and policies of a Person, directly or indirectly, whether through ownership of
voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
Agreement: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
Alternative Principal Payment: As to any Payment Date, the greater of (x)
___% of the Class A Certificate Principal Balance immediately prior to the
Payment Date or (y) the amount (but not less than zero) equal to Principal
Collections for such Payment Date less the aggregate of Draws under the Credit
Line Agreements during the related Collection Period.
Appraised Value: As to any Mortgaged Property, the value established by a
drive by inspection of such Mortgaged Property made to establish compliance with
the
underwriting criteria then in effect in connection with the application for the
Mortgage Loan secured by such Mortgaged Property.
Asset Balance: As to any Mortgage Loan, other than a Liquidated Mortgage
Loan, and day, the related Cut-Off Date Asset Balance, plus (i) with respect to
each HELOC Mortgage Loan, any Additional Balance in respect of such HELOC
Mortgage Loan, minus (ii) with respect to each Mortgage Loan, all collections
credited as principal against the Asset Balance of any such Mortgage Loan in
accordance with the related Loan Agreement. For purposes of this definition, a
Liquidated Mortgage Loan shall be deemed to have an Asset Balance equal to the
Asset Balance of the related Mortgage Loan immediately prior to the final
recovery of related Liquidation Proceeds and an Asset Balance of zero
thereafter.
Assignment of Mortgage: With respect to any Mortgage, an assignment,
notice of transfer or equivalent instrument, in recordable form, sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect the sale of the Mortgage to the Trustee, which assignment,
notice of transfer or equivalent instrument may be in the form of one or more
blanket assignments covering the Mortgage Loans secured by Mortgaged Properties
located in the same jurisdiction.
Authorized Newspaper: A newspaper of general circulation in the Borough of
Manhattan, The City of New York, printed in the English language and customarily
published on each Business Day, whether or not published on Saturdays, Sundays
and holidays.
BIF: The Bank Insurance Fund, as from time to time constituted, created
under the Financial Institutions Reform, Recovery and Enhancement Act of 1989,
or if at any time after the execution of this instrument the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.
Billing Cycle: With respect to any Mortgage Loan and Collection Period,
the billing period specified in the related Loan Agreement and with respect to
which amounts billed are received during such Collection Period.
Book-Entry Certificate: Any Investor Certificate registered in the name of
the Depository or its nominee, ownership of which is reflected on the books of
the Depository or on the books of a Person maintaining an account with such
Depository (directly or as an indirect participant in accordance with the rules
of such Depository).
Business Day: Any day other than a Saturday, a Sunday or other day on
which banking institutions in the State of New York, California or the State in
which the Corporate Trust Office is located are required or authorized by law or
executive order to be closed.
Certificate: A Class A Certificate, a Class S Certificate or a Transferor
Certificate.
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Certificate Owner: The Person who is the beneficial owner of a Book-Entry
Certificate.
Certificate Register and Certificate Registrar: The register maintained
and the registrar appointed pursuant to Section 6.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, direction, waiver or request pursuant to this Agreement, (x)
any Investor Certificate registered in the name of the Transferor, or any Person
known to a Responsible Officer to be an Affiliate of either the Depositor or the
Transferor and (y) any Investor Certificate for which the Transferor, or any
Person known to a Responsible Officer to be an Affiliate of either such entity
is the Certificate Owner shall be deemed not to be outstanding (unless to the
knowledge of a Responsible Officer (i) the Transferor, or such Affiliate is
acting as trustee or nominee for a Person who is not an Affiliate of the
Transferor and who makes the voting decision with respect to such Investor
Certificate or (ii) the Transferor, or such Affiliate is the Certificate Owner
of all the Investor Certificates) and the Percentage Interest evidenced thereby
shall not be taken into account in determining whether the requisite amount of
Percentage Interests necessary to effect any such consent, direction, waiver or
request has been obtained.
Class A Certificate: Any certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A-1 hereto.
Class A Certificate Carry Forward Interest: As to any Payment Date, the
amount, if any, by which interest accrued on the Class A Certificates at the
Class A Certificate Rate (without giving effect to the proviso in the definition
thereof) for the related Interest Period exceeds the Class A Interest Payment
Cap.
Class A Certificate Distribution Amount: As to any Payment Date, the sum
of all amounts to be distributed to the Holders of Class A Certificates pursuant
to Article V and Article hereof.
Class A Certificate Interest: With respect to any Payment Date, interest
for the related Interest Period at the applicable Class A Certificate Rate on
the Class A Certificate Principal Balance as of the first day of such Interest
Period (after giving effect to the distributions made on the first day of such
Interest Period).
Class A Certificate Principal Balance: With respect to any Payment Date,
(a) the Original Class A Certificate Principal Balance less (b) the aggregate of
amounts actually distributed as principal on the Class A Certificates.
Class A Certificate Rate: With respect to the first Interest Period,
_____%, and for any subsequent Interest Period, the sum of (a) LIBOR as of the
second LIBOR Business Day prior to the first day of such Interest Period and (b)
_____%; provided, however, that in no event shall the Class A Certificate Rate
with respect to any Interest Period exceed the Maximum Rate for such Interest
Period.
3
Class A Certificateholder: The Holder of a Class A Certificate.
Class A Interest Payment Cap: With respect to any Payment Date, an amount
equal to accrued interest on the Class A Certificate Principal Balance for the
related Interest Period at the Maximum Rate.
Class S Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A-2.
Class S Certificate Interest: With respect to any Payment Date, interest
for the related Interest Period at the Class S Certificate Rate on the Class S
Notional Amount as of the first day of such Interest Period (after giving effect
to distributions made on the first day of such Interest Period).
Class S Certificateholder: The Holder of a Class S Certificate.
Class S Notional Amount: With respect to any Payment Date, the Class A
Certificate Principal Balance for such Payment Date (before giving effect to
distributions made on such Payment Date).
Closed-End Mortgage Loan: Each Mortgage Loan originated under a Loan
Agreement providing for a single advance of funds on the date of origination and
no additional advances during the term of such Mortgage Loan.
Closing Date: ___________, 200_.
Code: The Internal Revenue Code of 1986, as the same may be amended from
time to time (or any successor statute thereto).
Collection Account: The custodial account or accounts created and
maintained for the benefit of the Investor Certificateholders and the Credit
Enhancer pursuant to Section 3.02(b). The Collection Account shall be an
Eligible Account.
Collection Period: With respect to any Payment Date and any Mortgage Loan,
the calendar month preceding such Payment Date.
Combined Loan-to-Value Ratio: (i) With respect to any HELOC Mortgage Loan
as of any date, the percentage equivalent of a fraction, the numerator of which
is the sum of (A) the Credit Limit and (B) the outstanding principal balance as
of the date of application for the related Credit Line Agreement (or as of any
subsequent date, if any, as of which such outstanding principal balance may be
determined in connection with an increase in the Credit Limit for such HELOC
Mortgage Loan) of any mortgage loan or mortgage loans that are senior in
priority to the HELOC Mortgage Loan and which are secured by the same Mortgaged
Property and the denominator of which is (C) the Appraised Value of the related
Mortgaged Property as set forth in the Mortgage File as of the date of the
appraisal or on such subsequent date, if any, or (D) in the case of a Mortgage
Property purchased within one year of the date of execution of the related
Credit Line Agreement, the lesser of (x) the Appraised Value of the related
Mortgaged
4
Property as set forth in the loan files as of the date of the appraisal and (y)
the purchase price of such Mortgaged Property and (ii) with respect to any
Closed-End Mortgage Loan Mortgage Loan as of any date, the percentage equivalent
of a fraction, the numerator of which is the sum of (A) the original principal
balance of such Closed-End Mortgage Loan and (B) any outstanding principal
balances senior to such Closed-End Mortgage Loan (calculated at the rate of
application for the Closed-End Mortgage Loan) and the denominator of which is
(C) the Appraised Value of the related Mortgaged Property as set forth in the
Mortgage File as of the date of the appraisal or (D) in the case of a Mortgaged
Property purchased within one year of the origination of the related Closed-End
Mortgage Loan, the lesser of (x) the Appraised Value of the related Mortgaged
Property as set forth in the Mortgage Files as of the date of the appraisal and
(y) the purchase price of such Mortgaged Property.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate business shall be administered, which office
on the Closing Date is located at [Address].
Credit Enhancement Draw Amount: As to any Payment Date, an amount equal to
the sum of (1) the amount by which (a) the amount to be distributed to Investor
Certificateholders pursuant to Sections 5.01(a)(iii) and 5.01(a)(iv) exceeds (b)
the sum of (i) the amount of Investor Interest Collections on deposit in the
Collection Account on the Business Day preceding such Payment Date that is
available to be applied therefor, (ii) the amount, if any, deposited in the
Collection Account in respect of such Payment Date pursuant to Section 4.05,
(iii) the amount transferred to the Collection Account from the Funding Account
pursuant to Section 5.05(c)(iii) and (iv) any amount transferred from the Spread
Account to the Collection Account pursuant to Section 4.03, (2) the Guaranteed
Principal Distribution Amount and (3) any Preference Claim for such Payment
Date.
Credit Enhancer: [Credit Enhancer], a [State] monoline stock insurance
company, any successor thereto or any replacement credit enhancer substituted
pursuant to Section 4.03.
Credit Enhancer Default: The failure by the Credit Enhancer to make a
payment required under the Policy in accordance with the terms thereof.
Credit Limit: As to any HELOC Mortgage Loan, the maximum Asset Balance
permitted under the terms of the related Credit Line Agreement.
Credit Limit Utilization Rate: As to any HELOC Mortgage Loan, the
percentage equivalent of a fraction the numerator of which is the Cut-Off Date
Asset Balance for such Mortgage Loan and the denominator of which is the related
Credit Limit.
Credit Line Agreement: With respect to any HELOC Mortgage Loan, the
related home equity line of credit agreement and promissory note executed by the
related Mortgagor and any amendment or modification thereof.
5
Custodial Agreement: Any Custodial Agreement between any Custodian and the
Trustee, which is reasonably acceptable in form and substance to the Credit
Enhancer, relating to the custody of the Mortgage Loans and the Related
Documents.
Custodian: Any custodian appointed by the Trustee under a Custodial
Agreement to maintain all or a portion of the Mortgage Files pursuant to Section
2.01(b).
Cut-Off Date: With respect to each Initial Mortgage Loan, __________, 200_
and with respect to each Subsequent Mortgage Loan, the date on which such
Subsequent Mortgage Loan was transferred to the Trust.
Cut-Off Date Asset Balance: With respect to any Mortgage Loan, the unpaid
principal balance thereof as of the Cut-Off Date.
Cut-Off Date Pool Balance: The Pool Balance calculated as of the Cut Off
Date.
Defective Mortgage Loan: A Mortgage Loan subject to retransfer pursuant to
Section 2.02, 2.04 or 2.09.
Definitive Certificates: As defined in Section 6.02(c).
Delivery Event: As defined in Section 2.01.
Depositor: GreenPoint Mortgage Securities Inc. or its successor in
interest.
Depository: The initial Depository shall be The Depository Trust Company,
the nominee of which is Cede & Co., as the registered Holder of Class A
Certificates evidencing $__________ in initial aggregate principal amount of the
Class A Certificates and as the registered Holder of Class S Certificates
evidencing $__________ in initial aggregate notional amount of the Class S
Certificates. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the UCC of the State of New York.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Payment Date, the third Business
Day prior to such Payment Date.
Payment Date: The [fifteenth] day of each month, or if such day is not a
Business Day, then the next Business Day, beginning in the month immediately
following the month of the initial issuance of the Certificates.
Draw: With respect to any HELOC Mortgage Loan Mortgage Loan, an additional
borrowing by the Mortgagor subsequent to the Cut-Off Date in accordance with the
related Mortgage Note.
6
Due Date: As to any Mortgage Loan, the twenty-fifth day of the month.
Electronic Ledger: The electronic master record of home equity credit line
mortgage loans maintained by the Servicer or by the Transferor, as appropriate.
Eligible Account: A segregated account that is (i) maintained with a
depository institution whose short-term debt obligations at the time of any
deposit therein have the highest short-term debt rating by the Rating Agencies,
(ii) one or more accounts maintained with a depository institution whose
long-term unsecured debt rating by the Rating Agencies is at least AA- and whose
accounts are fully insured by either the Savings Association Insurance Fund or
the Bank Insurance Fund of the Federal Deposit Insurance Corporation established
by such fund, (iii) a segregated trust account maintained with the Trustee in
its fiduciary capacity or (iv) otherwise acceptable to each Rating Agency and
the Credit Enhancer as evidenced by a letter from each Rating Agency and the
Credit Enhancer to the Trustee, without reduction or withdrawal of their then
current ratings of the Class A Notes without regard to the Policy.
Eligible Investments: One or more of the following (excluding any callable
investments purchased at a premium):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided that such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than three months from the date of acquisition thereof,
provided that the short-term unsecured debt obligations of the party
agreeing to repurchase such obligations are at the time rated by each
Rating Agency in its highest short-term rating category (which is A-1+ for
Standard & Poor's and P-1 for Moody's);
(iii) certificates of deposit, time deposits and bankers'
acceptances (which, if ▇▇▇▇▇'▇ is a Rating Agency, shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than 365
days) of any U.S. depository institution or trust company incorporated
under the laws of the United States or any state thereof and subject to
supervision and examination by federal and/or state banking authorities,
provided that the unsecured short-term debt obligations of such depository
institution or trust company at the date of acquisition thereof have been
rated by each of Moody's and Standard & Poor's in its highest unsecured
short-term debt rating category;
(iv) commercial paper (having original maturities of not more than
270 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by Standard & Poor's and Moody's in their highest short-term debt
rating categories;
7
(v) short-term investment funds ("STIFS") sponsored by any trust
company or national banking association incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by Standard & Poor's and Moody's in their respective highest
applicable rating category;
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has a rating of Aaa by Moody's and either
AAAm or AAAm-G by Standard & Poor's or such lower rating as will not
result in the qualification, downgrading or withdrawal of the then-current
rating assigned to the Certificates by each Rating Agency without regard
to the Policy; and
(vii) other obligations or securities that are acceptable to each
Rating Agency and the Credit Enhancer as an Eligible Investment hereunder
and will not result in a reduction in the then current rating of the
Certificates without regard to the Policy, as evidenced by a letter to
such effect from such Rating Agency and the Credit Enhancer and with
respect to which the Servicer has received confirmation that, for tax
purposes, the investment complies with the last clause of this definition;
provided that no instrument described hereunder shall evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that (x) no instrument described hereunder may be purchased at a price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to its stated maturity and (y) all Eligible Investments
shall mature no later than the next Payment Date.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Depositor, with the consent of the Credit Enhancer, for a Defective Mortgage
Loan which must, on the date of such substitution, (i) have an outstanding
Principal Balance (or, in the case of a substitution of more than one Mortgage
Loan for a Defective Mortgage Loan, an aggregate Principal Balance), equal to or
less than the Principal Balance of the Defective Mortgage Loan as of the
applicable Cut-Off Date; (ii) except for HELOC Mortgage Loans still in their
teaser period, have a Loan Rate not less than the Loan Rate of the Defective
Mortgage Loan and not more than ____% in excess of the Loan Rate of such
Defective HELOC Mortgage Loan; (iii) for HELOC Mortgage Loans, have a Loan Rate
based on the same Index as the Defective Mortgage Loan with adjustments to such
Loan Rate made on the same date on which the Defective HELOC Mortgage Loan's
interest rate adjusts; (iv) for HELOC Mortgage Loans, have a Margin that is not
less than the Margin of the Defective HELOC Mortgage Loan and not more than ___
basis points higher than the Margin for the Defective HELOC Mortgage Loan; (v)
have a mortgage of the same or higher level of priority as the Defective
Mortgage Loan at the time such Mortgage Loan was transferred to the Trust; (vi)
have a remaining term to maturity not
8
more than ___ months earlier and not more than ___ months later than the
remaining term to maturity of the Defective Mortgage Loan; (vii) comply with
each representation and warranty as to the Mortgage Loans set forth in the Sale
and Servicing Agreement (deemed to be made as of the date of substitution);
(viii) have an original Combined Loan-to-Value Ratio not greater than that of
the Defective Mortgage Loan; and (ix) have a Credit Score greater than or equal
to the Credit Score of the Defective Mortgage Loan at the time such Mortgage
Loan was transferred to the Trust; (x) the related Mortgaged Property is not an
investment property; (xi) the related Mortgaged Property is not a second home;
and (xii) the Combined Loan-to-Value Ratio is not greater than ___%.
Endorsement: As defined in the Policy.
ERISA: Employee Retirement Income Security Act of 1974, as amended.
Event of Servicing Termination: As defined in Section 8.01.
FDIC: The Federal Deposit Insurance Corporation or any successor thereto.
Fiscal Agent: As defined in the Policy.
Foreclosure Profit: With respect to a Liquidated Mortgage Loan, the
amount, if any, by which (i) the aggregate of its Net Liquidation Proceeds
exceeds (ii) the related Asset Balance (plus accrued and unpaid interest thereon
at the applicable Loan Rate from the date interest was last paid through the
last day in the related Collection Period) of such Liquidated Mortgage Loan
immediately prior to the final recovery of its Liquidation Proceeds.
Funding Account: The custodial account or accounts established and
maintained with the Trustee for the benefit of the Investor Certificateholders
pursuant to Section 5.05. The Funding Account shall be an Eligible Account.
Funding Period: The period commencing on the Closing Date and ending on
the earlier of (i) the close of business on the __________ 200_ Payment Date,
and (ii) the commencement of the Rapid Amortization Period.
Gross Margin: As to any HELOC Mortgage Loan Mortgage Loan, the percentage
set forth as the "Gross Margin" for such HELOC Mortgage Loan Mortgage Loan on
Exhibit C hereto.
Guaranteed Distribution: With respect to any Payment Date, the sum of the
(i) the Guaranteed Principal Distribution Amount and (ii) the amount to be
distributed to Certificateholders pursuant to Sections 5.01(a)(iii) and
5.01(a)(iv) for such Payment Date.
Guaranteed Principal Distribution Amount: With respect to (i) any Payment
Date on or after which the Transferor Subordinated Amount has been reduced to
zero, other than the Payment Date in __________ 200_, the amount, if any,
required to reduce the Class A Certificate Principal Balance (after giving
effect to the distributions of Interest
9
Collections and Principal Collections that are allocable to principal on the
Class A Certificates on such Payment Date) to the Invested Amount immediately
following such Payment Date and (ii) the Payment Date in __________ 200_, the
amount by which the outstanding Class A Certificate Principal Balance (after
giving effect to Interest Collections allocable and distributable to principal
on the Class A Certificates on such Payment Date) exceeds the sum of the amounts
on deposit in the Collection Account available to be distributed to the Class A
Certificateholders pursuant to Section 5.01(b) hereof.
HELOC Mortgage Loan Mortgage Loan: Any Mortgage Loan originated pursuant
to a Loan Agreement providing for Draws.
Index: With respect to each Interest Rate Adjustment Date for a HELOC
Mortgage Loan Mortgage Loan, the highest "prime rate" as published in the "Money
Rates" table of The Wall Street Journal as of the first business day of the
calendar month.
Initial Closed-End Mortgage Loan: Each Closed-End Mortgage Loan
transferred and assigned to the Trustee on the Closing Date.
Initial Cut-Off Date Pool Balance: $______________.
Initial HELOC Mortgage Loan Mortgage Loan: Each HELOC Mortgage Loan
Mortgage Loan transferred and assigned to the Trustee on the Closing Date.
Initial Mortgage Loan: Each Initial HELOC Mortgage Loan and Initial
Closed-End Mortgage Loan.
Insolvency Event: As defined in Section 11.02.
Insurance Agreement: The Insurance and Indemnity agreement dated as of
__________, 200_ among the Depositor, the Transferor, the Servicer, the Trustee
and the Credit Enhancer, including any amendments and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the Credit
Enhancer) pursuant to any insurance policy covering a Mortgage Loan, or amounts
required to be paid by the Servicer pursuant to the last sentence of Section
3.04, net of any component thereof (i) covering any expenses incurred by or on
behalf of the Servicer in connection with obtaining such proceeds, (ii) that is
applied to the restoration or repair of the related Mortgaged Property, (iii)
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures or (iv) required to be paid to any holder of a mortgage senior to
such Mortgage Loan.
Interest Collections: With respect to each Pool and for any Payment Date,
the sum of all payments by or on behalf of Mortgagors and any other amounts
constituting interest, including the portion of Net Liquidation Proceeds and
Insurance Proceeds allocated to interest on the applicable Mortgage Loan)
collected by the Servicer under the Mortgage Loans (excluding any fees
(including annual fees) or late charges or similar administrative fees paid by
Mortgagors) during the related Collection Period minus the
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Servicing Fee payable to the Servicer with respect to the related Collection
Period. The terms of the related Loan Agreement shall determine the portion of
each payment in respect of such Mortgage Loan that constitutes principal or
interest.
Interest Period: With respect to any Payment Date other than the first
Payment Date, the period beginning on the preceding Payment Date and ending on
the day preceding such Payment Date, and in the case of the first Payment Date,
the period beginning on the Closing Date and ending on the day preceding the
first Payment Date.
Interest Rate Adjustment Date: With respect to each HELOC Mortgage Loan,
any date on which the Loan Rate is adjusted in accordance with the related
Credit Line Agreement.
Invested Amount: With respect to any Payment Date, an amount equal to the
Original Invested Amount minus (i) the amount of Principal Collections
previously distributed to Class A Certificateholders (including amounts
previously distributed to Class A Certificateholders from Principal Collections
on deposit in the Funding Account) and minus (ii) the Investor Loss Amounts for
prior Payment Dates.
Investor Certificate: Any Class A Certificate or Class S Certificate.
Investor Certificateholder: The Holder of an Investor Certificate.
Investor Fixed Allocation Percentage: ____%.
Investor Floating Allocation Percentage: With respect to any Payment Date,
the percentage equivalent of a fraction, the numerator of which is the Invested
Amount at the close of business on the preceding Payment Date (or at the Closing
Date in the case of the first Payment Date) and the denominator of which is the
sum of (a) the Pool Balance, calculated as of the beginning of the related
Collection Period and (b) the amount of Principal Collections on deposit in the
Funding Account as of the close of business on the preceding Payment Date.
Investor Interest Collections: As to any Payment Date, the product of (i)
the Interest Collections during the related Collection Period and (ii) the
Investor Floating Allocation Percentage for such Payment Date.
Investor Loss Amount: With respect to any Payment Date, the amount equal
to the product of (i) the Investor Floating Allocation Percentage for such
Payment Date and (ii) the aggregate of the Liquidation Loss Amounts for such
Payment Date.
Investor Loss Reduction Amount: With respect to any Payment Date, the
portion, if any, of the Investor Loss Amount for such Payment Date and all prior
Payment Dates that has not been (a) distributed to Class A Certificateholders on
such Payment Date pursuant to Section 5.01(a)(iv) or 5.01(a)(v) or by way of the
Credit Enhancement Draw Amount or (b) reallocated to the Transferor Principal
Balance pursuant to Section 5.01(c).
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LIBOR: As to any date, the rate for United States dollar deposits for one
month which appear on the Telerate Screen LIBOR Page 3750 as of 11:00 A.M.,
London time. If such rate does not appear on such page (or such other page as
may replace that page on that service, or if such service is no longer offered,
such other service for displaying LIBOR or comparable rates as may be reasonably
selected by the Depositor after consultation with the Trustee), the rate will be
the Reference Bank Rate. If no such quotations can be obtained and no Reference
Bank Rate is available, LIBOR will be LIBOR applicable to the preceding Payment
Date.
LIBOR Business Day: Any day on which banks in London and New York are open
for conducting transactions in foreign currency and exchange.
Lien: Any mortgage, deed of trust, pledge, conveyance, hypothecation,
assignment, participation, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority right or interest or other security agreement or
preferential arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing and the filing of any financing statement under the UCC (other than
any such financing statement filed for informational purposes only) or
comparable law of any jurisdiction to evidence any of the foregoing; provided,
however, that any assignment pursuant to Section 7.02 hereof shall not be deemed
to constitute a Lien.
Lifetime Rate Cap: With respect to each HELOC Mortgage Loan with respect
to which the related Mortgage Note provides for a lifetime rate cap, the maximum
Loan Rate permitted over the life of such HELOC Mortgage Loan under the terms of
the related Credit Line Agreement, as set forth on Exhibit C hereto.
Liquidated Mortgage Loan: As to any Payment Date, any Mortgage Loan in
respect of which the Servicer has determined, in accordance with the servicing
procedures specified herein, as of the end of the related Collection Period,
that all Liquidation Proceeds which it expects to recover with respect to the
disposition of such Mortgage Loan or the related REO have been recovered.
Liquidation Expenses: Out-of-pocket expenses (exclusive of overhead) which
are incurred by the Servicer in connection with the liquidation of any Mortgage
Loan and not recovered under any insurance policy, including, without
limitation, legal fees and expenses, any unreimbursed amount expended pursuant
to Section 3.06 (including, without limitation, amounts advanced to correct
defaults on any mortgage loan which is senior to such Mortgage Loan and amounts
advanced to keep current or pay off a mortgage loan that is senior to such
Mortgage Loan) respecting the related Mortgage Loan and any related and
unreimbursed expenditures with respect to real estate property taxes, water or
sewer taxes, condominium association dues, property restoration or preservation
or insurance against casualty, loss or damage.
Liquidation Loss Amount: With respect to any Payment Date and any Mortgage
Loan that becomes a Liquidated Mortgage Loan during the related Collection
Period, the
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unrecovered Asset Balance thereof at the end of such Collection Period, after
giving effect to the Net Liquidation Proceeds applied in reduction of such Asset
Balance.
Liquidation Proceeds: Proceeds (including Insurance Proceeds) received in
connection with the liquidation of any Mortgage Loan or related REO, whether
through trustee's sale, foreclosure sale or otherwise.
Loan Agreement: Any Credit Line Agreement or Mortgage Note.
Loan Rate: With respect to any HELOC Mortgage Loan and as of any day, the
per annum rate of interest applicable under the related Credit Line Agreement to
the calculation of interest for such day on the Asset Balance of such HELOC
Mortgage Loan. With respect to any Closed-End Mortgage Loan and as of any day,
the per annum rate of interest applicable under the related Mortgage Note to the
calculation of interest for such day on the Asset Balance for such Closed-End
Mortgage Loan.
Loan Rate Cap: With respect to each HELOC Mortgage Loan, the lesser of (i)
the Lifetime Rate Cap, if any, or (ii) the applicable state usury ceiling, if
any.
Managed Amortization Period: The period from the termination of the
Funding Period to the Rapid Amortization Commencement Date.
Maximum Principal Payment: With respect to any Payment Date, the Investor
Fixed Allocation Percentage of the Principal Collections for such Payment Date.
Maximum Rate: As to any Interest Period, the Weighted Average Net Loan
Rate for the Collection Period during which such Interest Period begins
(adjusted to an effective rate reflecting accrued interest calculated on the
basis of the actual number of days in the Collection Period commencing in the
month in which such Interest Period commences and a year assumed to consist of
360 days).
Minimum Monthly Payment: With respect to any Mortgage Loan and any month,
the minimum amount required to be paid by the related Mortgagor in that month.
Minimum Transferor Interest: With respect to any date, an amount equal to
the lesser of (a) ___% of the Pool Balance on such date and (b) the Transferor
Principal Balance as of the Closing Date.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor-in-interest.
Mortgage: The mortgage, deed of trust or other instrument creating a first
or junior lien on an estate in fee simple interest in real property securing a
Mortgage Note or Credit Line Agreement.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining to
a particular Mortgage Loan and any additional documents required to be added to
the Mortgage File pursuant to this Agreement.
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Mortgage Loan Schedule: With respect to any date, the schedule of Mortgage
Loans included in the Trust on such date. The schedule of Initial Mortgage Loans
as of the Cut-Off Date is the schedule set forth in Exhibit C, which schedule
sets forth as to each such Mortgage Loan, to the extent applicable, (i) the
Cut-Off Date Asset Balance, (ii) the Credit Limit, (iii) the Gross Margin, (iv)
the Lifetime Rate Cap, (v) the account number, (vi) the current Loan Rate, (vii)
the Combined Loan-to-Value Ratio, (viii) a code specifying the property type,
(ix) a code specifying documentation type and (x) a code specifying lien
position. The Mortgage Loan Schedule will be deemed to be amended from time to
time to reflect Additional Balances, Eligible Substitute Mortgage Loans and
Subsequent Mortgage Loans.
Mortgage Loans: Any HELOC Mortgage Loans, including any Additional
Balances with respect thereto, as well as any Closed-End Mortgage Loans, that
are transferred and assigned to the Trustee pursuant to Section 2.01, together
with the Related Documents, exclusive of Mortgage Loans that are retransferred
to the Depositor, the Servicer or the Transferor from time to time pursuant to
Section 2.02, 2.04, 2.05, 2.06, 2.09 or 3.01 as from time to time are held as a
part of the Trust. The mortgage loans originally so held are identified in the
Mortgage Loan Schedule delivered on the Closing Date. The Mortgage Loans shall
also include any Eligible Substitute Mortgage Loan substituted by the Transferor
for a Defective Mortgage Loan pursuant to Sections 2.02 and 2.04. The term
"Mortgage Loans" includes the terms "HELOC Mortgage Loans" and "Closed-End
Mortgage Loans".
Mortgage Note: The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Closed-End Mortgage Loan.
Mortgaged Property: The underlying property, including any real property
and improvements thereon, securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note or Credit Line Agreement
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses.
Net Loan Rate: With respect to any Mortgage Loan and as to any day, the
Loan Rate (assuming each HELOC Mortgage Loan is fully indexed) less the
Servicing Fee Rate, the Premium Rate (multiplied by a fraction, the numerator of
which is the Note Principal Balance of the related Class of Notes and the
denominator of which is the related Pool Balance) and the Trustee Fee Rate.
Officer's Certificate: A certificate signed by the President, an Executive
Vice President, a Senior Vice President, a Vice President, an Assistant Vice
President, the Treasurer, Assistant Treasurer, Controller or Assistant
Controller of the Depositor, the Servicer or the Transferor, as the case may be,
and delivered to the Trustee.
Opinion of Counsel: One or more opinions of counsel who may, except as
otherwise expressly provided in the Agreement, be employees of or counsel to the
Trust and, if addressed to the Credit Enhancer, satisfactory to such party, and
if addressed to
14
the Credit Enhancer, shall be satisfactory to such party; provided, that any
opinion relating to matters of federal, state or local taxation must be provided
by independent, outside counsel.
Original Class A Certificate Principal Balance: $__________.
Original Invested Amount: $_________ (Same as Original Class A Certificate
Principal Balance.)
Overcollateralization Amount: At the time of reference thereto, the
amount, if any, by which the Invested Amount exceeds the Class A Certificate
Principal Balance.
Paying Agent: Any paying agent appointed pursuant to Section 6.06.
Percentage Interest: As to any Investor Certificate, the percentage
obtained by dividing the principal denomination (or notional amount) of such
Investor Certificate by the aggregate of the principal denominations (or
notional amounts) of all Investor Certificates of the same class.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Policy: The financial guaranty insurance policy No. _______ with respect
to the Class A Certificates, dated as of __________, 200_, issued by the Credit
Enhancer to the Trustee for the benefit of the Investor Certificateholders.
Pool Balance: With respect to any date, the aggregate of the Asset
Balances of all Mortgage Loans, as applicable, as of such date.
Pool Factor: A seven-digit decimal which the Servicer shall compute
monthly expressing the related Certificate Principal Balance as of each Payment
Date (after giving effect to any distribution of principal on such Payment Date)
as a proportion of the Original Class A Certificate Principal Balance for the
related Class. On the Closing Date, the Pool Factor for each Pool will be
1.0000000. Thereafter, the Pool Factor shall decline to reflect reductions in
the related Class A Certificate Principal Balance resulting from distributions
of principal to the related Certificates.
Preference Claim: As defined in Section 4.02.
Premium Fee Rate: As described in the Insurance Agreement.
Principal Collections: As to any Payment Date, the sum of all payments by
or on behalf of Mortgagors and any other amounts constituting principal
(including, but not limited to, Substitution Amounts and any portion of
Insurance Proceeds or Net Liquidation Proceeds allocable to principal of the
applicable Mortgage Loan, and Transfer Deposit Amounts, but excluding
Foreclosure Profits) collected by the Servicer under the Mortgage Loans during
the related Collection Period. The terms of the related
15
Loan Agreement shall determine the portion of each payment in respect of a
Mortgage Loan that constitutes principal or interest.
Purchase Agreement: The Mortgage Loan Purchase Agreement, dated as
__________, 200_, between GreenPoint Mortgage Funding, Inc., as seller, and
GreenPoint Mortgage Securities, Inc., as purchaser, with respect to the Mortgage
Loans.
Rapid Amortization Commencement Date: With respect to each Class of
Certificates, the earlier of (i) the Payment Date in ______________ and (ii) the
Payment Date next succeeding the Collection Period in which a Rapid Amortization
Event is deemed to occur pursuant to Section 11.01.
Rapid Amortization Event: As defined in Section 11.01.
Rapid Amortization Period: The period commencing on the Rapid Amortization
Date and continuing until the termination of the Trust pursuant to Section
10.01.
Rating Agency: Each of [First Rating Agency] and [Second Rating Agency].
If such agency or a successor is no longer in existence, "Rating Agency" shall
be such statistical credit rating agency, or other comparable Person, designated
by the Depositor and the Credit Enhancer, notice of which designation shall be
given to the Trustee. References in this Agreement to the highest short term
unsecured rating category of a Rating Agency shall means ___ or better in the
case of [First Rating Agency] and ___ or better in the case of [Second Rating
Agency], and in the case of any other Rating Agency shall mean the ratings such
other Rating Agency deems equivalent to the foregoing ratings. References in
this Agreement to the highest long-term rating category of a Rating Agency shall
mean "___" in the case of [First Rating Agency] and "___" in the case of [Second
Rating Agency], and in the case of any other Rating Agency, the rating such
other Rating Agency deems equivalent to the foregoing ratings.
Record Date: The Business Day immediately preceding the related Payment
Date; provided, however, that following the date on which Definitive
Certificates are available pursuant to Section 6.02(c) the Record Date for the
Certificates shall be the last Business Day of the calendar month preceding the
month in which the related Payment Date occurs.
Reference Bank Rate: As to any Interest Period as follows: the arithmetic
mean (rounded upwards, if necessary, to the nearest one sixteenth of a percent)
of the offered rates for United States dollar deposits for one month which are
offered by the Reference Banks as of 11:00 A.M., London time, on the second
LIBOR Business Day prior to the first day of such Interest Period to prime banks
in the London interbank market for a period of one month in amounts
approximately equal to the outstanding Class A Certificate Principal Balance;
provided that at least two such Reference Banks provide such rate. If fewer than
two offered rates appear, the Reference Bank Rate will be the arithmetic mean of
the rates quoted by one or more major banks in New York City, selected by the
Depositor after consultation with the Trustee, as of 11:00 A.M., New York City
time, on such date for loans in U.S. Dollars to leading European Banks for a
16
period of one month in amounts approximately equal to the outstanding Class A
Certificate Principal Balance. If no such quotations can be obtained, the
Reference Bank Rate shall be LIBOR applicable to the preceding Interest Period.
Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Depositor after consultation with the Trustee.
Related Documents: As defined in Section 2.01.
REO: A Mortgaged Property acquired by the Trust in foreclosure or by deed
in lieu of foreclosure in connection with a defaulted Mortgage Loan
Required Overcollateralization Amount: As defined in the Insurance
Agreement.
Responsible Officer: With respect to the Trustee or any officer of the
Trustee with direct responsibility for the administration of this Agreement and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
Retransfer Date: As defined in Section 2.06.
Retransfer Notice Date: As defined in Section 2.06.
SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or if at any time after the execution of this
instrument the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Scheduled Principal Collections Distribution Amount: With respect to any
Payment Date during the Funding Period or the Managed Amortization Period and
the Class A Certificates, an amount equal to the lesser of (i) the Maximum
Principal Payment and (ii) the Alternative Principal Payment. With respect to
any Payment Date in respect of the Rapid Amortization Period, the Maximum
Principal Payment.
Seller: GreenPoint Mortgage Funding, Inc., a New York corporation and any
successor thereto.
Servicer: GreenPoint Mortgage Funding, Inc., a New York corporation, any
successor thereto and, after its termination as Servicer, any successor
hereunder.
Servicing Certificate: A certificate completed and executed by a Servicing
Officer in accordance with Section 4.01.
Servicing Fee: With respect to any Payment Date, the product of (i)
one-twelfth of the Servicing Fee Rate and (ii) the aggregate Asset Balance of
the Mortgage Loans on the first day of the Collection Period preceding such
Payment Date (or at the Cut-Off Date with respect to the first Payment Date).
17
Servicing Fee Rate: ____% per annum.
Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
specimen signature appear on a list of servicing officers furnished to the
Trustee (with a copy to the Credit Enhancer) by the Servicer on the Closing
Date, as such list may be amended from time to time.
Spread Account: The account created pursuant to Section 4.03 and
maintained pursuant to the Insurance Agreement.
Spread Account Maximum: As defined in the Insurance Agreement.
Standard & Poor's: Standard & Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc., or its successor in interest.
Subsequent Mortgage Loan: Each HELOC Mortgage Loan acquired pursuant to
Section 2.10 with funds on deposit in the Funding Account during the Funding
Period on the related Subsequent Transfer Date.
Subsequent Transfer Date: With respect to Subsequent Mortgage Loans, any
Payment Date during the Funding Period.
Telerate Screen LIBOR Page 3750: The display designated as page 3750 on
the Telerate Service (or such other page as may replace page 3750 on that
service for the purpose of displaying London inter-bank offered rates of major
banks).
Transfer Date: With respect to each Subsequent Mortgage Loan, the
Subsequent Transfer Date, and with respect to each Eligible Substitute Mortgage
Loan, the date on which such Eligible Substitute Mortgage Loan shall have been
transferred to the Trust.
Transfer Deficiency: As defined in Section 2.02.
Transfer Deposit Amount: As defined in Section 2.02.
Transferor or Transferor Certificateholders: The Holders of the Transferor
Certificates which shall initially be GreenPoint Mortgage Securities, Inc.
Transferor Available Funds: As to any Payment Date, Transferor Collections
up to but not exceeding the Transferor Subordinated Amount immediately prior to
such Payment Date.
Transferor Certificates: The certificates executed and authenticated by
the Trustee substantially in the form set forth in Exhibit B hereto.
Transferor Collections: As to any period, the sum of Transferor Interest
Collections and Transferor Principal Collections for such period.
18
Transferor Interest Collections: Interest Collections that are not
Investor Interest Collections.
Transferor Principal Balance: As of any date of determination, the amount
equal to (i) the Pool Balance at the end of the day next preceding such date of
determination less (ii) the Invested Amount as of the close of business on the
preceding Payment Date plus (iii) Principal Collections on deposit in the
Funding Account.
Transferor Principal Collections: On any Payment Date, Principal
Collections received during the related Collection Period minus the amount of
such Principal Collections required to be distributed to Class A
Certificateholders pursuant to Section 5.01(b) or required to be deposited to
the Funding Account pursuant to Section 5.05.
Transferor Subordinated Amount: At the time of reference thereto, the
lesser of (a) $_____________ less the sum of (i) the aggregate amount of
Transferor Collections previously applied pursuant to Section 5.01(c), (ii) the
aggregate amount of Investor Loss Amounts that have previously been reallocated
to the Transferor Principal Balance pursuant to the second sentence of Section
5.01(c) and (iii) the amount by which the Overcollateralization Amount exceeds
$_______________ and (b) the Transferor Subordinated Amount on the previous
Payment Date; provided that the Transferor Subordinated Amount shall not be less
than zero.
Trust: The trust created by this Agreement, the corpus of which consists
of the Mortgage Loans, such other assets as shall from time to time be
identified as deposited in the Collection Account in accordance with this
Agreement, property that secured a Mortgage Loan and that has become REO, the
interest of the Depositor in certain hazard insurance policies maintained by the
Mortgagors or the Servicer in respect of the Mortgage Loans, the Policy, an
assignment of the Transferor's rights under the Purchase Agreement, such assets
as may be deposited from time to time in the Spread Account and the Funding
Account, and all proceeds of each of the foregoing (exclusive of payments of
accrued interest on the Mortgage Loans which are due on or prior to the Cut-Off
Date).
Trustee: [Trustee] or any successor Trustee appointed in accordance with
this Agreement that has accepted such appointment in accordance with this
Agreement.
Trustee Fee: A fee which is separately agreed to between the Servicer and
the Trustee.
Trustee Fee Rate: The per annum rate at which the Trustee Fee is
calculated.
UCC: Unless the context otherwise requires, the Uniform Commercial Code,
as in effect in the relevant jurisdiction, as amended from time to time.
Unpaid Class A Certificate Carry Forward Interest Amount: With respect to
any Payment Date, the aggregate amount, if any, of any Class A Certificate Carry
Forward Interest that was accrued in respect of prior Payment Dates and which
has not been distributed to Class A Certificateholders.
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Unpaid Class A Certificate Interest Shortfall: With respect to any Payment
Date, the aggregate amount, if any, of Class A Certificate Interest that was
accrued in respect of a prior Payment Date and has not been distributed to Class
A Certificateholders.
Unpaid Class S Certificate Interest Shortfall: With respect to any Payment
Date, the aggregate amount, if any, of Class S Certificate Interest that was
accrued in respect of a prior Payment Date and has not been distributed to Class
S Certificateholders.
Valuation: With respect to any Mortgaged Property and time referred to
herein, the Appraised Value of the Mortgaged Property.
Voting Rights: The portion of the aggregate voting rights of all the
Certificates evidenced by a Class of Certificates. At all times during the term
of this Agreement, ___% of all of the Voting Rights shall be allocated among
Holders of the Class A Certificates and the Holders of the Class S Certificates
shall be entitled to ___% of all of the Voting Rights. Voting Rights allocated
to a Class of Certificates shall be allocated among the Certificates of each
such Class in accordance with their respective Percentage Interests.
Weighted Average Net Loan Rate: As to any Collection Period, the average
of the daily Net Loan Rate for each Mortgage Loan for each day during the
related Billing Cycle, weighted on the basis of the daily average of the related
Asset Balances outstanding for each day in such Billing Cycle for each Mortgage
Loan as determined by the Servicer in accordance with the Servicer's normal
servicing procedures.
Section 1.02. Interest Calculations. All calculations of interest
hereunder that are made in respect of the Asset Balance of a Mortgage Loan shall
be made on a daily basis using a 365-day year. All calculations of interest on
the Investor Certificates shall be made on the basis of the actual number of
days in an Interest Period and a year assumed to consist of 360 days. The
calculation of the Servicing Fee shall be made on the basis of a 360-day year
consisting of twelve 30-day months. All dollar amounts calculated hereunder
shall be rounded to the nearest ▇▇▇▇▇ with one-half of one ▇▇▇▇▇ being rounded
down.
ARTICLE II
Conveyance of Mortgage Loans;
Original Issuance of Certificates;
Tax Treatment
Section 2.01. Conveyance of Mortgage Loans; Retention of Obligation to
Fund Advances Under Credit Line Agreements. The Transferor hereby sells,
transfers, assigns, sets over and otherwise conveys to the Depositor, without
recourse (subject to Section 2.02 and 2.04), all of its right, title and
interest in and to (i) each Initial Mortgage Loan, including its Asset Balance
and all collections in respect thereof received on or after the Cut-Off Date
(excluding payments in respect of accrued interest due prior to the Cut-Off
Date); (ii) property that secured an Initial Mortgage Loan that is acquired by
foreclosure
20
or deed in lieu of foreclosure; (iii) the Transferor's rights under the Purchase
Agreement (including all representations and warranties of the Seller contained
therein); and (iv) the Transferor's rights under the hazard insurance policies.
The Transferor has entered into this Agreement in consideration for the purchase
of the Mortgage Loans by the Depositor and has agreed to take the actions
specified herein.
The Depositor, concurrently with the execution and delivery of this
Agreement, hereby sells, transfers, assigns, sets over and otherwise conveys to
the Trust, without recourse (subject to Sections 2.02 and 2.04), all of its
right, title and interest in and to (i) each Initial Mortgage Loan, including
its Asset Balance and all collections in respect thereof received on or after
the Cut-Off Date (excluding payments in respect of accrued interest due prior to
the Cut-off Date); (ii) property that secured an Initial Mortgage Loan that is
acquired by foreclosure or deed in lieu of foreclosure; (iii) all rights under
the Purchase Agreement assigned by the Transferor to the Depositor (including
all representations and warranties of the Seller contained therein); (iv) the
Depositor's rights under the hazard insurance policies; (v) the Spread Account;
(vi) the Policy; (vii) the Funding Account; and (viii) all other assets included
or to be included in the Trust for the benefit of Certificateholders; provided,
however, neither the Trustee nor the Trust assumes the obligation under any
Credit Line Agreement that provides for the funding of future advances to the
Mortgagor thereunder, and neither the Trust nor the Trustee shall be obligated
or permitted to fund any such future advances. With respect to the HELOC
Mortgage Loans, Additional Balances shall be part of the related Asset Balance
and are hereby transferred to the Trust on the Closing Date pursuant to this
Section 2.01, and therefore part of the Trust property. In addition, on or prior
to the Closing Date, the Depositor shall cause the Credit Enhancer to deliver
the Policy to the Trustee for the benefit of the Investor Certificateholders.
The foregoing transfer, assignment, set-over and conveyance to the Trust shall
be made to the Trustee, on behalf of the Trust, and each reference in this
Agreement to such transfer, assignment, set-over and conveyance shall be
construed accordingly.
Each of the Transferor and the Depositor agrees to take or cause to be
taken such actions and execute such documents (including, without limitation,
the filing of all necessary continuation statements for the UCC-1 financing
statements filed in the States of ( ) and ( ), respectively,
(which shall have been filed within 10 days of the Closing Date) describing the
Cut-Off Date Asset Balances and Additional Balances and naming (i) the
Transferor as debtor and the Depositor as secured party and (ii) the Depositor
as debtor and the Trustee as secured party and any amendments to UCC-1 financing
statements required to reflect a change in the name or corporate structure of
the Transferor or the Depositor or the filing of any additional UCC-1 financing
statements due to the change in the principal office of the Depositor (within 10
days of any event necessitating such filing) as are necessary to perfect and
protect the Certificateholders' and Credit Enhancer's interests in each Cut-Off
Date Asset Balance and Additional Balances and the proceeds thereof (other than
maintaining possession by the Trustee of the Mortgage Loans and the Mortgage
Files).
In connection with such transfer and assignment, the Servicer shall
deliver to the Trustee the following documents or instruments (the "Related
Documents") with respect
21
to each Initial Mortgage Loan on the Closing Date and will deliver with respect
to each Subsequent Mortgage Loan on the related Subsequent Transfer Date:
(i) the original Mortgage Note endorsed in blank;
(ii) an original Assignment of Mortgage in blank in recordable form;
(iii) the original recorded Mortgage or, if, in connection with any
Mortgage Loan, the original recorded Mortgage with evidence of recording
thereon cannot be delivered on or prior to the Closing Date because of a
delay caused by the public recording office where such original Mortgage
has been delivered for recordation or because such original Mortgage has
been lost, the Transferor, at the direction of the Depositor, shall
deliver or cause to be delivered to the Custodian, as agent for the
Trustee, a true and correct copy of such Mortgage, together with (i) in
the case of a delay caused by the public recording office, an Officer's
Certificate of the Depositor stating that such original Mortgage has been
dispatched to the appropriate public recording official or (ii) in the
case of an original Mortgage that has been lost, a certificate by the
appropriate county recording office where such Mortgage is recorded;
(iv) if applicable, the original intervening assignments, if any
("Intervening Assignments"), with evidence of recording thereon, showing a
complete chain of title to the Mortgage from the originator to the
Depositor or, if any such original Intervening Assignment has not been
returned from the applicable recording office or has been lost, a true and
correct copy thereof, together with (i) in the case of a delay caused by
the public recording office, an Officer's Certificate of the Transferor
stating that such original Intervening Assignment has been dispatched to
the appropriate public recording official for recordation or (ii) in the
case of an original Intervening Assignment that has been lost, a
certificate by the appropriate county recording office where such Mortgage
is recorded;
(v) either a title policy, a title search or guaranty of title with
respect to the related Mortgaged Property;
(vi) the original of any guaranty executed in connection with the
Mortgage Note;
(vii) the original of each assumption, modification, consolidation
or substitution agreement, if any, relating to the Mortgage Loan; and
(viii) any security agreement, chattel mortgage or equivalent
instrument executed in connection with the Mortgage;
provided, however, that as to any Mortgage Loan, if (a) as evidenced by an
Opinion of Counsel delivered to and in form and substance satisfactory to the
Trustee and the Credit Enhancer, (x) an optical image or other representation of
the related documents specified in clauses (i) through (viii) above are
enforceable in the relevant jurisdictions to the same
22
extent as the original of such document and (y) such optical image or other
representation does not impair the ability of an owner of such Mortgage Loan to
transfer its interest in such Mortgage Loan, and (b) the retention of such
documents in such format will not result in a reduction in the then current
rating of the Investor Certificates, without regard to the Policy, such optical
image or other representation may be held by the Servicer, as custodian for the
Trustee or assignee in lieu of the physical documents specified above.
The Transferor hereby confirms to the Trustee that it has caused the
portions of the Electronic Ledgers relating to the Initial Mortgage Loans as of
the Closing Date, and that it will cause such Electronic Ledgers with respect to
each Subsequent Mortgage Loan as of the related Subsequent Transfer Date, to be
clearly and unambiguously marked, and has made, or will make, the appropriate
entries in its general accounting records to indicate that such Mortgage Loans
have been transferred to the Trust. The Servicer hereby confirms to the Trustee
that it has clearly and unambiguously made appropriate entries in its general
accounting records indicating that such Mortgage Loans constitute part of the
Trust and are serviced by it on behalf of the Trust in accordance with the terms
hereof. The Servicer hereby confirms to the Trustee that it will clearly and
unambiguously make appropriate entries in its general accounting records
indicating that each Subsequent Mortgage Loan constitutes part of the Trust and
is serviced by it on behalf of the Trust in accordance with the terms hereof as
of the related Subsequent Transfer Date.
Notwithstanding the characterization of the Class A Certificates as debt
for Federal, state and local income and franchise tax purposes, the parties
hereto intend to treat the transfer of the Mortgage Loans to the Trust as
provided herein as a sale, for certain non-tax purposes, of all the Transferor's
and Depositor's right, title and interest in and to the Mortgage Loans, whether
now existing or hereafter created, and the other property described above and
all proceeds thereof. In the event such transfer is deemed not to be a sale for
such purposes, the Transferor hereby grants to the Depositor and the Depositor
grants to the Trust, a security interest in all of such party's right, title and
interest in, to and under the Mortgage Loans, whether now existing or hereafter
created, and the other property described above and all proceeds thereof; and
this Agreement shall constitute a security agreement under applicable law.
Within 90 days following delivery of the Mortgage Files to the Trustee
pursuant to this Section, the Trustee shall review each such Mortgage File to
ascertain that all required documents set forth in this Section 2.01 have been
executed and received, and that such documents relate to the Mortgage Loans
identified on the Mortgage Loan Schedule and in so doing the Trustee may rely on
the purported due execution and genuineness of any signature thereon. If within
such 90-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 said Mortgage Loan Schedule or, if in the course of
its review, the Trustee determines that such Mortgage File is otherwise
defective in any material respect, the Trustee shall promptly upon the
conclusion of its review notify the Transferor, the Depositor and the Credit
Enhancer, and the Transferor shall have a period of 90 days after such notice
within which to correct or cure any such defect.
23
The Trustee shall have no responsibility for reviewing any Mortgage File
except as expressly provided in this Section 2.01. In reviewing any Mortgage
File pursuant to this Section, the Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment or endorsement is in proper or recordable form (except, if
applicable, to determine if the Trustee is the assignee or endorsee), whether
any document has been recorded in accordance with the requirements of any
applicable jurisdiction, or whether a blanket assignment is permitted in any
applicable jurisdiction, whether any Person executing any document is authorized
to do so or whether any signature thereon is genuine, but shall only be required
to determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded.
Section 2.02. Acceptance by Trustee; Retransfer of Mortgage Loans. (a)
The Trustee hereby acknowledges its receipt of the Policy and the Mortgage
Loans, and declares that the Trustee holds and will hold such instrument, and to
the extent that any documents are delivered to it pursuant to Section 2.01, will
hold such documents, and all amounts received by it thereunder and hereunder, in
trust, upon the terms herein set forth, for the use and benefit of all present
and future Certificateholders and the Credit Enhancer. If the time to cure any
defect in respect of any Mortgage Loan of which the Trustee has notified the
Transferor and the Depositor following the review pursuant to Section 2.01 has
expired or if at any time any loss is suffered by the Trustee on behalf of the
Certificateholders or the Credit Enhancer, in respect of any Mortgage Loan as a
result of (i) a defect in any document constituting a part of its Mortgage File
or (ii) an Assignment of Mortgage to the Trustee not having been recorded as
required by Section 2.01, then on the next succeeding Business Day upon the
deposit to the Collection Account of the Transfer Deposit Amount, if any, and
upon satisfaction of the applicable conditions described herein, all right,
title and interest of the Trust in and to such Mortgage Loan shall be deemed to
be retransferred, reassigned and otherwise reconveyed, without recourse,
representation or warranty, to the Transferor on such Business Day and the Asset
Balance of such Mortgage Loan shall be deducted from the Pool Balance; provided,
however, that interest accrued on the Asset Balance of such Mortgage Loan to the
end of the related Collection Period shall be the property of the Trust. The
Trustee shall determine if the reduction of such Asset Balance from the Pool
Balance in accordance with the preceding sentence would cause the Transferor
Principal Balance to be less than the Minimum Transferor Interest ("Transfer
Deficiency"), in which event the Trustee shall deliver written notice of such
deficiency to the Transferor, and within five Business Days after the Business
Day of such retransfer the Transferor shall either (i) substitute an Eligible
Substitute Mortgage Loan or (ii) deposit into the Collection Account an amount
(the "Transfer Deposit Amount") in immediately available funds equal to the
Transfer Deficiency or a combination of both (i) and (ii) above. Such reduction
or substitution and the actual payment of any Transfer Deposit Amount, if any,
shall be deemed to be payment in full for such Mortgage Loan. Upon receipt of
any Eligible Substitute Mortgage Loan or of written notification signed by a
Servicing Officer to the effect that the Transfer Deposit Amount in respect of a
Defective Mortgage Loan has been deposited into the Collection Account or, if
the Transferor Principal Balance is not reduced below the Minimum Transferor
Interest as a result of the deemed retransfer of a Defective Mortgage Loan, then
as promptly as practicable following such deemed
24
transfer, the Trustee shall execute such documents and instruments of transfer
presented by the Transferor, in each case without recourse, representation or
warranty, and take such other actions as shall reasonably be requested by the
Transferor to effect such transfer by the Trust of such Defective Mortgage Loan
pursuant to this Section. It is understood and agreed that the obligation of the
Transferor to accept a transfer of a Defective Mortgage Loan and to either
convey an Eligible Substitute Mortgage Loan or to make a deposit of any related
Transfer Deposit Amount into the Collection Account shall constitute the sole
remedy respecting such defect available to Certificateholders, the Trustee and
the Credit Enhancer against the Transferor.
The Servicer, promptly following the transfer of a Defective Mortgage Loan
from or to the Trust pursuant to this Section, shall amend the Mortgage Loan
Schedule and make appropriate entries in its general account records to reflect
such transfer. The Servicer shall, following such retransfer, appropriately ▇▇▇▇
its records to indicate that it is no longer servicing such Mortgage Loan on
behalf of the Trust. The Transferor, promptly following such transfer, shall
appropriately ▇▇▇▇ its Electronic Ledger and make appropriate entries in its
general account records to reflect such transfer.
Notwithstanding any other provision of this Section, a retransfer of a
Defective Mortgage Loan to the Transferor pursuant to this Section that would
cause the Transferor Principal Balance to be less than the Minimum Transferor
Interest shall not occur if either the Transferor fails to convey an Eligible
Substitute Mortgage Loan or to deposit into the Collection Account any related
Transfer Deposit Amount required by this Section with respect to the transfer of
such Defective Mortgage Loan.
As to any Eligible Substitute Mortgage Loan or Loans, the Transferor shall
deliver to the Trustee with respect to such Eligible Substitute Mortgage Loan or
Loans such documents and agreements as are required to be held by the Trustee in
accordance with Section 2.01. For any Collection Period during which the
Transferor substitutes one or more Eligible Substitute Mortgage Loans, the
Servicer shall determine the Transfer Deposit Amount which amount shall be
deposited by the Transferor in the Collection Account at the time of
substitution. All amounts received in respect of the Eligible Substitute
Mortgage Loan or Loans during the Collection Period in which the circumstances
giving rise to such substitution occur shall not be a part of the Trust Fund and
shall not be deposited by the Servicer in the Collection Account. All amounts
received by the Servicer during the Collection Period in which the circumstances
giving rise to such substitution occur in respect of any Defective Mortgage Loan
so removed by the Trust Fund shall be deposited by the Servicer in the
Collection Account. Upon such substitution, the Eligible Substitute Mortgage
Loan or Loans shall be subject to the terms of this Agreement in all respects,
and the Transferor shall be deemed to have made with respect to such Eligible
Substitute Mortgage Loan or Loans, as of the date of substitution, the
covenants, representations and warranties set forth in Section 2.04. The
procedures applied by the Transferor in selecting each Eligible Substitute
Mortgage Loan shall not be materially adverse to the interests of the Trustee,
the Certificateholders and the Credit Enhancer.
25
Section 2.03. Representations and Warranties Regarding the Servicer and
the Transferor. (a) The Servicer represents and warrants to the Trustee and
the Credit Enhancer that as of the Closing Date and as of the Subsequent
Transfer Date:
(i) The Servicer is a (state) corporation, validly existing and in
good standing under the laws of the State of ( ), and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. The Servicer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which
the character of the business transacted by it or any properties owned or
leased by it requires such qualification and in which the failure so to
qualify would have a material adverse effect on the business, properties,
assets, or condition (financial or other) of the Servicer;
(ii) The Servicer has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions
contemplated under the Agreement, and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Servicer enforceable in
accordance with its terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by the availability of equitable remedies;
(iii) The Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement, except for such consent, license,
approval or authorization, or registration or declaration, as shall have
been obtained or filed, as the case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement by
the Servicer will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the Servicer
or any provision of the Certificate of Incorporation or Bylaws of the
Servicer, or constitute a material breach of any mortgage, indenture,
contract or other agreement to which the Servicer is a party or by which
the Servicer may be bound; and
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the
knowledge of the Servicer threatened, against the Servicer or any of its
properties or with respect to this Agreement or the Certificates which in
the opinion of the Servicer has a reasonable likelihood of resulting in a
material adverse effect on the transactions contemplated by this
Agreement.
The representations and warranties set forth in this Section 2.03(a) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any
26
representations and warranties which materially and adversely affects the
interests of the Certificateholders or the Credit Enhancer, the person
discovering such breach shall give prompt written notice to the other parties
and to the Credit Enhancer. Within 90 days of its discovery or its receipt of
notice of breach, or, with the prior written consent of a Responsible Officer of
the Trustee, such longer period specified in such consent, the Servicer shall
cure such breach in all material respects.
(b) The Transferor represents and warrants to the Trustee and the Credit
Enhancer that as of the Closing Date and as of each Subsequent Transfer Date:
(i) The Transferor is a ( ) corporation, validly existing and in
good standing under the laws of the State of ( ), and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. The Transferor is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in which
the character of the business transacted by it or any properties owned or
leased by it requires such qualification and in which the failure so to
qualify would have a material adverse effect on the business, properties,
assets, or condition (financial or other) of the Transferor;
(ii) The Transferor has the power and authority to make, execute,
deliver and perform this Agreement and all of the transactions
contemplated under the Agreement, and has taken all necessary corporate
action to authorize the execution, delivery and performance of this
Agreement. When executed and delivered, this Agreement will constitute the
legal, valid and binding obligation of the Transferor enforceable in
accordance with its terms, except as enforcement of such terms may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by the availability of equitable remedies;
(iii) The Transferor is not required to obtain the consent of any
other party or any consent, license, approval or authorization from, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement, except for such consent, license,
approval or authorization, or registration or declaration, as shall have
been obtained or filed, as the case may be, prior to the Closing Date;
(iv) The execution, delivery and performance of this Agreement by
the Transferor will not violate any provision of any existing law or
regulation or any order or decree of any court applicable to the
Transferor or any provision of the Certificate of Incorporation or Bylaws
of the Transferor, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Transferor is a party
or by which the Transferor may be bound; and
(v) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is currently pending, or to the
knowledge of the
27
Transferor threatened, against the Transferor or any of its properties or
with respect to this Agreement or the Certificates which in the opinion of
the Transferor has a reasonable likelihood of resulting in a material
adverse effect on the transactions contemplated by this Agreement.
The representations and warranties set forth in this Section 2.03(b) shall
survive the sale and assignment of the Mortgage Loans to the Trust. Upon
discovery of a breach of any representations and warranties which materially and
adversely affects the interests of the Certificateholders or the Credit
Enhancer, the person discovering such breach shall give prompt written notice to
the other parties and to the Credit Enhancer. Within 90 days of its discovery or
its receipt of notice of breach, or, with the prior written consent of a
Responsible Officer of the Trustee, such longer period specified in such
consent, the Transferor shall cure such breach in all material respects.
Section 2.04. Representations and Warranties of the Transferor Regarding
the Mortgage Loans; Retransfer of Certain Mortgage Loans. (a) The Transferor
hereby represents and warrants to the Trustee, the Depositor and the Credit
Enhancer that as of the Closing Date with respect to the Mortgage Loans and as
of the applicable Transfer Date with respect to any Subsequent Mortgage Loan and
any Eligible Substitute Mortgage Loan,
(i) As of the Closing Date with respect to the Initial Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan and, with respect
to any HELOC Mortgage Loan, as of the date any Additional Balance is
created, the information set forth in the Mortgage Loan Schedule for such
Mortgage Loans is true and correct in all material respects;
(ii) The applicable Cut-Off Date Asset Balance has not been assigned
or pledged, and the Transferor is the sole owner and holder of such
Cut-Off Date Asset Balance free and clear of any and all liens, claims,
encumbrances, participation interests, equities, pledges, charges or
security interests of any nature, and has full right and authority, under
all governmental and regulatory bodies having jurisdiction over the
ownership of the applicable Mortgage Loan, to sell, assign or transfer the
same pursuant to the Purchase Agreement;
(iii) As of the Closing Date with respect to the Initial Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan, the related
Mortgage Note and the Mortgage with respect to each Mortgage Loan have not
been assigned or pledged, and the Transferor is 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, and has full right and authority, under
all governmental and regulatory bodies having jurisdiction over the
ownership of the applicable Mortgage Loans, to sell and assign the same
pursuant to the Purchase Agreement;
28
(iv) As of the Closing Date with respect to the Initial Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan, the related
Mortgage is a valid and subsisting first or second lien, as set forth on
the Mortgage Loan Schedule with respect to each related Mortgage Loan, on
the property therein described, and as of the applicable Cut-Off Date the
related Mortgaged Property is free and clear of all encumbrances and liens
having priority over the first or second lien, as applicable, of such
Mortgage except for liens for (i) real estate taxes and special
assessments not yet delinquent; (ii) any first mortgage loan secured by
such Mortgaged Property and specified on the Mortgage Loan Schedule; (iii)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record as of the date of recording that are acceptable
to mortgage lending institutions generally; and (iv) other matters to
which like properties are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by
such Mortgage;
(v) As of the Closing Date with respect to the Initial Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan, there is no valid
offset, defense or counterclaim of any obligor under any Loan Agreement or
Mortgage;
(vi) To the best knowledge of the Transferor, as of the Closing Date
with respect to the Initial Mortgage Loans and the applicable Transfer
Date with respect to any Subsequent Mortgage Loan and any Eligible
Substitute Mortgage Loan, there is no delinquent recording or other tax or
fee or assessment lien against any related Mortgaged Property;
(vii) As of the Closing Date with respect to the Initial Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan, there is no
proceeding pending or, to the best knowledge of the Transferor, threatened
for the total or partial condemnation of the related Mortgaged Property,
and such property is free of material damage;
(viii) To the best knowledge of the Transferor, as of the Closing
Date with respect to the Initial Mortgage Loans and the applicable
Transfer Date with respect to any Subsequent Mortgage Loan and any
Eligible Substitute Mortgage Loan, there are no mechanics' or similar
liens or claims which have been filed for work, labor or material
affecting the related Mortgaged Property which are, or may be, liens prior
or equal to the lien of the related Mortgage, except liens which are fully
insured against by the title insurance policy referred to in clause (xiv);
(ix) No Minimum Monthly Payment is more than 89 days delinquent
(measured on a contractual basis); and with respect to the Mortgage Loans
no more than ___% (by Initial Cut-Off Date Pool Balance) were 30-59 days
delinquent (measured on a contractual basis) and no more than ____% (by
Initial
29
Cut-Off Date Pool Balance) were 60-89 days delinquent (measured on a
contractual basis);
(x) As of the Closing Date with respect to the Initial Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan, for each Mortgage
Loan, the related Mortgage File contains each of the documents and
instruments specified to be included therein;
(xi) The related Mortgage Note and the related Mortgage at
origination complied in all material respects with applicable state and
federal laws, 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;
(xii) Either a lender's title insurance policy or binder was issued
on the date of origination of the Mortgage Loan and each such policy is
valid and remains in full force and effect, or a title search or guaranty
of title customary in the relevant jurisdiction was obtained with respect
to a Mortgage Loan as to which no title insurance policy or binder was
issued;
(xiii) As of the Closing Date with respect to the Initial Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan, none of the
Mortgaged Properties is a mobile home or a manufactured housing unit that
is not considered or classified as part of the real estate under the laws
of the jurisdiction in which it is located;
(xiv) As of the Cut-Off Date for the Initial Mortgage Loans no more
than ____% of such Mortgage Loans (by Initial Cut-Off Date Pool Balance),
are secured by Mortgaged Properties located in one United States postal
zip code;
(xv) The Combined Loan-to-Value Ratio for each Mortgage Loan was not
in excess of ___%;
(xvi) No selection procedure reasonably believed by the Transferor
to be adverse to the interests of the Certificateholders or the Credit
Enhancer was utilized in selecting the Mortgage Loans;
(xvii) The Transferor has not transferred the Mortgage Loans to the
Transferor with any intent to hinder, delay or defraud any of its
creditors;
(xviii) The Minimum Monthly Payment with respect to any HELOC
Mortgage Loan is not less than the interest accrued at the applicable Loan
Rate on the average daily Asset Balance during the interest period
relating to the date on which such Minimum Monthly Payment is due;
(xix) Within 10 days of the Closing Date with respect to the Initial
Mortgage Loans and, to the extent not already included in such filing,
within 10
30
days of the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan, the Transferor
will file UCC-1 financing statements with respect to such Mortgage Loans;
(xx) As of the Closing Date with respect to the Initial Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan, each Loan
Agreement and each Mortgage Loan is an enforceable obligation of the
related Mortgagor, except as the enforceability thereof may be limited by
the bankruptcy, insolvency or similar laws affecting creditors' rights
generally;
(xxi) As of the Closing Date with respect to the Initial Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan, the Transferor
has not received a notice of default of any senior mortgage loan related
to a Mortgaged Property that has not been cured by a party other than the
Servicer;
(xxii) The definition of "prime rate" in each Credit Line Agreement
relating to a HELOC Mortgage Loan does not differ materially from the
definition in the form of Credit Line Agreement in Exhibit F;
(xxiii) The weighted average remaining term to maturity of the
Initial Mortgage Loans on a contractual basis as of the Cut-Off Date is
approximately ___ months. On each date that the Loan Rates relating to
HELOC Mortgage Loans have been adjusted, interest rate adjustments on the
HELOC Mortgage Loans were made in compliance with the related Mortgages
and Mortgage Notes and applicable law. Over the term of each HELOC
Mortgage Loan, the Loan Rate may not exceed the related Loan Rate Cap, if
any. With respect to the Initial HELOC Mortgage Loans, the Loan Rate Caps
range between ____% and ___%. With respect to the Initial HELOC Mortgage
Loans, the Margins range between ___% and ____% and the weighted average
Margin is approximately ____% as of the related Cut-Off Date. The Loan
Rates on the Initial Mortgage Loans range between ___% and ____% and the
weighted average Loan Rate is approximately ___%;
(xxiv) As of the Closing Date with respect to the Initial Mortgage
Loans and the applicable Transfer Date with respect to any Subsequent
Mortgage Loan and any Eligible Substitute Mortgage Loan, each Mortgaged
Property consists of a single parcel of real property with a one-to-four
unit single family residence erected thereon, or an individual condominium
unit, planned unit development unit or townhouse;
(xxv) No more than ____% (by Initial Cut-Off Date Pool Balance) of
the Initial Mortgage Loans are secured by real property improved by
individual condominium units, planned development units, townhouses or
two-to-four family residences erected thereon, and at least ____% (by
Initial Cut-Off Date
31
Pool Balance) of the Initial Mortgage Loans are secured by real property
with a detached one-family residence erected thereon;
(xxvi) The Credit Limits on the Initial HELOC Mortgage Loans range
between $________ and $_________ with an average of $_______. As of the
applicable Cut-Off Date, no Initial Mortgage Loan had a principal balance
in excess of approximately $___________ and the average principal balance
of the Initial Mortgage Loans is equal to approximately $_______;
(xxvii) Approximately ____% and ___% of the Initial Mortgage Loans,
by aggregate principal balance as of the applicable Cut-Off Date, are
first and second liens, respectively;
(xxviii) Each Closed-End 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 on the maturity
thereof and bears a fixed interest rate for the term of such Closed-End
Mortgage Loan; and
(xxix) Either (A) this Agreement constitutes a valid transfer and
assignment to the Depositor of all right, title and interest of the
Transferor in and to the Cut-Off Date Asset Balances with respect to the
applicable Mortgage Loans, all monies due or to become due with respect
thereto (excluding payments in respect of accrued interest due prior to
the Cut-Off Date), and all proceeds of such Cut-Off Date Asset Balances
with respect to the Mortgage Loans and such funds as are from time to time
deposited in the Collection Account (excluding any investment earnings
thereon) and all other property specified in the definition of "Trust" as
being part of the corpus of the Trust conveyed to the Trust, and upon
payment for the Additional Balances, will constitute a valid transfer and
assignment to the Trustee of all right, title and interest of the
Transferor in and to the Additional Balances, all monies due or to become
due with respect thereto, and all proceeds of such Additional Balances and
all other property specified in the definition of "Trust" relating to the
Additional Balances or (B) this Agreement constitutes a grant of a
security interest (as defined in the UCC as in effect in New York) in such
property to the Trustee on behalf of the Trust. If this Agreement
constitutes the grant of a security interest to the Trust in such
property, and if the Trustee obtains and maintains possession of the
Mortgage File for each Mortgage Loan, the Trust shall have a first
priority perfected security interest in such property, subject to the
effect of Section 9-306 of the UCC with respect to collections on the
Mortgage Loans that are deposited in the Collection Account in accordance
with the next to last paragraph of Section 3.02(b).
With respect to the representations and warranties set forth in this
Section 2.04 that are made to the best of the Transferor's knowledge or as to
which the Transferor has no knowledge, if it is discovered by the Transferor,
the Depositor, the Servicer or a Responsible Officer of the Trustee that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related Mortgage Loan then,
notwithstanding the Transferor's lack of knowledge with respect to
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the substance of such representation and warranty being inaccurate at the time
the representation or warranty was made, such inaccuracy shall be deemed a
breach of the applicable representation or warranty.
(b) It is understood and agreed that the representations and warranties
set forth in this Section 2.04 shall survive delivery of the respective Mortgage
Files to the Trustee pursuant to Section 2.01 and the termination of the rights
and obligations of the Servicer pursuant to Section 7.04 or 8.02. Upon discovery
by the Transferor, the Depositor, the Servicer, the Credit Enhancer 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
therein concerning the knowledge of the Transferor as to the facts stated
therein, which materially and adversely affects the interests of the Trust or
the Investor Certificateholders or the Credit Enhancer in the related Mortgage
Loan, the party discovering such breach shall give prompt written notice to the
other parties and the Credit Enhancer. Within 90 days of its discovery or its
receipt of notice of such breach, the Transferor shall use all reasonable
efforts to cure such breach in all material respects or shall, not later than
the Business Day next preceding the Payment Date in the month following the
Collection Period in which any such cure period expired (or such later date that
is acceptable to the Trustee and the Credit Enhancer as evidenced by their
written consents), either (a) accept a transfer of such Mortgage Loan from the
Trust or (b) substitute an Eligible Substitute Mortgage Loan in the same manner
and subject to the same conditions as set forth in Section 2.02; provided,
however, that the cure for any breach of a representation and warranty relating
to the characteristics of the Mortgage Loans in the aggregate shall be a
repurchase of or substitution for only the Mortgage Loans necessary to cause
such characteristics to be in compliance with the related representation and
warranty. Upon accepting such transfer and making any required deposit into the
Collection Account or substitution of an Eligible Substitute Mortgage Loan, as
the case may be, the Transferor shall be entitled to receive an instrument of
assignment or transfer from the Trustee to the same extent as set forth in
Section 2.02 with respect to the transfer of Mortgage Loans under that Section.
It is understood and agreed that the obligation of the Transferor to
accept a retransfer of a Mortgage Loan as to which a breach has occurred and is
continuing and to make any required deposit in the Collection Account or to
substitute an Eligible Substitute Mortgage Loan, as the case may be, shall
constitute the sole remedy against the Transferor respecting such breach
available to Investor Certificateholders, the Trustee on behalf of Investor
Certificateholders and the Credit Enhancer; provided, however, that the
Transferor shall defend and indemnify the Trustee, the Credit Enhancer and the
Investor Certificateholders against all reasonable costs and expenses, and all
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel and the amount of any settlement entered into with the consent of the
Transferor (such consent not to be unreasonably withheld), which may be asserted
against or incurred by any of them as a result of any third-party action arising
out of any breach of any such representation and warranty. Notwithstanding the
foregoing, with regard to any breach of the representation and warranty set
forth in Section 2.04(a)(iv), the sale and assignment of the affected Mortgage
Loans to the Trust shall be deemed void and the Transferor shall pay to the
Trust the sum of (i) the amount of the related Asset Balances, plus unpaid
33
accrued interest on each such Asset Balance at the applicable Loan Rate to the
date of payment and (ii) the amount of any loss suffered by Certificateholders
or the Credit Enhancer with respect to the affected Mortgage Loans.
Section 2.05. Covenants of the Depositor and the Transferor. Each of the
Depositor and the Transferor hereby covenants that:
(a) Security Interests. Except for the transfer hereunder, neither the
Depositor nor the Transferor will sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any
Mortgage Loan, whether now existing or hereafter created, or any interest
therein; each of the Depositor and the Transferor will notify the Trustee of the
existence of any Lien on any Mortgage Loan immediately upon discovery thereof;
and each of the Depositor and the Transferor will defend the right, title and
interest of the Trust in, to and under the Mortgage Loans, whether now existing
or hereafter created, against all claims of third parties claiming through or
under the Depositor or the Transferor, respectively; provided, however, that
nothing in this Section 2.05(a) shall prevent or be deemed to prohibit the
Depositor or the Transferor from suffering to exist upon any of the Mortgage
Loans any Liens for municipal or other local taxes and other governmental
charges if such taxes or governmental charges shall not at the time be due and
payable or if the Depositor or the Transferor shall currently be contesting the
validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves with respect thereto.
(b) Negative Pledge. The Transferor hereby agrees not to transfer, assign,
exchange, pledge, finance, hypothecate, grant a security interest in or
otherwise convey the Transferor Certificates except in accordance with Sections
6.05 and 7.02.
(c) Downgrading. Neither the Depositor nor the Transferor will engage in
any activity which would result in a downgrading of the Investor Certificates.
(d) Amendment to Certificate of Incorporation. Neither the Depositor nor
the Transferor will amend its Certificate of Incorporation without prior written
notice to the Rating Agencies and the Credit Enhancer.
(e) Principal Place of Business. The Depositor's principal place of
business is in California and the Transferor's principal place of business is
( ), and neither such party will change its principal place of business without
prior written notice to the Rating Agencies.
Section 2.06. Retransfers of Mortgage Loans at Election of Transferor.
Subject to the conditions set forth below, the Transferor may, but shall not be
obligated to, require the retransfer of Mortgage Loans from the Trust to the
Transferor as of the close of business on a Payment Date (each, a "Retransfer
Date"). On the fifth Business Day (the "Retransfer Notice Date") prior to the
Retransfer Date designated in such notice, the Transferor shall give the Trustee
and the Servicer a notice of the proposed retransfer that contains a list of the
Mortgage Loans to be retransferred. Such retransfers of Mortgage Loans shall be
permitted upon satisfaction of the following conditions:
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(i) The Rapid Amortization Period shall not have commenced;
(ii) On the Transfer Notice Date the Transferor Principal Balance
(after giving effect to the removal from the Trust of the Mortgage Loans
proposed to be retransferred) is at least equal to the Minimum Transferor
Interest;
(iii) The transfer of any Mortgage Loans on any Retransfer Date
during the Managed Amortization Period shall not, in the reasonable belief
of the Transferor, cause a Rapid Amortization Event to occur or an event
which with notice or lapse of time or both would constitute a Rapid
Amortization Event;
(iv) On or before the Retransfer Date, the Transferor shall have
delivered to the Trustee a revised Mortgage Loan Schedule, reflecting the
proposed transfer and the Retransfer Date, and the Servicer shall have
marked the Electronic Ledger to show that the Mortgages Loans
retransferred to the Transferor are no longer owned by the Trust;
(v) The Transferor shall represent and warrant that no selection
procedures reasonably believed by the Transferor to be adverse to the
interests of the Investor Certificateholders or the Credit Enhancer were
utilized in selecting the Mortgage Loans to be removed from the Trust;
(vi) In connection with each such retransfer of Mortgage Loans
pursuant to this Section, each Rating Agency shall have received on or
prior to the related Retransfer Notice Date notice of such proposed
retransfer of Mortgage Loans and, prior to the Retransfer Date, shall have
notified the Trustee in writing that such retransfer of Mortgage Loans
would not result in a reduction or withdrawal of its then current rating
of the Investor Certificates without regard to the Policy; and
(vii) The Transferor shall have delivered to the Trustee and the
Credit Enhancer an Officer's Certificate certifying that the items set
forth in subparagraphs (i) through (vi), inclusive, have been performed or
are true and correct, as the case may be. The Trustee may conclusively
rely on such Officer's Certificate, shall have no duty to make inquiries
with regard to the matters set forth therein and shall incur no liability
in so relying.
Upon receiving the requisite information from the Transferor, the Servicer shall
perform in a timely manner those acts required of it, as specified above. Upon
satisfaction of the above conditions, on the Retransfer Date the Trustee shall
deliver, or cause to be delivered, to the Transferor the Mortgage File for each
Mortgage Loan being so transferred, and the Trustee shall execute and deliver to
the Transferor such other documents prepared by the Transferor as shall be
reasonably necessary to transfer such Mortgage Loans to the Transferor. Any such
retransfer of the Trust's right, title and interest in and to Mortgage Loans
shall be without recourse, representation or warranty by or of the Trustee or
the Trust to the Transferor.
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Section 2.07. Execution and Authentication of Certificates. The Trustee,
on behalf of the Trust, has caused to be executed, authenticated and delivered
to or upon the order of the Depositor, in exchange for the Trust, concurrently
with the sale, assignment and conveyance to the Trustee of the Trust, Investor
Certificates in authorized denominations and the Transferor Certificates,
together evidencing the ownership of the entire Trust.
Section 2.08. Tax Treatment. It is the intention of the Depositor, the
Transferor and the Class A Certificateholders that the Class A Certificates will
be indebtedness of the Transferor for federal, state and local income and
franchise tax purposes and for purposes of any other tax imposed on or measured
by income. The Transferor, the Depositor, the Trustee and each Class A
Certificateholder (or Certificate Owner) by acceptance of its Class A
Certificate (or, in the case of a Certificate Owner, by virtue of such
Certificate Owner's acquisition of a beneficial interest therein) agrees to
treat the Class A Certificates (or beneficial interest therein), for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, as indebtedness of the Transferor secured by the assets
of the Trust and to report the transactions contemplated by this Agreement on
all applicable tax returns in a manner consistent with such treatment. Each
Class A Certificateholder agrees that it will cause any Certificate Owner
acquiring an interest in an Class A Certificate through it to comply with this
Agreement as to treatment of the Class A Certificates as indebtedness for
federal, state and local income and franchise tax purposes and for purposes of
any other tax imposed on or measured by income. The Trustee will prepare and
file all tax reports required hereunder.
Section 2.09. Representations and Warranties of the Depositor. The
Depositor represents and warrants to the Trustee on behalf of the
Certificateholders and the Credit Enhancer as follows:
(i) This Agreement constitutes a legal, valid and binding obligation
of the Depositor, enforceable against the Depositor in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in
general and except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity);
(ii) Immediately prior to the sale and assignment by the Depositor
to the Trustee of each Mortgage Loan, the Depositor was the sole
beneficial owner of each Mortgage Loan (insofar as such title was conveyed
to it by the Transferor) subject to no prior lien, claim, participation
interest, mortgage, security interest, pledge, charge or other encumbrance
or other interest of any nature;
(iii) As of the Closing Date, the Depositor has transferred all
right, title and interest in the Mortgage Loans to the Trustee; and
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(iv) The Depositor has not transferred the Mortgage Loans to the
Trustee with any intent to hinder, delay or defraud any of its creditors.
Section 2.10. Conveyance of the Subsequent Mortgage Loans. (a) Subject
to the satisfaction of the conditions set forth in Section 2.01 and paragraph
(b) below, in consideration of the Trustee's delivery on a Subsequent Transfer
Date to or upon the order of the Transferor of all or a portion of the amount in
respect of Principal Collections in the Funding Account the Transferor shall, to
the extent of the availability thereof, on the related Subsequent Transfer Date
transfer, assign, set over and otherwise convey to the Trust without recourse
(subject to Sections 2.02 and 2.04) all of its right, title and interest in and
to the Asset Balances of the Subsequent Mortgage Loans and all Interest
Collections and Principal Collections in respect thereof received after the
Cut-Off Date for the Subsequent Mortgage Loans or, with respect to any
Additional Balances with respect thereto, on or after the date of transfer to
the Trust. Future advances made to a Mortgagor under a Loan Agreement relating
to a Subsequent Mortgage Loan shall be part of the related Asset Balance and
transferred to the Trust pursuant to this Section 2.10, and, therefore, part of
the Trust property upon the sale thereof to the Transferor under the Purchase
Agreement.
On each Subsequent Transfer Date, the Trustee shall acknowledge that the
Transferor has conveyed its right, title and interest in and to each Subsequent
Mortgage Loan and to the corresponding Related Documents and certain other
rights to the Trustee pursuant to this Agreement, and the Trustee shall hold
such documents hereunder for the benefit of the Certificateholders.
(b) The obligation of the Trustee to accept the transfer of the Subsequent
Mortgage Loans and the other property and rights related thereto described in
paragraph (a) above is subject to the satisfaction of each of the following
conditions on or prior to the Subsequent Transfer Date:
(i) the Trustee shall have been provided with a letter from the
Credit Enhancer consenting to such transfer of the Subsequent Mortgage
Loans (which consent shall not be unreasonably withheld or delayed);
(ii) the Trustee shall have been provided with a revised Mortgage
Loan Schedule, listing the Subsequent Mortgage Loans;
(iii) the Transferor shall have deposited in the Collection Account
all Principal Collections and Interest Collections in respect of such
Subsequent Mortgage Loans received after the Cut-Off Date for the
Subsequent Mortgage Loans;
(iv) the representations and warranties of the Transferor in Section
2.04 hereof, to the extent such representations and warranties do not
pertain exclusively to the Initial Mortgage Loans, are true and correct
with respect to the Subsequent Mortgage Loans as of the related Subsequent
Transfer Date;
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(v) the Trustee shall have been provided with a letter from each
Rating Agency confirming that the transfer of the Subsequent Mortgage
Loans shall not result in a reduction or withdrawal of its then-current
rating of the Investor Certificates;
(vi) the Servicer shall acknowledge in writing that it has delivered
the related Mortgage Files to the Trustee and complied with all other
requirements with respect to the assignment of the related Mortgages
specified therein;
(vii) the Servicer shall represent and warrant that no selection
procedures reasonably believed by the Servicer to be adverse to the
interests of the Investor Certificateholders or the Credit Enhancer were
utilized in selecting the Subsequent Mortgage Loans; and
(viii) the Transferor shall have delivered to the Trustee an
Officer's Certificate confirming the satisfaction of each condition
precedent specified in this paragraph (b).
The obligation of the Trust to purchase any Subsequent Mortgage Loans on a
Subsequent Transfer Date is subject to the following requirements: (i) each such
Subsequent Mortgage Loan is a HELOC Mortgage Loan and the remaining term to
maturity of each such Subsequent Mortgage Loan may not exceed ___ months; (ii)
the weighted average Margin of the Subsequent Mortgage Loans (by aggregate
Cut-Off Date Asset Balance with respect to such Subsequent Mortgage Loans) plus
any Subsequent Mortgage Loans previously transferred to the Trust is at least
____%; (iii) the weighted average Combined Loan-to-Value Ratio of the Subsequent
Mortgage Loans (by aggregate Cut-Off Date Asset Balance with respect to such
Subsequent Mortgage Loans) plus any Subsequent Mortgage Loans previously
transferred to the Trust is not more than ___%; (iv) no such Subsequent Mortgage
Loan will have a Cut-Off Date Asset Balance in excess of $________; (v) no less
than ___% of the Subsequent Mortgage Loans plus any Subsequent Mortgage Loans
previously transferred to the Trust (by aggregate Cut-Off Date Asset Balance
with respect to such Subsequent Mortgage Loans) are in a first lien position;
(vi) at least ___% of such Subsequent Mortgage Loans plus any Subsequent
Mortgage Loans previously transferred to the Trust (by aggregate Cut-Off Date
Asset Balance with respect to such Subsequent Mortgage Loans) are not more than
30 days delinquent (on a contractual basis) in the payment of a Minimum Monthly
Payment as of the Cut-Off Date for such Subsequent Mortgage Loans; and (vii) any
Subsequent HELOC Mortgage Loan more than 30 days delinquent that is so purchased
by the Trust shall not have had its Credit Limit terminated or suspended prior
to the Subsequent Transfer Date with respect to such Mortgage Loan. On the last
Payment Date of the Funding Period, the Transferor shall have provided the
Trustee, the Rating Agencies and the Credit Enhancer with an opinion of counsel
to the effect that such transfer constitutes a sale of the Trust Balances of the
Subsequent Mortgage Loans to the Transferor and a sale of or grant of a security
interest in the Subsequent Mortgage Loans to the Trustee; provided, however,
that in the event of a change of law during the Funding Period that materially
affects the method of perfecting the security interest in the Subsequent
Mortgage Loans, the Transferor shall either (i) provide the Trustee, the Rating
Agencies
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and the Credit Enhancer with an opinion of counsel to the effect that such
transfer constitutes a sale of the Asset Balances of the Subsequent Mortgage
Loans to the Transferor and a sale of or grant of a security interest in the
Subsequent Mortgage Loans to the Trustee, or (ii) take such action as is
necessary to perfect the interests of the Trust in the Subsequent Mortgage
Loans.
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Servicer. (a) The Servicer shall service and
administer the Mortgage Loans in a manner consistent with the terms of this
Agreement and with general industry practice and shall have full power and
authority, acting alone or through a subservicer, to do any and all things in
connection with such servicing and administration which it may deem necessary or
desirable, it being understood, however, that the Servicer shall at all times
remain responsible to the Trustee, the Certificateholders and the Credit
Enhancer for the performance of its duties and obligations hereunder in
accordance with the terms hereof. Any amounts received by any subservicer in
respect of a Mortgage Loan shall be deemed to have been received by the Servicer
whether or not actually received by it. Without limiting the generality of the
foregoing, the Servicer shall continue, and is hereby authorized and empowered
by the Trustee, to execute and deliver, on behalf of itself, the
Certificateholders and the Trustee, or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties. The Trustee shall, upon the written request
of a Servicing Officer, furnish the Servicer with any powers of attorney and
other documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. The Servicer in such capacity may
also consent to the placing of a lien senior to that of any Mortgage on the
related Mortgaged Property, provided that:
(x) such Mortgage succeeded to a first lien position after the
related Mortgage Loan was conveyed to the Trust and, immediately following
the placement of such senior lien, such Mortgage is in a second lien
position and the outstanding principal amount of the mortgage loan secured
by such subsequent senior lien is no greater than the outstanding
principal amount of the senior mortgage loan secured by the Mortgaged
Property as of the date the related Mortgage Loan was originated; or
(y) the Mortgage relating to such Mortgage Loan was in a second lien
position as of the Cut-Off Date and the new senior lien secures a mortgage
loan that refinances an existing first mortgage loan and the outstanding
principal amount of the replacement first mortgage loan immediately
following such refinancing is not greater than the outstanding principal
amount of such existing first mortgage loan at the date of origination of
such Mortgage Loan;
39
provided, further, that such senior lien does not secure a note that provides
for negative amortization.
The Servicer may also, without prior approval from the Rating Agencies or
the Credit Enhancer, increase the Credit Limits on HELOC Mortgage Loans provided
that (i) new appraisals are obtained and the Combined Loan-to-Value Ratios of
the Mortgage Loans after giving effect to such increase are less than or equal
to the Combined Loan-to-Value Ratios or the Mortgage Loans as of the Cut-Off
Date and (ii) such increases are consistent with the Servicer's underwriting
policies.
In addition, the Servicer may agree to changes in the terms of a Mortgage
Loan at the request of the Mortgagor; provided that such changes (i) do not
materially and adversely affect the interests of Certificateholders or the
Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Trustee and the Credit Enhancer.
In addition to the foregoing, the Servicer may solicit Mortgagors to
change any other terms of the related Mortgage Loans, provided that such changes
(i) do not materially and adversely affect the interest of Certificateholders or
the Credit Enhancer and (ii) are consistent with prudent and customary business
practice as evidenced by a certificate signed by a Servicing Officer delivered
to the Trustee and the Credit Enhancer. Nothing herein shall limit the right of
the Servicer to solicit Mortgagors with respect to new loans (including mortgage
loans) that are not Mortgage Loans.
The relationship of the Servicer (and of any successor to the Servicer as
servicer under this Agreement) to the Trustee under this Agreement is intended
by the parties to be that of an independent contractor and not that of a joint
venturer, partner or agent.
(b) In the event that the rights, duties and obligations of the Servicer
are terminated hereunder, any successor to the Servicer in its sole discretion
may, to the extent permitted by applicable law, terminate the existing
subservicer arrangements with any subservicer or assume the terminated
Servicer's rights under such subservicing arrangements which termination or
assumption will not violate the terms of such arrangements.
Section 3.02. Collection of Certain Mortgage Loan Payments. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Mortgage Loans, and shall, to the extent such
procedures shall be consistent with this Agreement, follow such collection
procedures as it follows with respect to mortgage loans in its servicing
portfolio comparable to the Mortgage Loans. Consistent with the foregoing, and
without limiting the generality of the foregoing, the Servicer may in its
discretion (i) waive any late payment charge or any assumption fees or other
fees which may be collected in the ordinary course of servicing such Mortgage
Loan and (ii) arrange with a Mortgagor a schedule for the payment of interest
due and unpaid; provided that such arrangement is consistent with the Servicer's
policies with respect to the mortgage loans it owns or services; provided,
further, that notwithstanding such arrangement such Mortgage Loans will be
included in the information regarding
40
delinquent Mortgage Loans set forth in the Servicing Certificate and monthly
statement to Certificateholders pursuant to Section 5.03.
(b) The Servicer shall establish and maintain a trust account (the
"Collection Account") titled "[Trustee], as Trustee, in trust for the registered
holders of Home Equity Loan Asset-Backed Certificates, Series 200_-_." The
Collection Account shall be an Eligible Account. The Servicer shall on the
Closing Date deposit any amounts representing payments on, and any collections
in respect of, the Initial Mortgage Loans received after the applicable Cut-Off
Date and prior to the Closing Date (exclusive of payments in respect of accrued
interest due on or prior to such Cut-Off Date), and thereafter the Servicer, or
the Transferor, as the case may be, shall deposit within two Business Days
following receipt thereof the following payments and collections received or
made by it (without duplication):
(i) all collections on and in respect of the Mortgage Loans;
(ii) the amounts, if any, deposited to the Collection Account
pursuant to Section 4.05;
(iii) Net Liquidation Proceeds net of any related Foreclosure
Profit;
(iv) Insurance Proceeds (including, for this purpose, any amount
required to be credited by the Servicer pursuant to the last sentence of
Section 3.04 and excluding the portion thereof, if any, that has been
applied to the restoration or repair of the related Mortgaged Property or
released to the related Mortgagor in accordance with the normal servicing
procedures of the Servicer); and
(v) any amounts required to be deposited therein pursuant to Section
10.01;
provided, however, that with respect to each Collection Period, the Servicer
shall be permitted to retain from payments in respect of interest on the
Mortgage Loans, the Servicing Fee for such Collection Period. The foregoing
requirements respecting deposits to the Collection Account are exclusive, it
being understood that, without limiting the generality of the foregoing, the
Servicer need not deposit in the Collection Account amounts representing
Foreclosure Profits, fees (including annual fees) or late charge penalties
payable by Mortgagors, or amounts received by the Servicer for the accounts of
Mortgagors for application towards the payment of taxes, insurance premiums,
assessments, excess pay off amounts and similar items. The Servicer shall remit
all Foreclosure Profits to the Transferor.
The Trustee shall hold amounts deposited in the Collection Account as
trustee for the Certificateholders and for the Credit Enhancer. In addition, the
Servicer shall notify the Trustee and the Credit Enhancer in writing on each
Determination Date of the amount of payments and collections in the Collection
Account allocable to Interest Collections and Principal Collections for the
related Payment Date. Following such notification, the Servicer shall be
entitled to withdraw from the Collection Account and retain any
41
amounts that constitute income and gain realized from the investment of such
payments and collections.
All income and gain realized from any investment in Eligible Investments
of funds in the Collection Account shall be for the benefit of the Servicer and
shall be subject to its withdrawal from time to time. The amount of any losses
incurred in respect of the principal amount of any such investments shall be
deposited in the Collection Account by the Servicer out of its own funds
immediately as realized.
Section 3.03. Withdrawals from the Collection Account. From time to time,
withdrawals may be made from the Collection Account by the Servicer for the
following purposes:
(i) To the Servicer as payment for its Servicing Fee pursuant to
Section 3.08;
(ii) To pay to the Servicer amounts on deposit in the Collection
Account that are not to be included in the distributions and payments
pursuant to Section 5.01 to the extent provided by the second to the last
and the last paragraph of Section 3.02(b);
(iii) To make or to permit the Paying Agent to make distributions
and payments pursuant to Section 5.01;
(iv) Prior to the Collection Period preceding the Rapid Amortization
Commencement Date, to pay to the Transferor, the amount of any Additional
Balances as and when created during the related Collection Period;
provided, that the aggregate amount so paid to the Transferor in respect
of Additional Balances at any time during any Collection Period shall not
exceed the amount of Principal Collections theretofore received for such
Collection Period minus the amount determined pursuant to clause (x) of
the definition of "Alternative Principal Payment"; and
(v) To make deposits to the Funding Account pursuant to Section 5.05
hereof.
If the Servicer deposits in the Collection Account any amount not required
to be deposited therein or any amount in respect of payments by Mortgagors made
by checks subsequently returned for insufficient funds or other reason for
non-payment it may at any time withdraw such amount from the Collection Account,
and any such amounts shall not be included in the amounts to be deposited in the
Collection Account pursuant to Section 3.02(b), any provision herein to the
contrary notwithstanding.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance naming the Servicer or the related subservicer as loss payee
thereunder providing extended coverage in an amount which is at least equal to
the lesser of (i) the maximum insurable value of the improvements securing such
Mortgage Loan from time to time or
42
(ii) the combined principal balance owing on such Mortgage Loan and any mortgage
loan senior to such Mortgage Loan from time to time. The Servicer shall also
maintain on property acquired upon foreclosure, or by deed in lieu of
foreclosure, hazard insurance with extended coverage in an amount which is at
least equal to the lesser of (i) the maximum insurable value from time to time
of the improvements which are a part of such property or (ii) the combined
principal balance owing on such Mortgage Loan and any mortgage loan senior to
such Mortgage Loan at the time of such foreclosure or deed in lieu of
foreclosure plus accrued interest and the good-faith estimate of the Servicer of
related Liquidation Expenses to be incurred in connection therewith. Amounts
collected by the Servicer under any such policies shall be deposited in the
Collection Account to the extent called for by Section 3.02. In cases in which
any Mortgaged Property is located in a federally designated flood area, the
hazard insurance to be maintained for the related Mortgage Loan shall include
flood insurance. All such flood insurance shall be in such amounts as are
required under applicable guidelines of the Federal Flood Emergency Act. The
Servicer shall be under no obligation to require that any Mortgagor maintain
earthquake or other additional insurance and shall be under no obligation itself
to maintain any such additional insurance on property acquired in respect of a
Mortgage Loan, other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance. If
the Servicer shall obtain and maintain a blanket policy consistent with prudent
industry standards insuring against hazard losses on all of the Mortgage Loans
in an aggregate amount prudent under industry standards, it shall conclusively
be deemed to have satisfied its obligations as set forth in the first sentence
of this Section 3.04 and there shall have been a loss which would have been
covered by such policy, deposit in the Collection Account, as the case may be,
the amount not otherwise payable under the blanket policy because of such
deductible clause.
Section 3.05. Assumption and Modification Agreements. In any case in which
a Mortgaged Property has been or is about to be conveyed by the Mortgagor, the
Servicer shall exercise its right to accelerate the maturity of such Mortgage
Loan consistent with the then current practice of the Servicer and without
regard to the inclusion of such Mortgage Loan in the Trust. If it elects not to
enforce its right to accelerate or if it is prevented from doing so by
applicable law, the Servicer (so long as such action conforms with the
underwriting standards generally acceptable in the industry at the time for new
origination) is authorized to take or enter into an assumption and modification
agreement from or with the Person to whom such Mortgaged Property has been or is
about to be conveyed, pursuant to which such Person becomes liable under the
Loan Agreement and, to the extent permitted by applicable law, the Mortgagor
remains liable thereon. The Servicer shall notify the Trustee that any
assumption and modification agreement has been completed by delivering to the
Trustee an Officer's Certificate certifying that such agreement is in compliance
with this Section 3.05 and by forwarding to the applicable Custodian, as agent
for the Trustee, the original copy of such assumption and modification
agreement. Any such assumption and modification agreement shall, for all
purposes, be considered a part of the related Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. No change in
the terms of the related Loan Agreement may be made by the Servicer in
connection with any such assumption to the extent that such change would not be
permitted to be made in respect
43
of the original Loan Agreement pursuant to the fourth paragraph of Section
3.01(a). Any fee collected by the Servicer for entering into any such agreement
will be retained by the Servicer as additional servicing compensation.
Section 3.06. Realization Upon Defaulted Mortgage Loans; Repurchase of
Certain Mortgage Loans. The Servicer shall foreclose upon or otherwise
comparably convert to ownership Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default when, in the opinion of the
Servicer based upon the practices and procedures referred to in the following
sentence, no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 3.02; provided that if the Servicer has actual
knowledge or reasonably believes that any Mortgaged Property is affected by
hazardous or toxic wastes or substances and that the acquisition of such
Mortgaged Property would not be commercially reasonable, then the Servicer will
not cause the Trust to acquire title to such Mortgaged Property in a foreclosure
or similar proceeding. In connection with such foreclosure or other conversion,
the Servicer shall follow such practices (including, in the case of any default
on a related senior mortgage loan, the advancing of funds to correct such
default) and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities. The foregoing is
subject to the proviso that the Servicer shall not be required to expend its own
funds in connection with any foreclosure or towards the correction of any
default on a related senior mortgage loan or restoration of any property unless
it shall determine that such expenditure will increase Net Liquidation Proceeds.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee on behalf of
Certificateholders.
The Servicer, in its sole discretion, shall have the right to purchase for
its own account from the Trust any Mortgage Loan which is 91 days or more
delinquent at a price equal to the purchase price described below. The price for
any Mortgage Loan purchased hereunder (which shall be calculated in the same
manner set forth in Section 2.02) shall be deposited in the Collection Account
and the Trustee, upon receipt of a certificate from the Servicer in the form of
Exhibit L hereto, 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 prepared by the Servicer, in each case without recourse, as shall
be necessary to vest in the purchaser of such Mortgage Loan any Mortgage Loan
released pursuant hereto and the Servicer shall succeed to all the Trustee's
right, title and interest in and to such Mortgage Loan and all security and
documents related thereto. Such assignment shall be an assignment outright and
not for security. The Servicer shall thereupon own such Mortgage Loan, and all
security and documents, free of any further obligation to the Trustee, the
Credit Enhancer or the Certificateholders with respect thereto.
Section 3.07. Trustee to Cooperate. On or before each Payment Date, the
Servicer will notify the Trustee of the payment in full of the Asset Balance of
any Mortgage Loan during the preceding Collection Period, which notification
shall be by a certification (which certification shall include a statement to
the effect that all amounts
44
received in connection with such payment which are required to be deposited in
the Collection Account pursuant to Section 3.02 have been so deposited or
credited) of a Servicing Officer. Upon any such payment in full, the Servicer is
authorized to execute, pursuant to the authorization contained in Section 3.01,
if the assignments of Mortgage have been recorded as required hereunder, an
instrument of satisfaction regarding the related Mortgage, which instrument of
satisfaction shall be recorded by the Servicer if required by applicable law and
be delivered to the Person entitled thereto. It is understood and agreed that no
expenses incurred in connection with such instrument of satisfaction or transfer
shall be reimbursed from amounts deposited in the Collection Account. If the
Trustee is holding the Mortgage Files, from time to time and as appropriate for
the servicing or foreclosure of any Mortgage Loan, or in connection with the
payment in full of the Asset Balance of any Mortgage Loan, the Trustee shall,
upon request of the Servicer and delivery to the Trustee of a Request for
Release substantially in the form attached hereto as Exhibit J signed by a
Servicing Officer, release the related Mortgage File to the Servicer and the
Trustee shall execute such documents, in the forms provided by the Servicer, as
shall be necessary to the prosecution of any such proceedings or the taking of
other servicing actions. Such trust receipt shall obligate the Servicer to
return the Mortgage File to the Trustee when the need therefor by the Servicer
no longer unless the Mortgage Loan shall be liquidated, in which case, upon
receipt of a certificate of a Servicing Officer similar to that hereinabove
specified, the trust receipt shall be released by the Trustee or such Custodian
to the Servicer.
In order to facilitate the foreclosure of the Mortgage securing any
Mortgage Loan that is in default following recordation of the assignments of
Mortgage in accordance with the provisions hereof, the Trustee shall, if so
requested in writing by the Servicer, execute an appropriate assignment in the
form provided to the Trustee by the Servicer to assign such Mortgage Loan for
the purpose of collection to the Servicer or to the related subservicer (any
such assignment shall unambiguously indicate that the assignment is for the
purpose of collection only), and, upon such assignment, the Servicer will
thereupon bring all required actions in its own name and otherwise enforce the
terms of the Mortgage Loan and deposit the Net Liquidation Proceeds, exclusive
of Foreclosure Profits, received with respect thereto in the Collection Account.
In the event that all delinquent payments due under any such Mortgage Loan are
paid by the Mortgagor and any other defaults are cured, then the Servicer shall
promptly reassign such Mortgage Loan to the Trustee and return the related
Mortgage File to the place where it was being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. The Servicer shall be entitled to receive the Servicing Fee pursuant
to Section 3.03 as compensation for its services in connection with servicing
the Mortgage Loans. Moreover, additional servicing compensation in the form of
late payment charges or other receipts not required to be deposited in the
Collection Account (other than Foreclosure Profits) shall be retained by the
Servicer. The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder (including payment of all other fees
and expenses not expressly stated hereunder to be for the account of the
Certificateholders) and shall not be entitled to reimbursement therefor
45
except as specifically provided herein. Liquidation Expenses are reimbursable to
the Servicer solely from related Liquidation Proceeds.
(a) The Servicer shall deliver to the Trustee, the Credit Enhancer and
each of the Rating Agencies, promptly after having obtained knowledge thereof,
but in no event later than five Business Days thereafter, written notice by
means of an Officer's Certificate of any event which with the giving of notice
or the lapse of time or both, would become an Event of Servicing Termination.
Section 3.09. Annual Statement as to Compliance. (a) The Servicer will
deliver to the Trustee, the Credit Enhancer and the Rating Agencies, on or
before __________ of each year, beginning 200_, an Officer's Certificate stating
that (i) a review of the activities of the Servicer during the preceding fiscal
year (or such shorter period as is applicable in the case of the first report)
and of its 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 has fulfilled all of its material obligations under this
Agreement throughout such fiscal year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
Section 3.10. Annual Servicing Report. On or before __________ of each
year, beginning 200_, the Servicer, at its expense, shall cause a firm of
nationally recognized independent public accountants (who may also render other
services to the Servicer) to furnish a report to the Trustee, the Credit
Enhancer and each Rating Agency to the effect that such firm has examined
certain documents and records relating to the servicing of mortgage loans during
the most recent fiscal year then ended under pooling and servicing agreements
(substantially similar to this Agreement, including this Agreement) that such
examination, was conducted substantially in compliance with the audit guide for
audits of non-supervised mortgagees approved by the Department of Housing and
Urban Development for use by independent public accountants (to the extent that
the procedures in such audit guide are applicable to the servicing obligations
set forth in such agreements) and that such examination has disclosed no items
of noncompliance with the provisions of this Agreement which, in the opinion of
such firm, are material, except for such items of noncompliance as shall be set
forth in such report.
Section 3.11. Annual Opinion of Counsel. On or before __________ of each
year, beginning 200_, each of the Transferor and the Depositor, at its expense,
shall deliver to the Trustee and the Credit Enhancer the applicable Opinion of
Counsel specified in Exhibit E hereto.
Section 3.12. Access to Certain Documentation and Information Regarding
the Mortgage Loans. (a) The Servicer shall provide to the Trustee, the
Credit Enhancer, any Investor Certificateholders that are federally insured
savings and loan associations, the Office of Thrift Supervision, successor to
the Federal Home Loan Bank Board, the FDIC and the supervisory agents and
examiners of the Office of Thrift Supervision access to the documentation
regarding the Mortgage Loans required by applicable regulations of the Office of
Thrift Supervision and the FDIC (acting as operator of the SAIF or the
46
BIF), such access being afforded without charge but only upon reasonable request
and during normal business hours at the offices of the Servicer. Nothing in this
Section 3.12 shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Mortgagors
and the failure of the Servicer to provide access as provided in this Section
3.12 as a result of such obligation shall not constitute a breach of this
Section 3.12.
(b) The Servicer shall supply information in such form as the Trustee
shall reasonably request to the Trustee and the Paying Agent, on or before the
start of the Determination Date preceding the related Payment Date, as is
required in the Trustee's reasonable judgment to enable the Paying Agent or the
Trustee, as the case may be, to make required distributions and to furnish the
required reports to Certificateholders and to make any claim under the Policy.
Section 3.13. Maintenance of Certain Servicing Insurance Policies. The
Servicer shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as master servicer hereunder and (ii) a fidelity
bond in respect of its officers, employees or agents. Each such policy or
policies and bond together shall comply with the requirements from time to time
of the Federal National Mortgage Association for persons performing servicing
for mortgage loans purchased by such Association.
Section 3.14. Reports to the Securities and Exchange Commission. The
Trustee shall, on behalf of the Trust, cause to be filed with the Securities and
Exchange Commission any periodic reports required to be filed under the
provisions of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission thereunder. Upon the
request of the Trustee, each of the Servicer, the Depositor and the Transferor
shall cooperate with the Trustee in the preparation of any such report and shall
provide to the Trustee in a timely manner all such information or documentation
as the Trustee may reasonably request in connection with the performance of its
duties and obligations under this Section.
Section 3.15. Tax Returns. In accordance with Section 2.08 hereof, the
Trustee shall prepare and file any Federal, state or local income and franchise
tax return for the Trust as well as any other applicable return and apply for a
taxpayer identification number on behalf of the Trust. The Transferor shall
treat the Mortgage Loans as its property for all Federal, state or local tax
purposes and shall report all income earned thereon (including amounts payable
as fees to the Servicer) as its income for income tax purposes. In the event the
Trust shall be required pursuant to an audit or administrative proceeding or
change in applicable regulations to file Federal, state or local tax returns,
the Trustee shall prepare and file or shall cause to be prepared and filed any
tax returns required to be filed by the Trust; the Trustee shall promptly sign
such returns and deliver such returns after signature to the Servicer and such
returns shall be filed by the Servicer. The Trustee shall also prepare or shall
cause to be prepared all tax information required by law to be distributed to
Investor Certificateholders. In no event shall the Trustee or the Servicer be
liable for any liabilities, costs or expenses of the Trust, the Investor
Certificateholders, the Transferor Certificateholders or the Certificate Owners
arising
47
under any tax law, including, without limitation, Federal, state or local income
and franchise or excise taxes or any other tax imposed on or measured by income
(or any interest or penalty with respect thereto or arising from a failure to
comply therewith).
Section 3.16. Information Required by the Internal Revenue Service
Generally and Reports of Foreclosures and Abandonments of Mortgaged Property.
The Servicer shall prepare and deliver all federal and state information reports
when and as required by all applicable state and federal income tax laws. In
particular, with respect to the requirement under Section 6050J of the Code to
the effect that the Servicer shall make reports of foreclosures and abandonments
of any mortgaged property for each year beginning in 200_, the Servicer shall
file reports relating to each instance occurring during the previous calendar
year in which the Servicer (i) on behalf of the Trustee acquires an interest in
any Mortgaged Property through foreclosure or other comparable conversion in
full or partial satisfaction of a Mortgage Loan, or (ii) knows or has reason to
know that any Mortgaged Property has been abandoned. The reports from the
Servicer shall be in form and substance sufficient to meet the reporting
requirements imposed by Section 6050J.
ARTICLE IV
Servicing Certificate
Section 4.01. Servicing Certificate. Not later than each Determination
Date, the Servicer shall deliver (a) to the Trustee, the Statement to
Certificateholders required to be prepared pursuant to Section 5.03 and (b) to
the Trustee, the Transferor, the Depositor, the Paying Agent, the Credit
Enhancer and each Rating Agency a Servicing Certificate (in written form or the
form of computer readable media or such other form as may be agreed to by the
Trustee and the Servicer), together with an Officer's Certificate to the effect
that such Servicing Certificate is true and correct in all material respects,
stating the related Collection Period, Payment Date, the series number of the
Certificates, the date of this Agreement, and:
(i) the aggregate amount of collections received on the Mortgage
Loans on or prior to the Determination Date in respect of such Collection
Period;
(ii) the aggregate amount of (a) Interest Collections and (b)
Principal Collections for such Collection Period;
(iii) the Investor Floating Allocation Percentage and the Investor
Fixed Allocation Percentage for such Collection Period;
(iv) the Investor Interest Collections and Principal Collections
allocated to the Investor Certificates for such Collection Period;
(v) the Transferor Interest Collections and Transferor Principal
Collections for such Collection Period;
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(vi) Class A Certificate Interest, the Class A Certificate Rate and
the Class S Certificate Interest for the related Interest Period;
(vii) the amount, if any, of such Class A Certificate Interest or
Class S Certificate Interest that is not payable on account of
insufficient Investor Interest Collections;
(viii) the portion of the Unpaid Class A Certificate Interest
Shortfall and the portion of the Unpaid Class S Certificate Interest
Shortfall, if any, the amount of interest on such shortfall at the
Certificate Rate applicable from time to time (separately stated) to be
distributed on such Payment Date;
(ix) the Unpaid Class A Certificate Interest Shortfall and the
Unpaid Class S Certificate Interest Shortfall, if any, to remain after the
distribution on such Payment Date;
(x) the Accelerated Principal Distribution Amount and the portion
thereof that will be distributed pursuant to Section 5.01(a)(viii);
(xi) the Scheduled Principal Collections Distribution Amount,
separately stating the components thereof;
(xii) the amount of any Transfer Deposit Amount paid by the
Transferor or the Depositor pursuant to Section 2.02 or 2.04;
(xiii) any accrued and unpaid Servicing Fees for previous Collection
Periods and the Servicing Fee for such Collection Period;
(xiv) the Investor Loss Amount for such Collection Period;
(xv) the aggregate amount, if any, of Investor Loss Reduction
Amounts for previous Payment Dates that have not been previously
reimbursed to Class A Certificateholders pursuant to 5.01(a)(vi);
(xvi) the Pool Balance as of the end of the preceding Collection
Period and as of the end of the second preceding Collection Period;
(xvii) the Invested Amount as of the end of the preceding Collection
Period;
(xviii) the Class A Certificate Principal Balance, the Class S
Notional Amount and Pool Factor after giving effect to the distribution on
such Payment Date and to any reduction on account of the Investor Loss
Amount;
(xix) the Transferor Principal Balance after giving effect to the
distribution on such Payment Date;
49
(xx) the aggregate amount of Additional Balances created during the
previous Collection Period;
(xxi) the number and aggregate Asset Balances of Mortgage Loans (x)
as to which the Minimum Monthly Payment is delinquent for 30-59 days,
60-89 days and 90 or more days, respectively and (y) that have become REO,
in each case as of the end of the preceding Collection Period;
(xxii) whether a Rapid Amortization Event has occurred since the
prior Determination Date, specifying each such Rapid Amortization Event if
one has occurred;
(xxiii) whether an Event of Servicing Termination has occurred since
the prior Determination Date, specifying each such Event of Servicing
Termination if one has occurred;
(xxiv) the amount to be distributed to the Credit Enhancer pursuant
to Section 5.01(a)(vii) and Section 5.01(a)(ix)(ii), stated separately;
(xxv) the amount to be distributed to the Spread Account pursuant to
Section 5.01(a)(ix)(i);
(xxvi) the Guaranteed Principal Distribution Amount for such Payment
Date;
(xxvii) the Credit Enhancement Draw Amount, if any, for such Payment
Date;
(xxviii) the amount to be distributed to the Transferor pursuant to
Section 5.01(a)(xi);
(xxix) the amount to be paid to the Servicer pursuant to Section
5.01(a)(x);
(xxx) the Maximum Rate for the related Collection Period and the
Weighted Average Net Loan Rate;
(xxxi) the total amount of funds on deposit in the Spread Account
and the applicable Spread Account Maximum;
(xxxii) the Overcollateralization Amount after giving effect to the
distribution to be made on such Distribution;
(xxxiii) the number and principal balances of any Mortgage Loans
retransferred to the Transferor pursuant to Section 2.06;
(xxxiv) the amount of Principal Collections to be deposited in the
Funding Account in respect of such Payment Date;
50
(xxxv) the amount on deposit in the Funding Account as of such
Payment Date; and
(xxxvi) the aggregate of the Asset Balances of the Subsequent
Mortgage Loans purchased on the related Subsequent Transfer Dates.
The Trustee shall conclusively rely upon the information contained in a
Servicing Certificate for purposes of making distributions pursuant to Section
5.01, shall have no duty to inquire into such information and shall have no
liability in so relying. The format and content of the Servicing Certificate may
be modified by the mutual agreement of the Servicer, the Trustee and the Credit
Enhancer. The Servicer shall give notice of any such change to the Rating
Agencies.
Section 4.02. Claims upon the Policy. (a) If, by the close of business
on the third Business Day prior to a Payment Date, the sum of the funds then on
deposit in the Collection Account for the related Collection Period which are
payable to the Investor Certificateholders pursuant to Sections 5.01(a), (b) and
(g) (after giving effect to the distribution of the Trustee Fee and the
Premium), the amounts on deposit in the Spread Account, amounts transferred from
the Funding Account to the Collection Account pursuant to Sections 5.05(c)(ii)
and 5.05(c)(iii)(B) and the amount, if any, deposited into the Collection
Account pursuant to Section 4.05 are insufficient to pay the Guaranteed
Distribution on such Payment Date, then the Trustee shall give notice to the
Credit Enhancer by telephone or telecopy of the amount equal to the Credit
Enhancement Draw Amount. Such notice of such sum shall be confirmed in writing
to the Credit Enhancer at or before 10:00 a.m., New York City time, on the
second Business Day prior to such Payment Date. Following receipt by the Credit
Enhancer of such notice in such form, the Credit Enhancer will pay any amount
payable under the Policy on the later to occur of (i) 12:00 noon, New York City
time, on the Business Day following such receipt and (ii) 12:00 noon, New York
City time, on the Payment Date to which such deficiency relates.
(b) The Trustee shall keep a complete and accurate record of the amount of
interest and principal paid in respect of any Investor Certificate from moneys
received under the Policy. The Credit Enhancer 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.
(c) The Trustee shall promptly notify the Credit Enhancer 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 Investor
Certificates. Each Investor Certificateholder by its purchase of such
Certificates, the Servicer and the Trustee hereby agree that, the Credit
Enhancer (so long as no Credit Enhancer 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
51
foregoing, the Credit Enhancer shall be subrogated to the rights of the
Servicer, the Trustee, each Investor Certificateholder in the conduct of any
such Preference Claim, including, without limitation, all rights of any party to
an adversary proceeding action with respect to any court order issued in
connection with any such Preference Claim.
Section 4.03. Spread Account. (a) The Trustee shall establish and
maintain a separate trust account (the "Spread Account") titled "[Trustee], as
Trustee, in trust for the registered holders of Home Equity Loan Asset Backed
Certificates, Series 200_-_." The Spread Account shall be an Eligible Account.
Amounts on deposit in the Spread Account will, at the direction of the
Transferor, be invested in Eligible Investments maturing no later than the day
before the next Payment Date.
All income and gain realized from any investment of funds in the Spread
Account shall be for the benefit of the Transferor and shall be subject to its
withdrawal from time to time. The amount of any losses incurred in respect of
the principal amount of any such investments shall be deposited in the Spread
Account by the Transferor out of its own funds immediately as realized.
(b) On each Determination Date the Trustee shall determine (i) the extent
to which Investor Interest Collections and the amounts, if any, deposited into
the Collection Account pursuant to Section 4.05 applied in the order specified
in Section 5.01(a) are insufficient to make distributions as provided in clauses
(iii), (iv) and (v) of Section 5.01(a) and (ii) the Guaranteed Principal
Distribution Amount for the related Payment Date. On each Payment Date the
Trustee shall withdraw from the Spread Account and deposit into the Collection
Account the lesser of the amount on deposit in the Spread Account and an amount
equal to the sum of the amounts, if any, determined in clauses (i) and (ii) of
the preceding sentence.
(c) Following the termination of the Trust pursuant to Section 10.01 or
11.02 hereof, the Trustee shall withdraw all amounts then on deposit in the
Spread Account and distribute such amounts first to any amounts due and owing to
the Credit Enhancer and then to the Transferor. If on any Payment Date the
amount on deposit in the Spread Account exceeds the Spread Account Maximum, the
Trustee shall withdraw such excess and distribute it to the Transferor.
Section 4.04. Effect of Payments by the Credit Enhancer; Subrogation.
Anything herein to the contrary notwithstanding, any payment with respect to
principal of or interest on any of the Investor Certificates which is made with
moneys received pursuant to the terms of the Policy shall not be considered
payment of such Investor Certificates from the Trust and shall not result in the
payment of or the provision for the payment of the principal of or interest on
such Investor Certificates within the meaning of Section 5.01. The Depositor,
the Servicer and the Trustee acknowledge, and each Holder by its acceptance of
an Investor Certificate agrees, that without the need for any further action on
the part of the Credit Enhancer, the Depositor, the Servicer, the Trustee or the
Certificate Registrar (a) to the extent the Credit Enhancer makes payments,
directly or indirectly, on account of principal of or interest on any Investor
Certificates to the Holders of such Certificates, the Credit Enhancer will be
fully subrogated to the rights of
52
such Holders to receive such principal and interest from the Trust and (b) the
Credit Enhancer shall be paid such principal and interest but only from the
sources and in the manner provided herein for the payment of such principal and
interest.
The Trustee and the Servicer shall cooperate in all respects with any
reasonable request by the Credit Enhancer for action to preserve or enforce the
Credit Enhancer's rights or interests under this Agreement without limiting the
rights or affecting the interests of the Holders as otherwise set forth herein.
ARTICLE V
Payments and Statements
to Certificateholders; Rights of Certificateholders
Section 5.01. Distributions. (a) Distributions of Investor Interest
Collections and Investment Proceeds. Subject to Section 11.02(b), on each
Payment Date, the Trustee or the Paying Agent, as the case may be, shall
distribute out of the Collection Account to the extent of (x) Investor Interest
Collections collected during the related Collection Period, (y) the amounts
transferred from the Funding Account pursuant to Section 5.05(c)(i) and (z) the
amounts transferred from the Spread Account as determined pursuant to Section
4.03(b), the following amounts and in the following order of priority to the
following Persons (based on the information set forth in the Servicing
Certificate):
(i) the Trustee Fee for such Payment Date to the Trustee;
(ii) the premium pursuant to the Insurance Agreement to the Credit
Enhancer;
(iii) the Class A Certificate Interest for such Payment Date to the
Class A Certificateholders and the Unpaid Class A Certificate Interest
Shortfall, if any, for such Payment Date to the Class A Certificateholders
plus, to the extent legally permissible, interest thereon at the Class A
Certificate Rate;
(iv) the Class S Certificate Interest for such Payment Date to the
Class S Certificateholders and the Unpaid Class S Certificate Interest
Shortfall, if any, for such Payment Date plus, to the extent legally
permissible, interest thereon at the Class S Certificate Rate;
(v) the Investor Loss Amount for such Collection Period to the Class
A Certificateholders as principal in reduction of the Class A Certificate
Principal Balance;
(vi) to Class A Certificateholders as principal in reduction of the
Class A Certificate Principal Balance the aggregate amount of the Investor
Loss Reduction Amounts, if any, for previous Payment Dates that have not
been previously reimbursed to Class A Certificateholders pursuant to this
clause (vi);
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(vii) to reimburse the Credit Enhancer for previously unreimbursed
Credit Enhancement Draw Amounts together with interest thereon at the
applicable rate set forth in the Insurance Agreement;
(viii) the Accelerated Principal Distribution Amount, if any, to the
Class A Certificateholders;
(ix) (i) to the Trustee to deposit to the Spread Account up to the
Spread Account Maximum and (ii) to the Credit Enhancer for any amounts
owed to the Credit Enhancer pursuant to the Insurance Agreement;
(x) the amount, if any, of any Unpaid Class A Certificate Carry
Forward Interest Amount to the Class A Certificates;
(xi) any amount required to be paid to the Servicer pursuant to
Section 7.03 which has not been previously paid to the Servicer; and
(xii) any remaining amount to the Transferor.
(b) Distribution of Principal Collections. On each Payment Date during the
Funding Period, the Scheduled Principal Collections Distribution Amount shall be
deposited into the Funding Account and shall not be distributed to the Class A
Certificateholders. On each Payment Date following the termination of the
Funding Period, the Trustee shall, subject to Section 11.02(b) and except on the
Payment Date in __________ 200_, distribute out of the Collection Account to the
Class a Certificateholders the Scheduled Principal Collections Distribution
Amount (together with amounts transferred to the Collection Account from the
Spread Account pursuant to Section 4.03(b) relating to principal up to but not
in excess of the Class A Certificate Principal Balance. In addition, on the
first Payment Date following the end of the Funding Period, the Trustee shall
distribute out of the Collection Account the amount required to be so
distributed pursuant to Section 5.05(c)(iii)(C). On the Payment Date in
__________ 200_, the Trustee shall distribute to Class A Certificateholders
Principal Collections up to the Class A Certificate Principal Balance.
(c) Application of Transferor Subordinated Amount. If, after applying
Class a Interest Collections as provided in Section 5.01(a) above, any amounts
specified in clauses (i) through (vi) remain unpaid, the Trustee shall, based on
information set forth in the Servicing Certificate for such Payment Date, apply
Transferor Available Funds to make such payments and the Transferor Subordinated
Amount shall be reduced in accordance with clause (i) of the definition thereof
to the extent of such application. If Transferor Available Funds applied in the
order specified in Section 5.01(a) are insufficient to cover the aggregate
Investor Loss Amount for such Payment Date, then the remaining aggregate
Investor Loss Amount (but only to the extent of the remaining Transferor
Subordinated Amount) shall be reallocated to the Transferor Principal Balance
(after giving effect to the Transferor's portion of the Investor Loss Amount)
and shall not be allocated to the Class A Certificates and the Transferor
Subordinated Amount shall be reduced, as described in clause (ii) of the
definition thereof, by the amount so reallocated.
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(d) Distribution of the Credit Enhancement Draw Amount. With respect to
any Payment Date, to the extent that Investor Interest Collections and amounts
transferred from the Spread Account on the related Payment Date in respect of
the amount determined pursuant to Section 4.03(b)(i) and any amounts, if any,
deposited to the Collection Account pursuant to Section 4.05 applied in the
order specified in Section 5.01(a) are insufficient to make distributions as
provided in clauses (iii) and (iv) of Section 5.01(a) above, the Trustee will
make such payments (the "Deficiency Amount") from the amount drawn under the
Policy for such Payment Date pursuant to Section 4.02. For any Payment Date as
to which there is a Guaranteed Principal Distribution Amount, the Trustee shall
distribute the Guaranteed Principal Distribution Amount to Certificateholders
from the amount drawn under the Policy for such Payment Date pursuant to Section
4.02.
The aggregate amount of principal distributed to the Class A
Certificateholders under this Agreement shall not exceed the Original Class A
Certificate Principal Balance.
(e) Method of Distribution. The Trustee shall make distributions in
respect of a Payment Date to each Investor Certificateholder of record on the
related Record Date (other than as provided in Section 10.01 respecting the
final distribution) by check or money order mailed to such Investor
Certificateholder at the address appearing in the Certificate Register, or upon
written request by an Investor Certificateholder delivered to the Trustee at
least five Business Days prior to such Record Date, by wire transfer (but only
if such Certificateholder is the Depository or such Certificateholder owns of
record one or more Investor Certificates having principal denominations
aggregating at least $1,000,000), or by such other means of payment as such
Investor Certificateholder and the Trustee shall agree. Distributions among
Investor Certificateholders shall be made in proportion to the Percentage
Interests evidenced by the Investor Certificates held by such Investor
Certificateholders.
(f) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which shall
credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. All such credits and disbursements
with respect to a Book-Entry Certificate are to be made by the Depository and
the Depository Participants in accordance with the provisions of the Investor
Certificates. None of the Trustee, the Paying Agent, the Certificate Registrar,
the Depositor, the Credit Enhancer or the Servicer shall have any responsibility
therefor except as otherwise provided by applicable law.
(g) Distributions to Holders of Transferor Certificates. On each Payment
Date, the Trustee shall, based upon the information set forth in the Servicing
Certificate for such Payment Date, distribute to the Transferor (i) the
Transferor Interest Collections for the related Collection Period and (ii) the
portion, if any, of Transferor Principal
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Collections for the related Collection Period in excess of Additional Balances
created during such Collection Period to the extent such amounts are not
required to be distributed to the Class A Certificateholders pursuant to Section
5.01(c); provided that collections allocable to the Transferor Certificates will
be distributed to the Transferor only to the extent that such distribution will
not reduce the amount of the Transferor Principal Balance as of the related
Payment Date below the Minimum Transferor Interest. Amounts not distributed to
the Transferor because of such limitations will be retained in the Collection
Account until the Transferor Principal Balance exceeds the Minimum Transferor
Interest, at which time such excess shall be released to the Transferor. If any
such amounts are still retained in the Collection Account upon the commencement
of the Rapid Amortization Period, such amounts will be paid to the Class A
Certificateholders as a reduction of the Class A Certificate Principal Balance.
Section 5.02. Calculation of the Class A Certificate Rate. On the second
LIBOR Business Day immediately preceding each Payment Date, the Trustee shall
determine LIBOR for the Interest Period commencing on such Payment Date and
inform the Servicer (at the facsimile number given to the Trustee in writing) of
such rates. On each Determination Date, the Trustee shall determine the
applicable Class A Certificate Rate for the related Payment Date.
Section 5.03. Statements to Certificateholders. Concurrently with each
distribution to Investor Certificateholders, the Trustee shall forward to each
Investor Certificateholder, the Servicer and each Rating Agency a statement
prepared by the Servicer pursuant to Section 4.01 with respect to such
distribution setting forth:
(i) the Investor Floating Allocation Percentage for the preceding
Collection Period;
(ii) the Class A Certificate Distribution Amount;
(iii) the amount of Class A Certificate Interest in such
distribution, the related Class A Certificate Rate and the Class S
Certificate Interest;
(iv) the amount, if any, of any Unpaid Class A Certificate Interest
Shortfall or any Unpaid Class S Certificate Interest Shortfall in such
distribution;
(v) the amount, if any, of the remaining Unpaid Class A Certificate
Interest Shortfall after giving effect to such distribution;
(vi) the amount, if any, of principal in such distribution,
separately stating the components thereof;
(vii) the amount, if any, of the reimbursement of previous Investor
Loss Reduction Amounts in such distribution;
(viii) the amount, if any, of the aggregate of unreimbursed Investor
Loss Reduction Amounts after giving effect to such distribution;
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(ix) the Servicing Fee for such Payment Date;
(x) the Invested Amount, the Class A Certificate Principal Balance
and the Pool Factor, each after giving effect to such distribution;
(xi) the Pool Balance as of the end of the preceding Collection
Period and the aggregate of the Asset Balances of the Mortgage Loans at
the close of business on the last day of the related Collection Period;
(xii) the Credit Enhancement Draw Amount, if any;
(xiii) the number and aggregate Asset Balances of Mortgage Loans as
to which the Minimum Monthly Payment is delinquent for 30-59 days, 60-89
days and 90 or more days, respectively, as of the end of the preceding
Collection Period;
(xiv) the book value (within the meaning of 12 C.F.R. Section 571.13
or comparable provision) of any real estate acquired through foreclosure
or grant of a deed in lieu of foreclosure;
(xv) the Class A Certificate Rate applicable to the distribution on
the following Payment Date;
(xvi) the number and principal balances of any Mortgage Loans
retransferred to the Transferor pursuant to (a) Section 2.04 and (b)
Section 2.06;
(xvii) the amount of Transferor Available Funds, if any, included in
such distribution; and
(xviii) the Transferor Subordinated Amount for the following Payment
Date.
In the case of information furnished pursuant to clauses (ii), (iii) in
respect of Class A Certificate Interest, (iv) and (viii) above, the amounts
shall be expressed as a dollar amount per Investor Certificate with a $1,000
denomination.
Within 60 days after the end of each calendar year, the Servicer shall
prepare or cause to be prepared and shall forward to the Trustee the information
set forth in clauses (iii) and (vi) above aggregated for such calendar year.
Such obligation of the Servicer shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Servicer or a Paying Agent pursuant to any requirements of the Code.
The Trustee shall prepare or cause to be prepared (in a manner consistent
with the treatment of the Class A Certificates as indebtedness of the
Transferor, or as may be otherwise required by Section 3.15) Internal Revenue
Service Form 1099 (or any successor form) and any other tax forms required to be
filed or furnished to
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Certificateholders in respect of distributions by the Trustee (or the Paying
Agent) on the Class A Certificates and shall file and distribute such forms as
required by law.
Section 5.04. Rights of Certificateholders. The Investor Certificates
shall represent fractional undivided interests in the Trust, including the
benefits of the Collection Account and the right to receive Investor Interest
Collections, Principal Collections, if any, and other amounts at the times and
in the amounts specified in this Agreement; the Transferor Certificates shall
represent the remaining interest in the Trust (other than the Spread Account,
the Policy and the Funding Account).
Section 5.05. Funding Account. (a) The Trustee shall establish and
maintain with itself a separate trust account (the "Funding Account") entitled
"[Trustee] as Trustee, in trust for the registered holders of Home Equity Loan
Asset Backed Certificates, Series 200_-_ Funding Account." The Funding Account
shall be an Eligible Account. On each Payment Date during the Funding Period,
the Trustee shall withdraw from the Collection Account and deposit to the
Funding Account the Scheduled Principal Collections Distribution Amount for such
Payment Date.
(b) The Servicer may cause the institution maintaining the Funding Account
to invest any funds in the Funding Account in Eligible Investments which shall
mature or otherwise be available not later than the Business Day next preceding
the Payment Date or, with the approval of the Credit Enhancer and the Rating
Agencies, on the Payment Date next following the date of such investment (except
that any investment in an obligation of the institution with which the Funding
Account is maintained may mature on or before 12:00 noon, New York time, on such
Payment Date) and shall not be sold or disposed of prior to its maturity. At any
time when the Trustee is maintaining the Funding Account, any request by the
Servicer to invest funds on deposit in the Funding Account shall be in writing,
shall be delivered to the Trustee at or before 10:30 a.m., New York time, if
such investment is to be made on such day, and shall certify that the requested
investment is an Eligible Investment which matures at or prior to the time
required hereby. Any such investment shall be registered in the name of the
Trustee as trustee hereunder or in the name of its nominee, and to the extent
such investments are certificated they shall be maintained in the possession of
the Trustee in the state of its Corporate Trust Office. All income and gain
realized from any such investment shall be for the benefit of the Investor
Certificateholders and shall be subject to withdrawal by the Trustee for
distribution to the Investor Certificateholders as provided in subsection (c)(i)
below. The amount of any losses incurred in respect of the principal amount of
any such investment shall be deposited in the Funding Account by the Servicer
out of its own funds immediately as realized. Any investment earnings on the
Funding Account shall be treated as owned by the Transferor for federal and
state income tax purposes.
(c) From time to time withdrawals shall be made from the Funding Account
by the Trustee as follows:
(i) on each Payment Date during the Funding Period, to deposit to
the Collection Account all income realized from Eligible Investments
during the related Interest Period on Principal Collections on deposit in
the Funding Account
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for distribution as Investor Interest Collections in accordance with
Section 5.01(a);
(ii) on each Payment Date prior to the last Payment Date during the
Funding Period, any amounts in respect of Principal Collections on deposit
in the Funding Account shall be withdrawn and applied to purchase the
Subsequent Mortgage Loans, if any, transferred to the Trust pursuant to
Section 2.10; and
(iii) on the last Payment Date of the Funding Period, any amounts in
respect of Principal Collections on deposit in the Funding Account shall
be withdrawn and applied in the following order:
(A) to purchase the Subsequent Mortgage Loans, if any,
transferred to the Trust pursuant to Section 2.10;
(B) to the Transferor, in payment for Additional Balances, in
a maximum amount equal to the excess, if any, of the aggregate of
Draws during the related Collection Period over Principal
Collections received during such Collection Period; and
(C) to the Collection Account, any remaining amounts on
deposit in the Funding Account in respect of Principal Collections,
for distribution to the Class A Certificateholders pursuant to
Section 5.01(b).
ARTICLE VI
The Certificates
Section 6.01. The Certificates. The Class A Certificates, Class S and
Transferor Certificates shall be substantially in the forms set forth in
Exhibits ▇-▇, ▇-▇ and B, respectively, and shall, on original issue, be
executed, authenticated and delivered by the Trustee to or upon the order of the
Depositor concurrently with the sale and assignment to the Trustee of the Trust.
The Class A Certificates shall be initially evidenced by one or more
certificates representing the entire Original Class A Certificate Principal
Balance and shall be held in minimum dollar denominations of $1,000 and
multiples of one dollar in excess thereof, except that one Class A Certificate
may be in a denomination of less than $1,000 so that the sum of the
denominations of all outstanding Class A Certificates shall equal the Original
Class A Certificate Principal Balance. The Class S Certificates shall be
initially evidenced by one or more certificates representing the entire original
Class S Notional Amount and shall be held in minimum notional amounts of $1,000
and multiples of one dollar in excess thereof, except that one Class S
Certificate may be in a notional amount of less than $1,000 so that the sum of
the denominations of all outstanding Class S Certificates shall equal the Class
S Notional Amount on the Closing Date. The Transferor Certificates shall be
issuable as one or more certificates representing the entire interest in the
assets of the Trust other than that represented by the Investor Certificates and
shall initially be issued to the Transferor.
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The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer under its seal imprinted thereon.
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trustee shall bind the Trust, notwithstanding that such individuals or any
of them have ceased to be so authorized prior to the authentication and delivery
of such Transferor Certificates or did not hold such offices at the date of such
Transferor Certificate. No Certificate shall be entitled to any benefit under
this Agreement, or be valid for any purpose, unless such Certificate shall have
been manually authenticated by the Trustee substantially in the form provided
for herein, and such authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Subject to Section 6.02(c), the Investor Certificates
shall be Book-Entry Certificates. The Transferor Certificates shall not be
Book-Entry Certificates.
Section 6.02. Registration of Transfer and Exchange of Investor
Certificates; Appointment of Registrar. (a) The Certificate Registrar shall
cause to be kept at the Corporate Trust Office a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Certificate
Registrar shall provide for the registration of Investor Certificates and of
transfers and exchanges of Investor Certificates as herein provided. The Trustee
shall initially serve as Certificate Registrar for the purpose of registering
Investor Certificates and transfers and exchanges of Investor Certificates as
herein provided.
Upon surrender for registration of transfer of any Investor Certificate at
any office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, the Trustee on behalf of the Trust shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Investor Certificates of the same aggregate
Percentage Interest.
At the option of the Investor Certificateholders, Investor Certificates
may be exchanged for other Investor Certificates in authorized denominations and
the same aggregate Percentage Interests, upon surrender of the Investor
Certificates to be exchanged at any such office or agency. Whenever any Investor
Certificates are so surrendered for exchange, the Trustee shall execute and
authenticate and deliver the Investor Certificates which the Investor
Certificateholder making the exchange is entitled to receive. Every Investor
Certificate presented or surrendered for transfer or exchange shall (if so
required by the Trustee or the Certificate Registrar) be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Trustee and the Certificate Registrar duly executed by, the Holder thereof or
his attorney duly authorized in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry Certificates
shall at all times remain registered in the name of the Depository or its
nominee and at all times: (i) registration of the Investor Certificates may not
be transferred by the Trustee except to another Depository; (ii) the Depository
shall maintain book-entry records with respect to the Certificate Owners and
with respect to ownership and transfers of such
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Investor Certificates; (iii) ownership and transfers of registration of the
Investor Certificates on the books of the Depository shall be governed by
applicable rules established by the Depository; (iv) the Depository may collect
its usual and customary fees, charges and expenses from its Depository
Participants; (v) the Trustee shall deal with the Depository as representative
of the Certificate Owners of the Investor Certificates for purposes of
exercising the rights of Holders under this Agreement, and requests and
directions for and votes of such representative shall not be deemed to be
inconsistent if they are made with respect to different Certificate Owners; and
(vi) the Trustee may rely and shall be fully protected in relying upon
information furnished by the Depository with respect to its Depository
Participants and furnished by the Depository Participants with respect to
indirect participating firms and Persons shown on the books of such indirect
participating firms as direct or indirect Certificate Owners.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository Participant
or brokerage firm representing such Certificate Owners. Each Depository
Participant shall only transfer Book-Entry Certificates of Certificate Owners
that it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures. The parties hereto are
hereby authorized to execute a Letter of Representations with the Depository or
take such other action as may be necessary or desirable to register a Book-Entry
Certificate to the Depository. In the event of any conflict between the terms of
any such Letter of Representation and this Agreement the terms of this Agreement
shall control.
(c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository, and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole option,
with the consent of the Trustee, elects to terminate the book-entry system
through the Depository or (iii) after the occurrence of an Event of Servicing
Termination, the Depository, at the direction of Certificate Owners representing
Percentage Interests aggregating not less than 51% advises the Trustee in
writing that the continuation of a book-entry system through the Depository to
the exclusion of definitive, fully registered Investor Certificates (the
"Definitive Certificates") to Certificate Owners is no longer in the best
interests of the Certificate Owners. Upon surrender to the Certificate Registrar
of the Investor Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Trustee shall execute and
authenticate the Definitive Certificates. Neither the Depositor nor the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates, all references herein to
obligations imposed upon or to be performed by the Depository 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, the Certificate
Registrar, the Servicer and the Depositor shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
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No service charge shall be made for any registration of transfer or
exchange of Investor Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
All Investor Certificates surrendered for registration of transfer or
exchange shall be cancelled by the Certificate Registrar and disposed of
pursuant to its standard procedures.
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate, and (ii) there is delivered to the Trustee,
the Depositor and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Trustee or the Certificate Registrar that such Certificate has been
acquired by a bona fide purchaser, the Trustee shall execute, authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section 6.03, the Trustee or
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section 6.03, shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 6.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Servicer, the Depositor, the
Trustee, the Certificate Registrar, any Paying Agent and any agent of the
Servicer, the Depositor, the Trustee, any Paying Agent or the Certificate
Registrar may treat the Person, including a Depository, in whose name any
Certificate is registered as the owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.01 and for all other purposes
whatsoever, and none of the Servicer, the Depositor, the Trustee, the
Certificate Registrar, any Paying Agent or any agent of any of them shall be
affected by notice to the contrary.
Section 6.05. Restrictions on Transfer of Transferor Certificates. (a)
The Transferor Certificates shall be assigned, transferred, exchanged, pledged,
financed, hypothecated or otherwise conveyed (collectively, for purposes of this
Section 6.05 and any other Section referring to the Transferor Certificates,
"transferred" or a "transfer") only in accordance with this Section 6.05.
(b) No transfer of a Transferor Certificate shall be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. Except for the initial issuance of the
Transferor Certificate to the Transferor, the Trustee shall require (i) the
transferee to execute an investment letter acceptable to and in form
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and substance satisfactory to the Trustee certifying to the Trustee the facts
surrounding such transfer, which investment letter shall not be an expense of
the Trustee or (ii) if the investment letter is not delivered, a written Opinion
of Counsel acceptable to and in form and substance satisfactory to the Trustee
and the Depositor that such transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from said Act or is
being made pursuant to said Act, which Opinion of Counsel shall not be an
expense of the Trustee or the Depositor. The Holder of a Transferor Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Transferor against any liability that may result if the transfer is not so
exempt or is not made in accordance with such federal and state laws.
(c) The Transferor Certificates and any interest therein shall not be
transferred except upon satisfaction of the following conditions precedent: (i)
the Person that acquires a Transferor Certificate shall (A) be organized and
existing under the laws of the United States of America or any state or the
District of Columbia thereof, (B) expressly assume, by an agreement supplemental
hereto, executed and delivered to the Trustee, the performance of every covenant
and obligation of the Transferor hereunder and (C) as part of its acquisition of
a Transferor Certificate, acquire all rights of the Transferor or any transferee
under this Section 6.05(c) to amounts payable to such Transferor or such
transferee under Sections 5.01(a)(xii) and 5.01(g); (ii) the Holder of the
Transferor Certificates shall deliver to the Trustee an Officer's Certificate
stating that such transfer and such supplemental agreement comply with this
Section 6.05(c) and that all conditions precedent provided by this subsection
6.05(c) have been complied with and an Opinion of Counsel stating that all
conditions precedent provided by this subsection 6.05(c) have been complied
with, and the Trustee may conclusively rely on such Officer's Certificate, shall
have no duty to make inquiries with regard to the matters set forth therein and
shall incur no liability in so relying; (iii) the Holder of the Transferor
Certificates shall deliver to the Trustee a letter from each Rating Agency
confirming that its rating of the Investor Certificates, after giving effect to
such transfer, will not be reduced or withdrawn without regard to the Policy;
(iv) the transferee of the Transferor Certificates shall deliver to the Trustee
an Opinion of Counsel to the effect that (a) such transfer will not adversely
affect the treatment of the Investor Certificates after such transfer as debt
for federal and applicable state income tax purposes, (b) such transfer will not
result in the Trust being subject to tax at the entity level for federal or
applicable state tax purposes, (c) such transfer will not have any material
adverse impact on the federal or applicable state income taxation of an Investor
Certificateholder or any Certificate Owner and (d) such transfer will not result
in the arrangement created by this Agreement or any "portion" of the Trust,
being treated as a taxable mortgage pool as defined in Section 7701(i) of the
Code; (v) all filings and other actions necessary to continue the perfection of
the interest of the Trust in the Mortgage Loans and the other property conveyed
hereunder shall have been taken or made and (vi) the transferee shall have
assumed the obligations of the Transferor pursuant to Section 7.07 hereof.
Notwithstanding the foregoing, the requirement set forth in subclause (i)(A) of
this Section 6.05(c) shall not apply in the event the Trustee shall have
received a letter from each Rating Agency confirming that its rating of the
Investor Certificates, after giving effect to a proposed transfer to a Person
that does not meet the requirement set forth in subclause (i)(A), shall not be
reduced or
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withdrawn. Notwithstanding the foregoing, the requirements set forth in this
paragraph (c) shall not apply to the initial issuance of the Transferor
Certificates to the Transferor.
(d) Except for the initial issuance of the Transferor Certificate to the
Transferor, no transfer of a Transferor Certificate shall be made unless the
Trustee shall have received either (i) a representation letter from the
transferee of such Certificate, acceptable to and in form and substance
satisfactory to the Trustee, to the effect that such transferee is not an
employee benefit plan subject to Section 406 of ERISA, nor a Person acting on
behalf of any such plan, which representation letter shall not be an expense of
the Trustee, (ii) if the purchaser is an insurance company, a representation
that the purchaser is an insurance company which is purchasing such Certificates
with funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTCE
95-60")) and that the purchase and holding of such Certificates are covered
under PTCE 95-60, or (iii) in the case of any Transferor Certificate presented
for registration in the name of an employee benefit plan subject to ERISA, and
Section 4975 of the Code (or comparable provisions of any subsequent
enactments), or a trustee of any such plan, an Opinion of Counsel to the effect
that the purchase or holding of such Certificate will not result in the assets
of the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code and will not subject the Trustee to
any obligation in addition to those undertaken in this Agreement, which Opinion
of Counsel shall not be an expense of the Trustee or the Depositor.
Section 6.06. Appointment of Paying Agent. (a) The Paying Agent shall
make distributions to Investor Certificateholders from the Collection Account
pursuant to Section 5.01 and shall report the amounts of such distributions to
the Trustee. The duties of the Paying Agent may include the obligation (i) to
withdraw funds from the Collection Account pursuant to Section 3.03 and for the
purpose of making the distributions referred to above and (ii) to distribute
statements and provide information to Certificateholders as required hereunder.
The Paying Agent hereunder shall at all times be a corporation duly incorporated
and validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by federal or state authorities. The
Paying Agent shall initially be the Trustee. The Trustee may appoint a successor
to act as Paying Agent, which appointment shall be reasonably satisfactory to
the Depositor.
(b) The Trustee shall cause the Paying Agent (if other than the Trustee)
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent shall hold all sums, if any,
held by it for payment to the Investor Certificateholders in trust for the
benefit of the Investor Certificateholders entitled thereto until such sums
shall be paid to such Certificateholders and shall agree that it shall comply
with all requirements of the Code regarding the withholding of payments in
respect of Federal income taxes due from Certificate Owners and otherwise comply
with the provisions of this Agreement applicable to it.
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Section 6.07. Acceptance of Obligations. The Transferor, by its acceptance
of the Transferor Certificates, agrees to be bound by and to perform all the
duties of the Transferor set forth in this Agreement.
ARTICLE VII
The Servicer, the Transferor and the Depositor
Section 7.01. Liability of the Transferor, the Servicer and the Depositor.
The Transferor and the Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically imposed upon and undertaken by the
Transferor or Servicer, as the case may be, herein. The Depositor shall be
liable in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Depositor.
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer, the Transferor or the Depositor. Any corporation into which
the Servicer, the Transferor or the Depositor may be merged or consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Servicer, the Transferor or the Depositor shall be a party, or any
corporation succeeding to the business of the Servicer, the Transferor or the
Depositor, shall be the successor of the Servicer, the Transferor or the
Depositor, as the case may be, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
Section 7.03. Limitation on Liability of the Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders for
any action taken or for refraining from the taking of any action by the Servicer
in good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any such Person
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties of the
Servicer or by reason of reckless disregard of obligations and duties of the
Servicer hereunder. The Servicer and any director or officer or employee or
agent of the Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Servicer and any director or officer or employee or agent
of the Servicer shall be indemnified by the Trust and held harmless against any
loss, liability or expense incurred in connection with any legal action relating
to this Agreement or the 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 its willful
misfeasance, bad faith or gross negligence in the performance of duties
hereunder or by reason of its reckless disregard of obligations and duties
hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to duties to
service the Mortgage Loans in accordance with this Agreement, and which in its
opinion may involve it in any expense or liability; provided, however, that the
Servicer may in its sole discretion undertake any
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such action which it may deem necessary or desirable in respect of this
Agreement, and the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the reasonable legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust and the Servicer shall only be
entitled to be reimbursed therefor pursuant to Section 5.01(a)(xi). The
Servicer's right to indemnity or reimbursement pursuant to this Section 7.03
shall survive any resignation or termination of the Servicer pursuant to Section
7.04 or 8.01 with respect to any losses, expenses, costs or liabilities arising
prior to such resignation or termination (or arising from events that occurred
prior to such resignation or termination).
Section 7.04. Servicer Not to Resign. Subject to the provisions of Section
7.02, the Servicer shall not resign from the obligations and duties hereby
imposed on it except (i) upon determination that the performance of its
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by it or its subsidiaries or Affiliates, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer or its subsidiaries or Affiliates at the date of this
Agreement or (ii) upon satisfaction of the following conditions: (a) the
Servicer has proposed a successor servicer to the Trustee in writing and such
proposed successor servicer is reasonably acceptable to the Trustee; (b) each
Rating Agency shall have delivered a letter to the Trustee prior to the
appointment of the successor servicer stating that the proposed appointment of
such successor servicer as Servicer hereunder will not result in the reduction
or withdrawal of the then current rating of the Investor Certificates without
regard to the Policy; and (c) such proposed successor servicer is reasonably
acceptable to the Credit Enhancer, as evidenced by a letter to the Trustee;
provided, however, that no such resignation by the Servicer shall become
effective until the Trustee or successor servicer designated by the Servicer as
provided above shall have assumed the Servicer's responsibilities and
obligations hereunder or the Trustee shall have designated a successor servicer
in accordance with Section 8.02. Any such resignation shall not relieve the
Servicer of responsibility for any of the obligations specified in Sections 8.01
and 8.02 as obligations that survive the resignation or termination of the
Servicer. Any such determination permitting the resignation of the Servicer
pursuant to clause (i) above shall be evidenced by an Opinion of Counsel to such
effect delivered to the Trustee and the Credit Enhancer. The Servicer shall have
no claim (whether by subrogation or otherwise) or other action against any
Certificateholder for any amounts paid by the Servicer pursuant to any provision
of this Agreement.
Section 7.05. Delegation of Duties. In the ordinary course of business,
the Servicer at any time may delegate any of its duties hereunder to any Person,
including any of its Affiliates, or any subservicer referred to in Section 3.01,
who agrees to conduct such duties in accordance with standards comparable to
those with which the Servicer complies pursuant to Section 3.01. Such delegation
shall not relieve the Servicer of its liabilities and responsibilities with
respect to such duties and shall not constitute a resignation within the meaning
of Section 7.04.
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Section 7.06. Indemnification of the Trust by the Servicer. The Servicer
shall indemnify and hold harmless the Trust and the Trustee from and against any
loss, liability, expense, damage or injury suffered or sustained by reason of
the Servicer's activities or omissions in servicing or administering the
Mortgage Loans that are not in accordance with this Agreement, including, but
not limited to, any judgment, award, settlement, reasonable attorneys' fees and
other costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim. Any such indemnification shall not be
payable from the assets of the Trust. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof. The provisions of this Section 7.06 shall survive termination of this
Agreement.
Section 7.07. Indemnification of the Trust by the Transferor.
Notwithstanding anything to the contrary contained herein, the Transferor (i)
agrees to be liable directly to the injured party for the entire amount of any
losses, claims, damages, liabilities and expenses of the Trust (other than those
attributable to an Investor Certificateholder in the capacity as an investor in
the Investor Certificates as a result of defaults on the Mortgage Loans) to the
extent that the Transferor would be liable if the Trust were a partnership under
the Delaware Revised Uniform Limited Partnership Act in which the Transferor was
a general partner and (ii) shall indemnify and hold harmless the Trust and the
Trustee from and against any loss, liability, expense, damage, claim or injury
(other than those attributable to an Investor Certificateholder in the capacity
as an investor in the Investor Certificates as a result of defaults on the
Mortgage Loans) arising out of or based on this Agreement by reason of any acts,
omissions, or alleged acts or omissions arising out of activities of the Trust
or the Trustee, or the actions of the Servicer, including, but not limited to,
amounts payable to the Servicer pursuant to Section 7.03, any judgment, award,
settlement, reasonable attorneys' fees and other costs or expenses incurred in
connection with the defense of any actual or threatened action, proceeding or
claim; provided that the Transferor shall not indemnify the Trustee (but shall
indemnify any other injured party) if such loss, liability, expense, damage or
injury is due to the Trustee's willful malfeasance, bad faith or gross
negligence or by reason of the Trustee's reckless disregard of its obligations
hereunder. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof.
Section 7.08. Limitation on Liability of the Transferor. None of the
directors or officers or employees or agents of the Transferor shall be under
any liability to the Trust, the Trustee or the Certificateholders, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement and
the issuance of the Certificates; provided, however, that this provision shall
not protect any such Person against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of the duties hereunder. Except as provided in Section 7.07, the
Transferor shall not be under any liability to the Trust, the Trustee or the
Certificateholders for any action taken or for refraining from the taking of any
action in its capacity as Transferor pursuant to this Agreement whether arising
from express or implied duties under this Agreement; provided, however, that
this provision shall not protect the Transferor against any liability which
would otherwise be imposed by reason of willful misfeasance, bad
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faith or gross negligence in the performance of its duties or by reason of
reckless disregard of its obligations and duties hereunder. The Transferor and
any director or officer or employee or agent of the Transferor may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder.
Section 7.09. Limitation on Liability of the Depositor. None of the
directors or officers or employees or agents of the Depositor shall be under any
liability to the Trust, the Trustee or the Certificateholders, it being
expressly understood that all such liability is expressly waived and released as
a condition of, and as consideration for, the execution of this Agreement and
the issuance of the Certificates; provided, however, that this provision shall
not protect any such Person against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of the duties hereunder. The Transferor and any director or officer
or employee or agent of the Transferor may rely in good faith on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising hereunder.
ARTICLE VIII
Servicing Termination
Section 8.01. Events of Servicing Termination. If any one of the following
events ("Events of Servicing Termination") shall occur and be continuing:
(i) Any failure by the Servicer to deposit in the Collection Account
any deposit required to be made under the terms of this Agreement which
continues unremedied for a period of five Business Days after the date
upon which written notice of such failure shall have been given to the
Servicer by the Trustee or to the Servicer and the Trustee by the Credit
Enhancer or Holders of Investor Certificates evidencing Percentage
Interests aggregating not less than 25%; or
(ii) Failure on the part of the Servicer duly to observe or perform
in any material respect any other covenants or agreements of the Servicer
set forth in the Certificates or in this Agreement, which failure
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, and
stating that such notice is a "Notice of Default" hereunder, shall have
been given to the Servicer by the Trustee or to the Servicer and the
Trustee by the Credit Enhancer or the Holders of Investor Certificates
evidencing Percentage Interests aggregating not less than 25%; or
(iii) The entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises for
the appointment of a trustee, conservator, receiver or liquidator in any
insolvency, conservatorship, receivership, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs,
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and the continuance of any such decree or order unstayed and in effect for
a period of 60 consecutive days; or
(iv) The consent by the Servicer to the appointment of a trustee,
conservator, receiver or liquidator in any insolvency, conservatorship,
receivership, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Servicer or of or relating to
substantially all of its property; or the Servicer shall admit in writing
its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations;
then, and in each and every such case, so long as an Event of Servicing
Termination shall not have been remedied by the Servicer, with respect to an
Event of Servicing Termination specified in (i) - (iv), above, either the
Trustee, the Credit Enhancer or the Holders of Investor Certificates evidencing
Voting Rights aggregating not less than 51%, by notice then given in writing to
the Servicer (and to the Trustee if given by the Credit Enhancer or the Holders
of Investor Certificates) may terminate all of the rights and obligations of the
Servicer as servicer under this Agreement. Any such notice to the Servicer shall
also be given to each Rating Agency and the Credit Enhancer. On or after the
receipt by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Certificates or the
Mortgage Loans or otherwise, shall pass to and be vested in the Trustee pursuant
to and under this Section 8.01; and , without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents, or otherwise. The
Servicer agrees to cooperate with the Trustee in effecting the termination of
the responsibilities and rights of the Servicer 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 and to be deposited by it
in the Collection Account, or that have been deposited by the Servicer in the
Collection Account or thereafter received by the Servicer 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 and amending this Agreement to reflect such succession as Servicer
pursuant to this Section 8.01 shall be paid by the predecessor Servicer (or if
the predecessor Servicer is the Trustee, the initial Servicer) upon presentation
of reasonable documentation of such costs and expenses.
Notwithstanding the foregoing, a delay in or failure of performance under
Section 8.01(i) for a period of ten Business Days or under Section 8.01(ii) for
a period of 60 Business Days, shall not constitute an Event of Servicing
Termination if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes. The preceding sentence shall
not
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relieve the Servicer from using its best efforts to perform its respective
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Trustee, the Transferor, the Credit Enhancer
and the Investor Certificateholders with an Officers' Certificate giving prompt
notice of such failure or delay by it, together with a description of its
efforts to so perform its obligations. The Servicer shall immediately notify the
Trustee in writing of any Events of Servicing Termination.
Section 8.02. Trustee to Act; Appointment of Successor. (a) On and
after the time the Servicer receives a notice of termination pursuant to Section
8.01 or 7.04, the Trustee shall be the successor in all respects to the Servicer
in its capacity as servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof. Notwithstanding the above, if the Trustee becomes the
Servicer hereunder, it shall have no responsibility or obligation (i) of
repurchase or substitution with respect to any Mortgage Loan, (ii) with respect
to any representation or warranty of the Servicer, and (iii) for any act or
omission of either a predecessor or successor Servicer other than the Trustee.
As compensation therefor, the Trustee shall be entitled to such compensation as
the Servicer would have been entitled to hereunder if no such notice of
termination had been given. In addition, the Trustee will be entitled to
compensation with respect to its expenses in connection with conversion of
certain information, documents and record keeping, as provided in Section
7.04(b). Notwithstanding the above, (i) if the Trustee is unwilling to act as
successor Servicer, or (ii) if the Trustee is legally unable so to act, the
Trustee may (in the situation described in clause (i)) or shall (in the
situation described in clause (ii)) appoint or petition a court of competent
jurisdiction to appoint, any established housing and home finance institution,
bank or other mortgage loan or home equity loan servicer having a net worth of
not less than $15,000,000 as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder; provided that any such successor Servicer shall be
acceptable to the Credit Enhancer, as evidenced by the Credit Enhancer's prior
written consent, which consent shall not be unreasonably withheld; and provided,
further, that the appointment of any such successor Servicer will not result in
the qualification, reduction or withdrawal of the ratings assigned to the
Certificates by the Rating Agencies without regard to the Policy. Pending
appointment of a successor to the Servicer hereunder, unless the Trustee is
prohibited by law from so acting, the Trustee shall act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
successor shall be entitled to receive compensation out of payments on Mortgage
Loans in an amount equal to the compensation which the Servicer would otherwise
have received pursuant to Section 3.08 (or such lesser compensation as the
Trustee and such successor shall agree). The Trustee and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
(b) Any successor, including the Trustee, to the Servicer as servicer
shall during the term of its service as servicer (i) continue to service and
administer the Mortgage Loans for the benefit of Certificateholders and the
Credit Enhancer and (ii) maintain in force a policy or policies of insurance
covering errors and omissions in the
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performance of its obligations as Servicer hereunder and a fidelity bond in
respect of its officers, employees and agents to the same extent as the Servicer
is so required pursuant to Section 3.12. The appointment of a successor Servicer
shall not affect any liability of the predecessor Servicer which may have arisen
under this Agreement prior to its termination as Servicer (including, without
limitation, any deductible under an insurance policy pursuant to Section 3.04),
nor shall any successor Servicer be liable for any acts or omissions of the
predecessor Servicer or for any breach by such Servicer of any of their
representations or warranties contained herein.
Section 8.03. Notification to Certificateholders. Upon any termination or
appointment of a successor to the Servicer pursuant to this Article VIII or
Section 7.04, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register, the Credit Enhancer and each Rating Agency.
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee. The Trustee, prior to the occurrence of
an Event of Servicing Termination and after the curing or waiver of all Events
of Servicing Termination which may have occurred, undertakes to perform such
duties and only such duties as are specifically set forth in this Agreement. If
an Event of Servicing Termination has occurred (which has not been cured or
waived) of which a Responsible Officer has knowledge, 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 man would exercise or
use under the circumstances in the conduct of his own affairs; provided,
however, that if the Trustee is acting as Servicer it shall use the same degree
of care and skill as is required of the Servicer under this Agreement.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Servicing Termination of
which a Responsible Officer of the Trustee has knowledge, and after the
curing or waiver of all such Events of Servicing Termination 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
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Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the consent or direction of the Credit Enhancer or in
accordance with the direction of the Holders of Investor Certificates
evidencing Voting Rights aggregating not less than 51% relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer referred to
in clauses (i) and (ii) of Section 8.01 or of the occurrence of a Rapid
Amortization Event unless a Responsible Officer of the Trustee at the
Corporate Trust Office obtains actual knowledge of such failure or the
Trustee receives written notice of such failure from the Servicer, the
Credit Enhancer or the Holders of Investor Certificates evidencing Voting
Rights aggregating not less than 51%.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it. None
of the provisions contained in this Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of the Servicer under this Agreement, except during such time,
if any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
this Agreement and in no event shall it be required to perform or accept
responsibility for the obligations of the Depositor or the Transferor.
Section 9.02. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 9.01:
(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 reasonably believed by it to be genuine
and to have been signed or presented by the proper party or parties;
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(ii) the Trustee may consult with counsel and any written advice of
such counsel or 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 advice
or Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders or the Credit
Enhancer, pursuant to the provisions of this Agreement, unless such
Certificateholders or the Credit Enhancer shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of the
Trustee to perform any discretionary act enumerated in this Agreement
shall not be construed as a duty, and the Trustee shall not be answerable
for other than its negligence or willful misconduct in the performance of
any such act; nothing contained herein shall, however, relieve the Trustee
of the obligations, upon the occurrence of an Event of Servicing
Termination (which has not been cured or waived) of which a Responsible
Officer has knowledge, 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 man would exercise or use under the
circumstances in the conduct of his own affairs, unless it is acting as
Servicer;
(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 Servicing Termination and
after the curing or waiver of all Events of Servicing Termination 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 documents, unless
requested in writing to do so by Holders of Investor Certificates
evidencing Voting Rights aggregating not less than 51%; provided, however,
that if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Agreement,
the Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to such proceeding. The reasonable expense of
every such examination shall be paid by the Servicer or, if paid by the
Trustee, shall be reimbursed by the Servicer upon demand. Nothing in this
clause (v) shall derogate from the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Mortgagors;
(vi) the Trustee shall not be accountable, shall have no liability
and makes no representation as to any acts or omissions hereunder of the
Servicer
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until such time as the Trustee may be required to act as Servicer pursuant
to Section 8.02; and
(vii) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through an
Affiliate, agents or attorneys or a custodian.
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans. The
recitals contained herein and in the Certificates (other than the authentication
of the Trustee on the Certificates) shall be taken as the statements of the
Depositor, and the Trustee assumes no responsibility for the correctness of the
same. The Trustee makes no representations as to the validity or sufficiency of
this Agreement or of the Certificates (other than the signature and
authentication 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 Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan, or the
perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the Trust
or its ability to generate the payments to be distributed to Certificateholders
under this Agreement, including, without limitation: the existence, condition
and ownership of any Mortgaged Property; the existence and enforceability of any
hazard insurance thereon (other than if the Trustee shall assume the duties of
the Servicer pursuant to Section 8.02); the validity of the assignment of any
Mortgage Loan to the Trustee or of any intervening assignment; the completeness
of any Mortgage Loan; the performance or enforcement of any Mortgage Loan (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
8.02); the compliance by the Depositor, the Transferor or the Servicer with any
warranty or representation made under this Agreement or in any related document
or the accuracy of any such warranty or representation prior to the Trustee's
receipt of notice or other discovery of any non-compliance therewith or any
breach thereof; any investment of monies by or at the direction of the Servicer
or any loss resulting therefrom, it being understood that the Trustee shall
remain responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of any of the Depositor, the Servicer (other
than if the Trustee shall assume the duties of the Servicer pursuant to Section
8.02), any subservicer or any Mortgagor; any action of the Servicer (other than
if the Trustee shall assume the duties of the Servicer pursuant to Section
8.02), or any subservicer taken in the name of the Trustee; the failure of the
Servicer or any subservicer to act or perform any duties required of it as agent
of the Trustee hereunder; or any action by the Trustee taken at the instruction
of the Servicer (other than if the Trustee shall assume the duties of the
Servicer pursuant to Section 8.02); provided, however, that the foregoing shall
not relieve the Trustee of its obligation to perform its duties under this
Agreement. The Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder (unless the Trustee shall have become the successor Servicer) or to
prepare or
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file any Securities and Exchange Commission filing for the Trust or to record
this Agreement.
Section 9.04. Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates with the
same rights as it would have if it were not Trustee and may transact any banking
and trust business with the Transferor, the Servicer, the Credit Enhancer or the
Depositor.
Section 9.05. Servicer to Pay Trustee's Fees and Expenses; Servicer to
Indemnify. The Servicer covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, reasonable compensation (which shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and the Servicer will pay or
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by 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) except any such expense, disbursement or advance as may
arise from its negligence or bad faith or which is the responsibility of
Certificateholders hereunder. The Servicer covenants and agrees to indemnify the
Trustee from, and hold it harmless against, any and all losses, liabilities,
damages, claims or expenses other than those resulting from the negligence or
bad faith of the Trustee. This section shall survive termination of this
Agreement or the resignation or removal of any Trustee hereunder.
Section 9.06. Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be a corporation duly incorporated and validly existing under
the laws of the United States of America or any state thereof, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, subject to supervision or examination by
federal or state authority. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 9.06,
the combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. The principal office of the Trustee (other than the initial
Trustee) shall be in a state with respect to which an Opinion of Counsel has
been delivered to such Trustee at the time such Trustee is appointed Trustee to
the effect that the Trust will not be a taxable entity under the laws of such
state. In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 9.06, the Trustee shall resign immediately
in the manner and with the effect specified in Section 9.07.
Section 9.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Transferor, the Depositor, the Servicer, the Credit
Enhancer and each Rating Agency. Upon receiving such notice of resignation, the
Transferor shall promptly appoint a successor Trustee (approved in writing by
the Credit Enhancer, so long as such approval is not unreasonably withheld) by
written instrument, in duplicate, one copy of
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which instrument shall be delivered to the resigning Trustee (who shall deliver
a copy to the Servicer) and one copy to the successor Trustee; provided,
however, that any such successor Trustee shall be subject to the prior written
approval of the Transferor. 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 9.06 and shall fail to resign after written request
therefor by the Transferor or the Credit Enhancer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or if a
tax is imposed or threatened with respect to the Trust Fund by any state in
which the Trustee or the Trust Fund is located (which tax cannot be vacated by
the appointment of a co-Trustee or separate trustee pursuant to Section 9.10),
then the Transferor or the Credit Enhancer may remove the Trustee. If the
Transferor or the Credit Enhancer removes the Trustee under the authority of the
immediately preceding sentence, the Transferor shall promptly appoint a
successor Trustee (approved in writing by the Credit Enhancer, which approval
shall not be unreasonably withheld) by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
The Holders of Investor Certificates evidencing Percentage Interests
aggregating over 50% of all Investor Certificates may at any time remove the
Trustee by written instrument or instruments delivered to the Servicer, the
Transferor and the Trustee; the Transferor shall thereupon use its best efforts
to appoint a successor trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 9.07 shall not become
effective until acceptance of appointment by the successor Trustee as provided
in Section 9.08.
Section 9.08. Successor Trustee. Any successor Trustee appointed as
provided in Section 9.07 shall execute, acknowledge and deliver to the
Transferor, the Depositor, the Servicer, the Credit Enhancer and to its
predecessor Trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with like effect as if originally
named as Trustee. The Transferor, the Depositor, the Servicer and the
predecessor Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
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No successor Trustee shall accept appointment as provided in this Section
9.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 9.06.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 9.08, the successor Trustee shall mail notice of the succession of such
Trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register and to each Rating Agency. If the Servicer fails to
mail such notice within 30 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Servicer.
Section 9.09. Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all
of the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be eligible under the provisions of Section 9.06,
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 9.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Mortgaged Property may at the time be located, the
Transferor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments necessary to appoint one or more Persons approved by
the Credit Enhancer 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, and to vest in such Person or Persons, in such capacity and for the
benefit of the Certificateholders, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section 9.10, such powers, duties,
obligations, rights and trusts as the Transferor and the Trustee may consider
necessary or desirable. Any such co-trustee or separate trustee shall be subject
to the written approval of the Servicer. If the Transferor shall not have joined
in such appointment within 15 days after the receipt by it of a request so to
do, or in the case an Event of Servicing Termination shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 9.06 and no notice to
Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 9.08. The Servicer shall be responsible for the
fees of any co-trustee or separate trustee appointed hereunder.
Every separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) 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
(it being understood
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that such separate trustee or co-trustee is not authorized to act
separately without the Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts
are to be performed (whether as Trustee hereunder or as successor to the
Servicer hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Servicer and the Trustee acting jointly may at any time
accept the resignation of or remove any separate trustee or co-trustee
except that following the occurrence of an Event of Servicing Termination,
the Trustee acting alone may accept the resignation or remove any separate
trustee or co-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 IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Transferor and the Servicer.
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 9.11. Limitation of Liability. The Certificates are executed by
the Trustee, not in its individual capacity but solely as Trustee of the Trust,
in the exercise of the powers and authority conferred and vested in it by the
Trust Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates
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or the production thereof in any proceeding relating thereto, and such
proceeding instituted by the Trustee shall be brought in its own name or in its
capacity as Trustee. Any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursement and advances of
the Trustee, its agents and counsel, be for the ratable benefit or the
Certificateholders in respect of which such judgment has been recovered.
Section 9.13. Suits for Enforcement. In case an Event of Servicing
Termination or other default by the Servicer, the Transferor, the Depositor or
the Transferor hereunder shall occur and be continuing, the Trustee, in its
discretion, may proceed to protect and enforce its rights and the rights of the
Investor Certificateholders under this Agreement by a suit, action or proceeding
in equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution of
any power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy, as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee and the
Certificateholders.
ARTICLE X
Termination
Section 10.01. Termination. (a) The respective obligations and
responsibilities of the Servicer, the Depositor, the Transferor and the Trustee
created hereby (other than the obligation of the Trustee to make certain
payments to Certificateholders after the final Payment Date and the obligation
of the Servicer to send certain notices as hereinafter set forth) shall
terminate upon the last action required to be taken by the Trustee on the final
Payment Date pursuant to this Article X following the later of (A) payment in
full of all amounts owing to the Credit Enhancer and (B) the earliest of (i) the
transfer, under the conditions specified in Section 10.01(b), to the Transferor
of the Investor Certificateholders' interest in each Mortgage Loan and all
property acquired in respect of any Mortgage Loan remaining in the Trust for an
amount equal to the sum of (w) the Class A Certificate Principal Balance, (x)
the sum of accrued and unpaid Class A Certificate Interest and Class S
Certificate Interest through the day preceding the final Payment Date, and (y)
interest accrued on any Unpaid Class A Certificate Interest Shortfall or Class S
Certificate Interest Shortfall, to the extent legally permissible, (ii) the day
following the Payment Date on which the distribution made to Class A
Certificateholders has reduced the Class A Certificate Principal Balance to
zero, (iii) the final payment or other liquidation of the last Mortgage Loan
remaining in the Trust (including, without limitation, the disposition of the
Mortgage Loans pursuant to Section 10.02) or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
(iv) the Payment Date in __________ 200_; provided, however, that in no event
shall the trust created hereby continue beyond the expiration of 21 years from
the date of the last survivor descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. ▇▇▇▇▇, living on the date
hereof. Upon termination in accordance with clause (i) or (ii) of this Section
10.01, the Trustee shall execute such documents and instruments of transfer
presented by the Transferor, in
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each case without recourse, representation or warranty, and take such other
actions as the Transferor may reasonably request to effect the transfer of the
Mortgage Loans to the Transferor.
(b) The Transferor shall have the right to exercise the option to effect
the transfer to the Transferor of each Mortgage Loan pursuant to Section
10.01(a) above on any Payment Date on or after the Payment Date immediately
prior to which the Class A Certificate Principal Balance is less than ten
percent (10%) of the Original Class A Certificate Principal Balance and all
amounts due and owing to the Credit Enhancer for unpaid premiums and
unreimbursed draws on the Policy and all other amounts due and owing to the
Credit Enhancer pursuant to the Insurance Agreement, together with interest
thereon as provided under the Insurance Agreement, have been paid.
(c) Notice of any termination, specifying the Payment Date (which shall be
a date that would otherwise be a Payment Date) upon which the Investor
Certificateholders may surrender their Investor Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee (upon receipt of written directions from the Transferor, if the
Transferor is exercising its right to transfer of the Mortgage Loans, given not
later than the first day of the month preceding the month of such final
distribution) to the Credit Enhancer and to the Servicer by letter to Investor
Certificateholders mailed not earlier than the 15th day and not later than the
25th day of the month next preceding the month of such final distribution
specifying (i) the Payment Date upon which final distribution of the Investor
Certificates will be made upon presentation and surrender of Investor
Certificates at the office or agency of the Trustee therein designated, (ii) the
amount of any such final distribution and (iii) that the Record Date otherwise
applicable to such Payment Date is not applicable, distributions being made only
upon presentation and surrender of the Investor Certificates at the office or
agency of the Trustee therein specified. In the event written directions are
delivered by the Transferor to the Trustee as described in the preceding
sentence, the Transferor shall deposit in the Collection Account on or before
the Payment Date for such final distribution in immediately available funds an
amount which, when added to the funds on deposit in the Collection Account that
are payable to the Investor Certificateholders, will be equal to the retransfer
amount for the Mortgage Loans computed as above provided, together with all
amounts due and owing to the Credit Enhancer for unpaid premiums and
unreimbursed draws on the Policy and all other amounts due and owing to the
Credit Enhancer pursuant to the Insurance Agreement, together with interest
thereon as provided under the Insurance Agreement.
(d) Upon presentation and surrender of the Investor Certificates, the
Trustee shall cause to be distributed to the Holders of Investor Certificates on
the Payment Date for such final distribution, in proportion to the Percentage
Interests of their respective Investor Certificates and to the extent that funds
are available for such purpose, an amount equal to (i) if such final
distribution is not being made pursuant to the transfer to the Transferor
pursuant to Section 10.01(a)(i), the amount required to be distributed to
Investor Certificateholders pursuant to Section 5.01 for such Payment Date and
(ii) if such final distribution is being made pursuant to such retransfer, the
amount specified in Section 10.01(a)(i). The distribution on such final Payment
Date pursuant to a retransfer
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pursuant to Section 10.01(a)(i) shall be in lieu of the distribution otherwise
required to be made on such Payment Date in respect of the Certificates. On the
final Payment Date prior to having made the distributions called for above, the
Trustee shall, based upon the information set forth in the Servicing Certificate
for such Payment Date, withdraw from the Collection Account and remit to the
Credit Enhancer the lesser of (x) the amount available for distribution on such
final Payment Date, net of any portion thereof necessary to pay the amounts
described in clauses (d)(i) and (ii) above and (y) the unpaid amounts due and
owing to the Credit Enhancer for unpaid premiums and unreimbursed draws on the
Policy and all other amounts due and owing to the Credit Enhancer pursuant to
the Insurance Agreement, together with interest thereon as provided under the
Insurance Agreement.
(e) In the event that all of the Investor Certificateholders shall not
surrender their Investor Certificates for final payment and cancellation on or
before such final Payment Date, the Trustee shall on such date cause all funds
in the Collection Account not distributed in final distribution to Investor
Certificateholders to be withdrawn therefrom and credited to the remaining
Investor Certificateholders by depositing such funds in a separate escrow
account for the benefit of such Investor Certificateholders and the Transferor
(if the Transferor has exercised its right to transfer the Mortgage Loans) or
the Trustee (in any other case) shall give a second written notice to the
remaining Investor Certificateholders to surrender their Investor Certificates
for cancellation and receive the final distribution with respect thereto. If
within one year after the second notice all the Investor Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate steps, to contact the remaining
Investor Certificateholders concerning surrender of their Investor Certificates,
and the cost thereof shall be paid out of the funds on deposit in such escrow
account.
ARTICLE XI
Rapid Amortization Events
Section 11.01. Rapid Amortization Events. If any one of the following
events shall occur during the Managed Amortization Period:
(a) failure on the part of the Transferor (i) to make any payment or
deposit required by the terms of this Agreement, on or before the date occurring
three Business Days after the date such payment or deposit is required to be
made herein, or (ii) duly to observe or perform in any material respect the
covenants of the Transferor set forth in Section 2.04(a) or (iii) duly to
observe or perform in any material respect any other covenants or agreements of
the Transferor set forth in this Agreement, which failure, in each case,
materially and adversely affects the interests of the Certificateholders or the
Credit Enhancer and which, in the case of clause (iii), continues unremedied and
continues to affect materially and adversely the interests of the
Certificateholders for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Transferor by the Trustee, or to the
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Transferor and the Trustee by the Holders of Investor Certificates evidencing
Voting Rights aggregating not less than 51%;
(b) any representation or warranty made by the Transferor or the Depositor
in this Agreement shall prove to have been incorrect in any material respect
when made, as a result of which the interests of the Investor Certificateholders
or the Credit Enhancer are materially and adversely affected and which continues
to be incorrect in any material respect and continues to affect materially and
adversely the interests of the Certificateholders or the Credit Enhancer for a
period of 60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Transferor or
the Depositor, as the case may be, by the Trustee, or to the Transferor, the
Depositor and the Trustee by either the Credit Enhancer or the Holders of
Investor Certificates evidencing Voting Rights aggregating not less than 51%;
provided, however, that a Rapid Amortization Event pursuant to this subparagraph
(b) shall not be deemed to have occurred hereunder if the Transferor has
accepted retransfer of the related Mortgage Loan or Mortgage Loans during such
period (or such longer period (not to exceed an additional 60 days) as the
Trustee may specify) in accordance with the provisions hereof;
(c) the Transferor or the Depositor shall voluntarily go into liquidation,
consent to the appointment of a conservator or receiver or liquidator or similar
person in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Transferor or the
Depositor, or of or relating to all or substantially all of such Person's
property, or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Transferor or the Depositor and such decree or order shall have remained in
force undischarged or unstayed for a period of 30 days; or the Transferor or the
Depositor shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable insolvency
or reorganization statute, make an assignment for the benefit of its creditors
or voluntarily suspend payment of its obligations;
(d) the Trust shall become subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended; or
(e) the aggregate of all draws under the Policy exceeds __% of the Initial
Cut-Off Date Pool Balance; then, in the case of any event described in
subparagraph (a) or (b) after the applicable grace period, if any, set forth in
such subparagraphs, either the Trustee, the Credit Enhancer or the Holders of
Investor Certificates evidencing Voting Rights aggregating more than 51%, by
notice given in writing to the Transferor, the Depositor and the Servicer (and
to the Trustee if given by either the Credit Enhancer or the Investor
Certificateholders) may declare that an early amortization event (a "Rapid
Amortization Event") has occurred as of the date of such notice, and in the case
of any event described in subparagraph (c), (d) or (e), a Rapid Amortization
Event shall occur without any notice
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or other action on the part of the Trustee, the Credit Enhancer or the Investor
Certificateholders, immediately upon the occurrence of such event.
Section 11.02. Additional Rights Upon the Occurrence of Certain Events.
(a) If the Transferor voluntarily goes into liquidation or consents to the
appointment of a conservator or receiver or liquidator or similar person in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Transferor or of or relating to all or
substantially all its property, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator or receiver or liquidator or similar person in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Transferor and such decree shall have remained in force
undischarged or unstayed for a period of 30 days; or the Transferor shall admit
in writing its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations (such voluntary liquidation, appointment,
entering of such decree, admission, filing, making, suspension or violation or
other event described above, an "Insolvency Event"), the Transferor shall on the
day of such appointment, voluntary liquidation, entering of such decree,
admission, filing, making, suspension or inability, as the case may be (the
"Appointment Day"), promptly give notice to the Trustee, the Servicer and the
Credit Enhancer of such Insolvency Event. Within 15 days of the receipt by the
Trustee of the Transferor's notice of an Insolvency Event, the Trustee shall (i)
publish a notice in Authorized Newspapers that an Insolvency Event has occurred
and that the Trustee intends to direct the Servicer to sell, dispose of or
otherwise liquidate the Mortgage Loans in a commercially reasonable manner and
(ii) send written notice to the Investor Certificateholders describing the
provisions of this Section 11.02, which notice shall inform Investor
Certificateholders that unless (Holders of Investor Certificates evidencing
Voting Rights aggregating not less than 51%) advise the Trustee in writing that
they wish the Trustee to instruct the Servicer not to sell, dispose of or
otherwise liquidate the Mortgage Loans within 90 days from the day notice
pursuant to clause (i) above is first published (the "Publication Date"), the
Trustee shall instruct the Servicer to proceed to sell, dispose of, or otherwise
liquidate the Mortgage Loans in a commercially reasonable manner and on
commercially reasonable terms, which shall include the solicitation of
competitive bids, and shall proceed to consummate the sale, liquidation or
disposition of the Mortgage Loans as provided above with the highest bidder for
the Mortgage Loans. The Transferor shall be permitted to bid for the Mortgage
Loans. The Trustee may obtain a prior determination from such conservator or
receiver that the terms and manner of any proposed sale, disposition or
liquidation are commercially reasonable. The provisions of Sections 11.01 and
11.02 shall not be deemed to be mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the Mortgage
Loans pursuant to Section 11.02(a) above shall be treated as collections on the
Mortgage Loans received during the Rapid Amortization Period; provided, however,
that such proceeds will, based on amounts specified in writing by the Servicer
to the Trustee, first be paid to the Credit Enhancer to reimburse the Credit
Enhancer for previously
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unreimbursed Credit Enhancement Draw Amounts and other amounts owing under the
Insurance Agreement; and provided, further, that the Investor Fixed Allocation
Percentage of such remaining proceeds shall be paid to Investor
Certificateholders in the following amounts and order of priority:
(i) all accrued and unpaid interest on the Class A Certificate
Principal Balance through the Interest Period immediately preceding the
Payment Date on which such proceeds are distributed to the Investor
Certificateholders;
(ii) all accrued and unpaid interest on the Class S Notional Amount
through the Interest Period immediately preceding the Payment Date on
which such proceeds are distributed to the Investor Certificateholders;
and
(iii) an amount of principal up to the Class A Certificate Principal
Balance.
The Policy shall cover any shortfall in the event such proceeds are insufficient
to make the distributions to Investor Certificateholders pursuant to Section
11.02(b). On the day following the Payment Date on which such proceeds are
distributed to the Investor Certificateholders, the Trust shall terminate.
ARTICLE XII
Miscellaneous Provisions
Section 12.01. Amendment. This Agreement may be amended from time to time
by the Transferor, the Servicer, the Depositor and the Trustee, in each case
without the consent of any of the Certificateholders, but only with the consent
of the Credit Enhancer (which consent shall not be unreasonably withheld), (i)
to cure any ambiguity, (ii) to correct any defective provisions or to correct or
supplement any provisions herein that may be inconsistent with any other
provisions herein, (iii) to add to the duties of the Transferor or the Servicer,
(iv) to add any other provisions with respect to matters or questions arising
under this Agreement or the Policy, as the case may be, which shall not be
inconsistent with the provisions of this Agreement, (v) to add or amend any
provisions of this Agreement as required by any Rating Agency or any other
nationally recognized statistical rating organization in order to maintain or
improve any rating of the Investor Certificates (it being understood that, after
obtaining the ratings in effect on the Closing Date, neither the Trustee, the
Transferor, the Depositor nor the Servicer is obligated to obtain, maintain or
improve any such rating), (vi) to add or amend any provisions of this Agreement
to correct or cure any defective provision or ambiguity as a result of a
transfer of the Transferor Certificates pursuant to Section 6.05 or (vii) to
comply with any requirement imposed by the Code; provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, materially and
adversely affect the interests of any Certificateholder or the Credit Enhancer;
and provided, further, that the amendment shall not be deemed to adversely
affect in any material respect the interests of the Certificateholders and no
opinion referred to in the preceding proviso shall be required to be delivered
if the Person requesting the amendment obtains a letter from each Rating
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Agency stating that the amendment would not result in the downgrading or
withdrawal of the respective ratings then assigned to the Investor Certificates
without regard to the Policy. Notwithstanding the foregoing, any amendment
pursuant to clause (viii) above shall be permissible only upon receipt of a
letter from each Rating Agency stating that the amendment would not result in
the downgrading or withdrawal of the respective ratings then assigned to the
Investor Certificateholders without regard to the Policy.
This Agreement also may be amended from time to time by the Servicer, the
Transferor, the Depositor and the Trustee, and the Servicer and the Credit
Enhancer, may from time to time consent to the amendment of the Policy with the
consent of the Holders of the Investor Certificates evidencing Voting Rights
aggregating not less than 51%, and in the case of an amendment to this
Agreement, with the consent of the Credit Enhancer 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
Certificateholders; provided, however, that no such amendment shall (i) reduce
in any manner the amount of, or delay the timing of, payments on the
Certificates or distributions or payments under the Policy which are required to
be made on any Certificate without the consent of the Holder of such Certificate
or (ii) reduce the aforesaid percentage required to consent to any such
amendment, without the consent of the Holders of all Certificates then
outstanding or (iii) adversely effect in any material respect the interests of
the Credit Enhancer.
Notwithstanding the foregoing, the Agreement may not be amended unless, in
connection with such amendment, an Opinion of Counsel is furnished to the
Trustee that such amendment will not (i) adversely affect the status of the
Investor Certificates as debt; (ii) result in the Trust being taxable at the
entity level; or (iii) result in the Trust being classified as a taxable
mortgage pool (as defined in Section 7701(i) of the Code).
Following the execution and delivery of any such amendment hereto or to
the Policy to which the Credit Enhancer was required to consent, either the
Transferor, if the Transferor requested the amendment, or the Servicer, if the
Servicer requested the amendment, shall reimburse the Credit Enhancer for the
reasonable out-of-pocket costs and expenses incurred by the Credit Enhancer in
connection with such amendment.
Prior to the execution of any such amendment, the party hereto requesting
any such amendment shall furnish written notification of the substance of such
amendment to each Rating Agency. In addition, promptly after the execution of
any such amendment made with the consent of the Investor Certificateholders, the
Trustee shall furnish written notification of the substance of such amendment to
each Investor Certificateholder and fully executed original counterparts of the
instruments effecting such amendment to the Credit Enhancer.
It shall not be necessary for the consent of Investor Certificateholders
under this Section 12.01 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
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Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe.
In executing any amendment permitted by this Section 12.01, the Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that such amendment is authorized or permitted hereby
and that all conditions precedent to the execution and delivery of such
amendment have been satisfied. The 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 or otherwise.
Section 12.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Trustee, but only upon direction of Investor Certificateholders accompanied by
an Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of Investor Certificateholders. The Investor
Certificateholders requesting such recordation shall bear all costs and expenses
of such recordation. The Trustee shall have no obligation to ascertain whether
such recordation so affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 12.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Investor Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Investor Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as provided in
Sections 8.01, 9.01, 9.02, 11.01 and 12.01) or in any manner otherwise control
the operation and management of the Trust, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any Investor
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Investor Certificates evidencing
86
Voting Rights aggregating not less than 51% shall have made written request upon
the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 12.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
By accepting its Investor Certificate, each Investor Certificateholder
agrees that unless a Credit Enhancer Default exists, the Credit Enhancer shall
have the right to exercise all rights of the Investor Certificateholders under
this Agreement without any further consent of the Investor Certificateholders.
Section 12.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 12.05. Notices. All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by certified mail, return receipt requested, to (a) in
the case of the Depositor or Transferor, GreenPoint Mortgage Securities Inc.,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (b) in the case of the
Servicer, GreenPoint Mortgage Funding, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (c) in the case of the Trustee, at the Corporate Trust Office,
(d) in the case of the Credit Enhancer, [Credit Enhancer], [Address], (e) in the
case of [First Rating Agency], [Address of First Rating Agency], and (f) in the
case of [Second Rating Agency], [Address of Second Rating Agency], or, as to
each party, at such other address as shall be designated by such party in a
written notice to each other party. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice. 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 Rating Agency.
87
Section 12.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 12.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.05, 7.02 and 7.04, this
Agreement may not be assigned by the Depositor or the Servicer without the prior
written consent of the Credit Enhancer and Holders of the Investor Certificates
evidencing Percentage Interests aggregating not less than 66%.
Section 12.08. Certificates Nonassessable and Fully Paid. The parties
agree that the Investor Certificateholders shall not be personally liable for
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 the Certificates upon execution,
authentication and delivery thereof by the Trustee pursuant to Section 2.08 or
6.02 are and shall be deemed fully paid.
Section 12.09. Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, the Certificateholders, the
Certificate Owners, the Credit Enhancer and their respective successors and
permitted assigns. Except as otherwise provided in this Agreement, no other
Person will have any right or obligation hereunder.
Section 12.10. Counterparts. This instrument may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
Section 12.11. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
Section 12.12. Insurance Agreement. The Trustee is authorized and directed
to execute and deliver the Insurance Agreement and to perform the obligations of
the Trustee thereunder.
88
IN WITNESS WHEREOF, the Depositor, the Transferor, the Seller, the
Servicer and the Trustee have caused this Agreement to be duly executed by their
respective officers all as of the day and year first above written.
GREENPOINT MORTGAGE SECURITIES INC.,
as Depositor and Transferor
By:
--------------------------------
Title:
GREENPOINT MORTGAGE FUNDING, INC.,
as Seller and Servicer
By:
--------------------------------
Title:
[Trustee], as Trustee
By:
--------------------------------
Title:
89
State of ______________________)
) ss.:
County of _____________________)
On the ____ day of ________, 200_ before me, a notary public in and for
the State of ________, personally appeared _________________, known to me who,
being by me duly sworn, did depose and say that he resides at
______________________; that he is the _____________________ of GreenPoint
Mortgage Securities Inc., a Delaware corporation, one of the parties that
executed the foregoing instrument; that he knows the seal of said corporation;
that the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation; and that he
signed his name thereto by like order.
---------------------------
Notary Public
(Notarial Seal)
State of ______________________)
) ss.:
County of _____________________)
On the ____ day of __________, 200_ before me, a notary public in and for
the State of ________, personally appeared _____________________, known to me
who, being by me duly sworn, did depose and say that he resides at
_________________, ____________, ________ _____; that he is the ______________
of GreenPoint Mortgage Funding, Inc., a New York corporation, one of the parties
that executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by order of the Board of Directors of said corporation;
and that he signed his name thereto by like order.
---------------------------
Notary Public
(Notarial Seal)
90
State of ______________________)
) ss.:
County of _____________________)
On the ____ day of ______________, 200_ before me, a notary public in and
for the State of ________, personally appeared _________________, known to me
who, being by me duly sworn, did depose and say that he resides at
_______________, _______________ _____; that he is the _____________ of
[Trustee], a __________, one of the parties that executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said corporation.
---------------------------
Notary Public
(Notarial Seal)
91
EXHIBIT A
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE").
Certificate No. :
Cut-Off Date :
First Payment Date :
Initial Class Principal Balance
of this Certificate
("Denomination") : $
Initial Class Principal
Balance : $
Pass-Through Rate : %
CUSIP :
Class : [A-_]/[S]
A-1
GREENPOINT HOME EQUITY LOAN TRUST 200_-_
Home Equity Loan Asset-Backed Certificates, Series 200_-_
Class [A-_]/[S]
evidencing a percentage interest in the distributions allocable to the
Certificates of the above-referenced Class with respect to a trust (the
"Trust") consisting of (closed-end fixed) and (adjustable rate) home
equity loans (the "Mortgage Loans")
GREENPOINT MORTGAGE SECURITIES INC., as Depositor
Principal in respect of this Certificate is distributable monthly as set
forth herein. Accordingly, the Class Principal Balance of this Class
[A-_]/[S]Certificate at any time may be less than the Initial Class Principal
Balance set forth on the face hereof, as described herein. This Class [A-_]/[S]
Certificate does not evidence an obligation of, or an interest in, and is not
guaranteed by the Seller or the Trustee referred to below or any of their
respective affiliates. Neither this Class [A-_]/[S]Certificate nor the Mortgage
Loans are guaranteed or insured by any governmental agency or instrumentality.
This certifies that ____________ is the registered owner of the Percentage
Interest evidenced by this Class (A-_) (S) Certificate (obtained by dividing the
Denomination of this Class (A-_) (S) Certificate by the Class Principal Balance)
in certain monthly distributions with respect to a Trust consisting primarily of
the Mortgage Loans sold to the Trust by GreenPoint Mortgage Funding, Inc. (the
"Seller"). The Trust was created pursuant to a Pooling and Servicing Agreement
dated as of the Cut-Off Date specified above (the "Agreement") between the
Depositor, GreenPoint Mortgage Funding, Inc., as seller and servicer (in such
capacities, the "Seller" or the "Servicer," respectively), GreenPoint Mortgage
Securities Inc., as transferor (the "Transferor") and [Trustee], as trustee (the
"Trustee"). To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Class [A-_]/[S]Certificate is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Class [A-_]/[S] Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound.
Reference is hereby made to the further provisions of this Class [A-_]/[S]
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
This Class [A-_]/[S] Certificate shall not be entitled to any benefit
under the Agreement or be valid for any purpose unless manually countersigned by
an authorized signatory of the Trustee.
* * *
A-2
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: __________, 200_
[Trustee], as Trustee
By:
----------------------------------------------
This is one of the Class [A-_]/[S] Certificates
referenced in the within-mentioned Agreement
By:
-------------------------
Authorized Signatory
A-3
GREENPOINT HOME EQUITY LOAN TRUST 200_-_
Home Equity Loan Asset-Backed Certificates,
Series 200_-_
This Certificate is one of a duly authorized issue of Certificates
designated as GreenPoint Home Equity Loan Trust 200_-_, Home Equity Loan
Asset-Backed Certificates, Series 200_-_ (herein collectively called the
"Certificates"), and representing a beneficial ownership interest in the Trust
created by the Agreement.
The Certificateholder, by its acceptance of this Certificate, agrees that
it will look solely to the funds on deposit in the Distribution Account for
payment hereunder and that the Trustee is not liable to the Certificateholders
for any amount payable under this Certificate or the Agreement or, except as
expressly provided in the Agreement, subject to any liability under the
Agreement.
This Certificate will have the benefit of an irrevocable and unconditional
certificate guaranty insurance policy issued by [Credit Enhancer] (the "Credit
Enhancer").
This Certificate does not purport to summarize the Agreement and reference
is made to the Agreement for the interests, rights and limitations of rights,
benefits, obligations and duties evidenced thereby, and the rights, duties and
immunities of the Trustee.
Pursuant to the terms of the Agreement, a distribution will be made on the
__th day of each month or, if such __th day is not a Business Day then the first
Business Day following such Payment Date (the "Payment Date"), commencing on the
first Payment Date specified on the face hereof, to the Person in whose name
this Certificate is registered at the close of business on the applicable Record
Date in an amount equal to the product of the Percentage Interest evidenced by
this Certificate and the amount required to be distributed to Holders of
Certificates of the Class to which this Certificate belongs on such Payment Date
pursuant to the Agreement. The Record Date applicable to each Payment Date is
the last Business Day of the month preceding the month of such Payment Date.
Distributions on this Certificate shall be made by check or money order
mailed to the address of the person entitled thereto as it appears on the
Certificate Register or, upon the request of a Certificateholder owning
Certificates having the requisite aggregate denominations or Percentage
Interests specified in the Agreement, by wire transfer or otherwise, as set
forth in the Agreement. The final distribution on each Certificate will be made
in like manner, but only upon presentment and surrender of such Certificate at
the office or agency of the Trustee specified in the notice to
Certificateholders of such final distribution.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Trustee and the rights of the Certificateholders under the Agreement at any time
by the Seller and the Trustee with the consent of the Credit Enhancer and of
Holders of the requisite percentage of the
A-4
Percentage Interests of each Class of Certificates affected by such amendment,
as specified in the Agreement. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange therefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register of the Trustee upon surrender of this Certificate for registration of
transfer at the office or agency maintained by the Trustee in New York, New
York, accompanied by a written instrument of transfer in form satisfactory to
the Trustee and the Certificate Registrar duly executed by the holder hereof or
such holder's attorney duly authorized in writing, and thereupon one or more new
Certificates of the same Class in authorized denominations and evidencing the
same aggregate Percentage Interest in the Trust will be issued to the designated
transferee or transferees.
The Certificates are issuable only as registered Certificates without
coupons in denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, Certificates are
exchangeable for new Certificates of the same Class in authorized denominations
and evidencing the same aggregate Percentage Interest, as requested by the
Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
The Seller and the Trustee and any agent of the Seller or the Trustee may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and neither the Seller, the Trustee nor any such agent
shall be affected by any notice to the contrary.
On any Payment Date on which the Pool Principal Balance is less than ( )%
of the Cut-Off Date Pool Principal Balance, the Seller will have the option to
repurchase, in whole, from the Trust the Mortgage Loans at a purchase price
determined as provided in the Agreement. In the event that no such optional
termination occurs, the obligations and responsibilities created by the
Agreement will terminate upon the later of (A) payment in full of all amounts
owing to the Credit Enhancer unless the Credit Enhancer shall otherwise consent
and (B) the earliest of (i) the day following the Payment Date on which the
Aggregate Class A Principal Balance has been reduced to zero, (ii) the final
payment or other liquidation of the last Mortgage Loan in the Trust and (iii)
the Payment Date in __________ 200_. In no event, however, will the trust
created by the Agreement continue beyond the expiration of 21 years from the
death of the last survivor of the descendants living at the date of the
Agreement of a certain person named in the Agreement.
A-5
Capitalized terms used herein that are defined in the Agreement shall have
the meanings ascribed to them in the Agreement, and nothing herein shall be
deemed inconsistent with that meaning.
A-6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
---------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)
the Percentage Interest evidenced by the within Certificate and hereby
authorizes the transfer of registration of such Percentage Interest to assignee
on the Certificate Register of the Trust.
I (We) further direct the Trustee to issue a new Certificate of a like
denomination and Class, to the above named assignee and deliver such Certificate
to the following address:
------------------------------------------------------
Dated:
----------------------------------------
Signature by or on behalf of assignor
A-7
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in immediately
available funds to
-------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
for the account of
------------------------------------------------------------,
account number , or, if mailed by check, to
--------------------------------------
. Applicable
-------------------------------------------------------------------
statements should be mailed to
-------------------------------------------------
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------.
This information is provided by__________________________________________,
the assignee named above, or __________________________________________________,
as its agent.
A-8
EXHIBITS B THROUGH L ARE RESERVED
