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DELTA FUNDING CORPORATION,
as Seller,
RENAISSANCE MORTGAGE ACCEPTANCE CORP.
as Depositor,
[_______________________________],
as Servicer
and
[_______________________________],
as Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of [____________] [__], 200[_]
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Home Equity Loan Asset-Backed Certificates
Series [____]-[__]
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TABLE OF CONTENTS
ARTICLE I
Definitions
Page
Section 1.01. Definitions.....................................................................................1
Section 1.02. Interest Calculations..........................................................................31
ARTICLE II
Conveyance of Initial Mortgage Loans;
Original Issuance of Certificates Tax Treatment
Section 2.01. Conveyance of Initial Mortgage Loans...........................................................31
Section 2.02. Acceptance by Trustee..........................................................................35
Section 2.03. Representations and Warranties Regarding the Seller and the Servicer...........................36
Section 2.04. Representations and Warranties of the Seller Regarding the Mortgage Loans......................41
Section 2.05. Substitution of Mortgage Loans.................................................................49
Section 2.06. Execution and Authentication of Certificates...................................................50
Section 2.07. Designation of Interests in REMICs.............................................................50
Section 2.08. Designation of Startup Day of REMIC............................................................54
Section 2.09. REMIC Certificate Maturity Date................................................................54
Section 2.10. Tax Returns and Reports to Certificateholders..................................................54
Section 2.11. Tax Matters Person.............................................................................55
Section 2.12. REMIC Related Covenants........................................................................55
Section 2.13. Subsequent Transfers...........................................................................59
ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Servicer...................................................................................61
Section 3.02. Collection of Certain Mortgage Loan Payments...................................................63
Section 3.03. Withdrawals from the Collection Account........................................................64
Section 3.04. Maintenance of Hazard Insurance; Property Protection Expenses..................................66
Section 3.05. Maintenance of Mortgage Impairment Insurance Policy............................................66
Section 3.06. Management and Realization Upon Defaulted Mortgage Loans.......................................67
Section 3.07. Trustee to Cooperate...........................................................................69
Section 3.08. Servicing Compensation; Payment of Certain Expenses by Servicer................................69
Section 3.09. Annual Statement as to Compliance..............................................................70
Section 3.10. Annual Servicing Review........................................................................70
Section 3.11. Access to Certain Documentation and Information Regarding the Mortgage Loans...................70
Section 3.12. Maintenance of Certain Servicing Insurance Policies............................................70
Section 3.13. Reports to the Securities and Exchange Commission..............................................71
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Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged Properties, Returns Relating to
Mortgage Interest Received from Individuals and Returns Relating to Cancellation of
Indebtedness...................................................................................71
Section 3.15. Advances by the Servicer.......................................................................71
Section 3.16. Optional Purchase of Defaulted Mortgage Loans..................................................72
Section 3.17. Superior Liens.................................................................................72
Section 3.18. Assumption Agreements..........................................................................73
Section 3.19. Payment of Taxes, Insurance and Other Charges..................................................73
Section 3.20. Advance Facility...............................................................................74
ARTICLE IV
Certificate Insurance Policy, Initial Interest Coverage Account and Pre-Funding Account
Section 4.01. Certificate Insurance Policy...................................................................76
Section 4.02. Initial Interest Coverage Account and Pre-Funding Account......................................77
Section 4.03. Claims Upon the Certificate Insurance Policy...................................................78
ARTICLE V
Payments and Statements to Certificateholders; Rights of Certificateholders
Section 5.01. Distributions..................................................................................79
Section 5.02. Compensating Interest..........................................................................82
Section 5.03. Statements.....................................................................................82
Section 5.04. Distribution Account...........................................................................86
Section 5.05. Investment of Accounts.........................................................................86
Section 5.06. Allocation of Losses...........................................................................87
Section 5.07. [Reserved].....................................................................................87
Section 5.08. Net Rate Cap Fund..............................................................................87
ARTICLE VI
The Certificates
Section 6.01. The Certificates...............................................................................88
Section 6.02. Registration of Transfer and Exchange of Certificates..........................................89
Section 6.03. Mutilated, Destroyed, Lost or Stolen Certificates..............................................93
Section 6.04. Persons Deemed Owners..........................................................................93
Section 6.05. Appointment of Paying Agent....................................................................94
ARTICLE VII
The Seller and the Servicer
Section 7.01. Liability of the Seller and the Servicer.......................................................94
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Section 7.02. Merger or Consolidation of, or Assumption of the Obligations of, the Seller or the
Servicer.......................................................................................94
Section 7.03. Limitation on Liability of the Servicer and Others.............................................95
Section 7.04. Servicer Not to Resign.........................................................................95
Section 7.05. Delegation of Duties...........................................................................96
Section 7.06. Indemnification of the Trust by the Servicer...................................................96
ARTICLE VIII
Default
Section 8.01. Events of Default..............................................................................96
Section 8.02. Appointment of Successor.......................................................................98
Section 8.03. Waiver of Defaults............................................................................100
Section 8.04. Notification to Certificateholders............................................................100
Section 8.05. Rights of the Certificate Insurer.............................................................100
Section 8.06. Certificate Insurer Default...................................................................100
ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee.............................................................................101
Section 9.02. Certain Matters Affecting the Trustee.........................................................102
Section 9.03. Trustee Not Liable for Certificates or Mortgage Loans.........................................104
Section 9.04. Trustee May Own Certificates..................................................................104
Section 9.05. Trustee Fees and Expenses.....................................................................105
Section 9.06. Eligibility Requirements for Trustee..........................................................105
Section 9.07. Resignation or Removal of Trustee.............................................................105
Section 9.08. Successor Trustee.............................................................................106
Section 9.09. Merger or Consolidation of Trustee............................................................106
Section 9.10. Appointment of Co-Trustee or Separate Trustee.................................................107
Section 9.11. Limitation of Liability.......................................................................108
Section 9.12. Trustee May Enforce Claims Without Possession of Certificates; Inspection.....................108
Section 9.13. Suits for Enforcement.........................................................................109
ARTICLE X
Termination
Section 10.01. Termination...................................................................................109
Section 10.02. Additional Termination Requirements...........................................................111
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ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment.....................................................................................111
Section 11.02. Recordation of Agreement......................................................................113
Section 11.03. Limitation on Rights of Certificateholders....................................................113
Section 11.04. Governing Law.................................................................................114
Section 11.05. Notices.......................................................................................114
Section 11.06. Severability of Provisions....................................................................116
Section 11.07. Assignment....................................................................................116
Section 11.08. Certificates Nonassessable and Fully Paid.....................................................116
Section 11.09. Third-Party Beneficiaries.....................................................................116
Section 11.10. Counterparts..................................................................................116
Section 11.11. Effect of Headings and Table of Contents......................................................116
Section 11.12. Mortgage Loans and Accounts Held for Benefit of the Certificate Insurer.......................117
Section 11.13. Effect of Payments by the Certificate Insurer; Subrogation....................................117
Section 11.14. Notices to the Certificate Insurer............................................................117
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EXHIBIT A FORMS OF OFFERED CERTIFICATES.................................................................A-1
EXHIBIT B FORM OF CLASS BIO CERTIFICATE.................................................................B-1
EXHIBIT B-1 FORM OF CLASS R CERTIFICATES................................................................B-1-1
EXHIBIT C MORTGAGE LOAN SCHEDULE........................................................................C-1
EXHIBIT D FORM OF SUBSEQUENT TRANSFER AGREEMENT.........................................................D-1
EXHIBIT E FORM OF MORTGAGE NOTE.........................................................................E-1
EXHIBIT F FORM OF MORTGAGE..............................................................................F-1
EXHIBIT G TRANSFER AFFIDAVITS...........................................................................G-1
EXHIBIT H LETTER OF REPRESENTATIONS.....................................................................H-1
EXHIBIT I FORM OF REQUEST FOR RELEASE FOR DOCUMENTS.....................................................I-1
EXHIBIT J RESERVED......................................................................................J-1
EXHIBIT K FORM OF CUSTODIAL AGREEMENT...................................................................K-1
EXHIBIT L DELINQUENCY AND LOSS INFORMATION............................................................. L-1
EXHIBIT M FORM OF TRANSFEROR CERTIFICATE ...............................................................M-1
EXHIBIT N-1 FORM OF INVESTMENT LETTER (NON-RULE 144A)...................................................N-1-1
EXHIBIT N-2 FORM OF RULE 144A LETTER ...................................................................N-2-1
EXHIBIT O FORM OF INITIAL CERTIFICATION.................................................................O-1
EXHIBIT P FORM OF FINAL CERTIFICATION...................................................................P-1
EXHIBIT Q SUBSEQUENT FUNDING PARAMETERS.................................................................Q-1
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This Pooling and Servicing Agreement, dated as of [_________] [__],
[____], among Delta Funding Corporation, as Seller (the "Seller"),
[___________________], Renaissance Mortgage Acceptance Corp., as Depositor,
[_______________] as Servicer (the "Servicer") and [___________________], 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. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article.
Accounts: Collectively, the Collection Account, the Initial Interest
Coverage Account, the Pre-Funding Account and the Distribution Account.
Addition Notice: The notice given pursuant to Section 2.13 with respect
to the transfer of Subsequent Mortgage Loans to the Trust pursuant to such
Section.
Adjustable Rate Certificates: The Class A-1A Certificates and the
Subordinate Certificates.
Adjusted Certificate Rate: As to any class of Senior Certificates and
any date of determination, a per annum rate equal to the sum of (i) the
applicable Certificate Rate, (ii) the Premium Percentage and (iii) the Trustee
Fee Rate. As to any class of Subordinate Certificates and any date of
determination, a per annum rate equal to the sum of (i) the applicable
Certificate Rate and (ii) the Trustee Fee Rate.
Affiliate: With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or indirectly, whether through ownership of voting securities,
by contract or otherwise and "controlling" and "controlled" shall have meanings
correlative to the foregoing.
Aggregate Principal Amount: As to any Distribution Date, the sum of
each Basic Principal Amount.
Agreement: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
Applied Realized Loss Amounts: As to any Distribution Date, an amount
equal to the excess, if any, of (i) the aggregate of the Class Principal
Balances of the Offered Certificates, after giving effect to all distributions
on such Distribution Date over (ii) the sum of (x) the Pool Balance as of the
last day of the related Due Period and (y) the Pre-Funded Amount, if any.
Appraised Value: The appraised value of the Mortgaged Property based
upon the appraisal made by or for the originator at the time of the origination
of the related Mortgage Loan.
Approved Servicer: For purposes of Sections 3.01(b), 7.04 and 8.02
hereof any of the following:
1. An affiliate of [________________________] that services
mortgage loans similar to the Mortgage Loans.
2. If at the relevant time, the aggregate Class Principal
Balance of the Senior Certificates is more than 50% of the
aggregate Class Principal Balance of all the Certificates, the
Person approved by Holders of Certificates evidencing at least
51% of the Voting Rights in the Trust.
3. If at the relevant time, the aggregate Class Principal
Balance of the Senior Certificates is 50% or less of the
aggregate Class Principal Balance of all the Certificates, a
Person who is an approved servicer by S&P.
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.
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.
Available Funds: As to any Distribution Date, the sum, without
duplication of the following amounts with respect to the Mortgage Loans: (i)
scheduled payments of principal and interest on the Mortgage Loans due during
the related Due Period and received by the Servicer (net of amounts representing
the Servicing Fee with respect to each Mortgage Loan and reimbursement for
Monthly Advances and Servicing Advances); (ii) Net Liquidation Proceeds and
Insurance Proceeds with respect to the Mortgage Loans (net of amounts applied to
the restoration or repair of a Mortgaged Property) and unscheduled payments of
principal and interest on the Mortgage Loans received by the Servicer during the
related Prepayment Period (net of amounts representing the Servicing Fee with
respect to each Mortgage Loan and reimbursement for Monthly Advances and
Servicing Advances); (iii) the Purchase Price for repurchased Defective Mortgage
Loans and any related Substitution Adjustment Amounts; (iv) payments from the
Servicer in connection with (a) Monthly Advances, (b) Compensating Interest and
(c) the termination of the Trust with respect to the Mortgage Loans as provided
in this Agreement; (v) on the Distribution Dates during and immediately
following the Funding Period, amounts from the Initial Interest Coverage Account
in respect of the Capitalized Interest Requirement; and (vi) on the Distribution
Date at or immediately following the end of the Funding Period, any Excess
Funding Amount.
Available Funds Cap: For any Distribution Date a per annum rate equal
to (i) the weighted average Net Loan Rate of the Mortgage Loans minus (ii) the
product of (x) the applicable Certificate Rate on the Notional Amount
Certificates and (y) a fraction, the numerator of which is the Notional Amount
of such Notional Amount Certificates immediately prior to such Distribution
Date, and the denominator of which is the sum of the Pool Balance and the
Pre-Funded Amount as of the end of the second preceding Due Period and minus
(iii) the Premium Amount, expressed as a per annum rate.
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Balloon Loan: Any Mortgage Loan that provided on the date of
origination for scheduled monthly payment in level amounts substantially lower
than the amount of the final scheduled payment.
Basic Principal Amount: As to any Distribution Date and Loan Group, an
amount equal to the sum of the following amounts (without duplication) with
respect to the Mortgage Loans in that Loan Group: (i) each scheduled payment of
principal on a Mortgage Loan due during such Due Period and received by the
Servicer; (ii) the Net Liquidation Proceeds allocable to principal and all full
and partial principal prepayments received by the Servicer during the related
Prepayment Period; (iii) the portion of the Purchase Price allocable to
principal of all repurchased Defective Mortgage Loans with respect to such
Distribution Date; (iv) any Substitution Adjustment allocable to principal
received on or prior to the previous Determination Date and not yet distributed;
(v) any Monthly Advances with respect to scheduled payments of principal due
during the related Due Period; and (vi) any related Excess Funding Amount.
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 Agreement the Bank Insurance Fund
is not existing and performing duties now assigned to it, the body performing
such duties on such date.
Blanket Mortgage: The mortgage or mortgages encumbering a Cooperative
Property.
Book-Entry Certificate: Any Regular 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 a day on which
banking institutions in New York City, the States of Florida and New Jersey or
the city in which the Corporate Trust Office of the Trustee or the executive
office of the Certificate Insurer is located are authorized or obligated by law
or executive order to close.
Capitalized Interest Requirement: With respect to each Pre-Funding
Distribution Date, (A) the sum of (i) the amount of interest accrued during the
related Interest Period for the Class A Certificates at the weighted average
Adjusted Certificate Rate thereof on the Senior Portion of the Pre-Funded Amount
as of the first day of the related Due Period and (ii) interest at the
Certificate Rate for the Notional Amount Certificates on an amount equal to the
product of (x) the Pre-Funded Amount and (y) a fraction, the numerator of which
is the Notional Amount of the Notional Amount Certificates and the denominator
of which is the Pool Balance plus the Pre-Funded Amount as of the end of the
second preceding Due Period plus (B) the amount of interest accrued during the
related Interest Period for the Subordinate Certificates at the weighted average
Adjusted Certificate Rate thereof on the Subordinate Portion of the Pre-Funded
Amount as of the first day of the related Due Period, minus (C) the interest
received or advanced on each Subsequent Mortgage Loan added to the Trust during
such Due Period if such Subsequent Mortgage Loan has a Due Date in such Due
Period.
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Certificate: Any Offered Certificate, Class BIO Certificate or Residual
Certificate.
Certificate Balance: As of any date of determination, the aggregate of
the Class Principal Balances of the Certificates.
Certificate Index: The rate for one month United States dollar deposits
quoted on Telerate Page 3750 as of 11:00 A.M., London time, on the second LIBOR
Business Day prior to the first day of any Interest Period relating to the
Adjustable Rate Certificates. "Telerate Page 3750" means the display designated
as page 3750 on Bridge Telerate Service (or such other page as may replace page
3750 on that service for the purpose of displaying London interbank offered
rates of major banks). 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 Trustee after consultation with the Seller), the rate
will be the Reference Bank Rate. If no such quotations can be obtained and no
Reference Bank Rate is available, the Certificate Index will be the Certificate
Index applicable to the preceding Distribution Date. On the second LIBOR
Business Day immediately preceding each Distribution Date, the Trustee shall
determine the Certificate Index for the Interest Period commencing on such
Distribution Date and inform the Seller and the Servicer of such rate.
Certificate Insurance Policy: The Certificate Guaranty Insurance Policy
(No. [_______]), and all endorsements thereto dated the Closing Date, issued by
the Certificate Insurer for the benefit of the Holders of each Class of Senior
Certificates, a copy of which is attached hereto as Exhibit J.
Certificate Insurer: [_____________________], a monoline insurance
company organized and created under the laws of the State of [___________], or
any successor thereto.
Certificate Insurer Default: One of the following events shall have
occurred and be continuing:
(i) the Certificate Insurer fails to make a payment
required under the Certificate Insurance Policy in accordance
with its terms;
(ii) the Certificate Insurer (A) files any petition
or commences any case or proceeding under any provision or
chapter of the United States Bankruptcy Code or any other
similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, (B)
makes a general assignment for the benefit of its creditors,
or (C) has an order for relief entered against it under the
United States Bankruptcy Code or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and
nonappealable; or
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(iii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory
authority enters a final and nonappealable order, judgment or
decree (1) appointing a custodian, trustee, agent or receiver
for the Certificate Insurer or for all or any material portion
of its property or (2) authorizing the taking of possession by
a Custodian, trustee, agent or receiver of the Certificate
Insurer (or the taking of possession of all or any material
portion of the property of the Certificate Insurer).
Certificate Margin: As to any Adjustable Rate Certificate, the
respective amount set forth below:
Class Certificate Margin
----- ------------------
(1) (2)
A-1A [___]% [___]%
M-1 [___]% [___]%
M-2 [___]% [___]%
B [___]% [___]%
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(1) On or before the Optional Termination Date.
(2) After the Optional Termination Date.
Certificate Owner: The Person who is the beneficial owner of a
Book-Entry Certificate.
Certificate Rate: As to any Class of Certificates, the respective per
annum rate set forth or described below:
Class Certificate Rate
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A-1F [___]% (1)(2)
A-1A [___]% (4)
IO [___]% (3)
M-1 [___]% (4)
M-2 [___]% (4)
B [___]% (4)
BIO [___]% (3)
R-1 0.00%
R-2 0.00%
R-3 0.00%
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(1) As to any Distribution Date, the lesser of (x) the fixed rate set forth and
(y) the applicable Available Funds Cap.
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(2) On any Distribution Date after the Optional Termination Date, the
Certificate Rate shall increase by 50 basis points (0.50% per annum).
(3) Calculated as provided in Section 2.07.
(4) As to any Distribution Date, the least of (i) the Certificate Index plus the
applicable Certificate Margin, (ii) [___]% per annum and (iii) the Available
Funds Cap.
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 Offered Certificate registered in the name of the Seller or any Person known
to a Responsible Officer to be an Affiliate of the Seller and (y) any Offered
Certificate for which the Seller or any Person known to a Responsible Officer to
be an Affiliate of the Seller is the Certificate Owner or Holder shall be deemed
not to be outstanding (unless to the knowledge of a Responsible Officer (i) the
Seller or such Affiliate is acting as trustee or nominee for a Person who is not
an Affiliate of such Seller and who makes the voting decision with respect to
such Offered Certificates or (ii) the Seller or such Affiliate is the
Certificate Owner or Holder of all the Certificates of a Class, but only with
respect to the Class as to which the Seller or such Affiliate owns all the
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.
Civil Relief Act: The Soldiers' and Sailors' Civil Relief Act of 1940,
as amended.
Civil Relief Act Interest Shortfall: With respect to any Distribution
Date, for any Mortgage Loan as to which there has been a reduction in the amount
of interest collectible thereon for the most recently ended Due Period as a
result of the application of the Civil Relief Act, the amount by which (i)
interest collectible on such Mortgage Loan during such Due Period is less than
(ii) one month's interest on the Principal Balance of such Mortgage Loan at the
Loan Rate for such Mortgage Loan before giving effect to the application of the
Civil Relief Act.
Class: All Certificates having the same designation.
Class A-1A Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-1A Certificate pursuant to Section 6.01.
Class A-1F Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class A-1F Certificate pursuant to Section 6.01.
Class A Certificates: The Class A-1F and Class A-1A Certificates.
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Class Allocation Percentage: As to the Class A-1F Certificates, the
percentage equivalent of a fraction, the numerator of which is the Basic
Principal Amount for Loan Group 1 for the applicable Distribution Date and the
denominator of which is the Aggregate Principal Amount. As to the Class A-1A
Certificates, the percentage equivalent of a fraction, the numerator of which is
the Basic Principal Amount for Loan Group 2 for the applicable Distribution Date
and the denominator of which is the Aggregate Principal Amount.
Class B Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class B Certificate pursuant to Section 6.01.
Class BIO Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit B and
designated as a Class BIO Certificate pursuant to Section 6.01.
Class BIO Distribution Amount: As to any Distribution Date, the amount
allocable to the Class BIO Certificates as provided in Section 2.07 for such
Distribution Date and all prior Distribution Dates, less the aggregate of all
amounts distributed or deemed distributed with respect to the Class BIO
Certificates on prior Distribution Dates.
Class B Principal Distribution Amount: On any Distribution Date on and
after the Stepdown Date and so long as a Delinquency Event is not in effect, an
amount equal to the excess of (1) the sum of (A) the aggregate Class Principal
Balance of the Senior Certificates (after giving effect to the distribution of
the Senior Principal Distribution Amount on such Distribution Date), (B) the
Class Principal Balance of the Class M-1 Certificates (after giving effect to
the distribution of the Class M-1 Principal Distribution Amount on such
Distribution Date), (C) the Class Principal Balance of the Class M-2
Certificates (after giving effect to the distribution of the Class M-2 Principal
Distribution Amount on such Distribution Date) and (D) the Class Principal
Balance of the Class B Certificates immediately prior to such Distribution Date,
over (2) the lesser of (A) the Pool Balance as of the last day of the related
Due Period, minus the Subordination Required Overcollateralization Amount for
that Distribution Date and (B) the Pool Balance as of the last day of the
related Due Period minus the OC Floor, provided, however, that after the Class
Principal Balances of the Senior, Class M-1 and Class M-2 Certificates are
reduced to zero, the Class B Principal Distribution Amount for such Distribution
Date will equal 100% of the Principal Distribution Amount.
Class Interest Carryover Shortfall: As to any Class of Regular
Certificates and any Distribution Date, an amount equal to the sum of (i) the
excess of the related Class Monthly Interest Amount for the preceding
Distribution Date and any outstanding Class Interest Carryover Shortfall with
respect to such Class on such preceding Distribution Date, over the amount in
respect of interest that is actually distributed to the Holders of such Class on
such preceding Distribution Date plus (ii) one month's interest on such excess,
to the extent permitted by law, at the related Certificate Rate.
Class Interest Distribution: As to any Class of Regular Certificates
and Distribution Date, an amount equal to the sum of (a) the related Class
Monthly Interest Amount and (b) any Class Interest Carryover Shortfall for such
Class of Certificates for such Distribution Date.
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Class IO Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form attached hereto as Exhibit A and designated as
a Class IO Certificate pursuant to Section 6.01.
Class M-1 Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class M-1 Certificate pursuant to Section 6.01.
Class M-1 Principal Distribution Amount: As to any Distribution Date on
or after the Stepdown Date, 100% of the Principal Distribution Amount if the
Class Principal Balance of each Class of Senior Certificates has been reduced to
zero and a Delinquency Event exists, or, if a Delinquency Event is not in
effect, the excess of (1) the sum of (A) the aggregate Class Principal Balance
of the Senior Certificates (after giving effect to distributions of the Senior
Principal Distribution Amount for such Distribution Date) and (B) the Class
Principal Balance of the Class M-1 Certificates immediately prior to such
Distribution Date over (2) the lesser of (A) [___]% of the Pool Balance as of
the last day of the related Due Period, minus the Subordination Required
Overcollateralization Amount for that Distribution Date and (B) the Pool Balance
as of the last day of the related Due Period minus the OC Floor.
Class M-2 Certificate: Any Certificate executed and authenticated by
the Trustee substantially in the form attached hereto as Exhibit A and
designated as a Class M-2 Certificate pursuant to Section 6.01.
Class M-2 Principal Distribution Amount: As to any Distribution Date on
or after the Stepdown Date, 100% of the Principal Distribution Amount if the
aggregate Class Principal Balance of each of the Senior and Class M-1
Certificates has been reduced to zero and a Delinquency Event exists or, if a
Delinquency Event is not in effect, the excess of (1) the sum of (A) the
aggregate Class Principal Balance of the Senior Certificates (after giving
effect to distributions of the Senior Principal Distribution Amount for such
Distribution Date), (B) the Class Principal Balance of the Class M-1
Certificates (after giving effect to distribution of the Class M-1 Principal
Distribution Amount for such Distribution Date) and (C) the Class Principal
Balance of the Class M-2 Certificates immediately prior to such Distribution
Date over (2) the lesser of (A) [___]% of the Pool Balance as of the last day of
the related Due Period, minus the Subordination Required Overcollateralization
Amount for that Distribution Date and (B) the Pool Balance as of the last day of
the related Due Period minus the OC Floor.
Class Monthly Interest Amount: As to any Distribution Date and Class of
Regular Certificates, interest (i) for the related Interest Period at the
related Certificate Rate on the related Class Principal Balance or Notional
Amount minus (ii) such Class' pro rata portion of any Civil Relief Act Interest
Shortfall during the related Due Period based on the amount of interest to which
each such Class would otherwise be entitled in the absence of such shortfall.
Class Principal Balance: As of any date of determination and Class of
Certificates, other than the Notional Amount Certificates, the Original Class
Principal Balance for such Class reduced by the sum of all amounts previously
distributed to the Certificateholders of such Class in respect of principal from
the related Principal Distribution Amount on all previous Distribution Dates
and, in the case of any Class of Subordinate Certificates, reduced by any
Applied Realized Loss Amounts allocated to such Class on prior Distribution
Dates.
-8-
Class Principal Carryover Shortfall: As to any Class of Subordinate
Certificates and any Distribution Date, the excess, if any, of (i) the sum of
(x) the amount of the reduction in the Class Principal Balance of that Class of
Subordinate Certificates on such Distribution Date and (y) the amount of such
reductions on prior Distribution Dates over (ii) the amount distributed in
respect of principal thereof on prior Distribution Dates.
Class R-1 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form set forth in Exhibit
B-1 hereto.
Class R-2 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-1 hereto.
Class R-3 Certificate: Any Certificate designated as such and executed
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit B-1 hereto.
Class R Certificateholder: The Holder of a Residual Certificate.
Closing Date: [_________] [___], [____].
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 Certificateholders pursuant to Section
3.02(b). The Collection Account shall be an Eligible Account.
Combined Loan-to-Value Ratio or CLTV: With respect to any Mortgage
Loan, the sum of the original principal balance of such Mortgage Loan and the
outstanding principal balance of the related First Lien, if any, as of the date
of origination of the Mortgage Loan, divided by the Appraised Value.
Compensating Interest: As to any Distribution Date, the amount
calculated pursuant to Section 5.02.
Cooperative Corporation: The entity that holds title (fee or an
acceptable leasehold estate) to the real property and improvements constituting
the Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.
Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, including the allocation of individual dwelling units
to the holders of the Cooperative Shares of the Cooperative Corporation.
-9-
Cooperative Shares: Shares issued by a Cooperative Corporation.
Cooperative Unit: A single-family dwelling located in a Cooperative
Property.
Corporate Trust Office: The designated offices of the Trustee at which
at any particular time its corporate trust business with respect to this
Agreement shall be administered, which offices at the date of the execution of
this Agreement are located, for Certificate transfer services, at
[______________________________], Attention: [_________________], and for all
other purposes at [______________________________], Attention:
[_________________], and which are the respective addresses to which notices to
and correspondence with the Trustee should be directed.
Cumulative Loss Event: For any Distribution Date in the applicable
period below, if Cumulative Net Losses exceed the applicable percentage of the
aggregate Original Class Principal Balances of the Offered Certificates:
Number of
Distribution Dates Percentages
------------------ -----------
[37-48 [___]%
49-60 [___]%
61-72 [___]%
73-84 [___]%
85 and thereafter] [___]%
Cumulative Net Losses: As of any date of determination, the aggregate
of the Liquidation Loan Losses incurred from the Cut-Off Date through the end of
the calendar month preceding such date of determination.
Curtailment: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of the
amount of the Monthly Payment due for such Due Period and which is not intended
to satisfy the Mortgage Loan in full, nor is intended to cure a delinquency.
Custodial Agreement: Any Custodial Agreement, as amended and
supplemented from time to time, dated as of the date hereof, by and among the
Trustee, the Seller, the Servicer, and the Custodian substantially in the form
set forth as Exhibit K hereto.
Custodian: The Person acting as custodian under a Custodial Agreement
from time to time.
Cut-Off Date: As to any Initial Mortgage Loan, the close of business on
[_________] [___], [____], except that the Cut-Off Date for any Initial Mortgage
Loan originated after [_________] [___], [____], will be the date of origination
of such Mortgage Loan. As to any Subsequent Mortgage Loan, the later of the
first day of the month of the related Subsequent Transfer Date and the date of
origination of such Subsequent Mortgage Loan.
-10-
Cut-Off Date Pool Principal Balance: $[____________].
Cut-Off Date Principal Balance: With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the related Cut-Off Date after giving
effect to payments of principal due on or before the Cut-Off Date (or as of the
applicable date of substitution with respect to an Eligible Substitute Mortgage
Loan pursuant to Section 2.02 or 2.04).
Defective Mortgage Loan: Any Mortgage Loan subject to repurchase or
substitution pursuant to Section 2.02 or 2.04.
Deficiency Amount: With respect to any Distribution Date, the amount,
if any, by which the Guaranteed Distributions for such Distribution Date exceeds
the Available Funds for such Distribution Date that will be available to make
payment of the Guaranteed Distributions on such Distribution Date pursuant to
Section 5.01.
Definitive Certificates: As defined in Section 6.02(c).
Delinquency Amount: As to any Distribution Date, the aggregate
Principal Balance of the Mortgage Loans that are (a) 60 or more days delinquent,
(b) in bankruptcy or foreclosure or (c) REO in each case, as of the last day of
the preceding month.
Delinquency Event: A Delinquency Event shall have occurred and be
continuing, if at any time the Three Month Delinquency Rate exceeds [___]% of
the Senior Enhancement Percentage.
Delta: Delta Funding Corporation, a New York corporation, or any
successor thereto.
Deposit Date: As to any Distribution Date, the Business Day preceding
such Distribution Date.
Depositor: Renaissance Mortgage Acceptance Corp., a Delaware
corporation, or any successor thereto.
Depository: The initial Depository shall be The Depository Trust
Company, the nominee of which is Cede & Co., as the registered Holder of the
Regular 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 a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the fourth
Business Day prior to such Distribution Date.
Distribution Account: The account established and maintained by the
Trustee pursuant to Section 5.04. The Distribution Account shall be an Eligible
Account.
-11-
Distribution Date: The 25th day of each month, or, if such day is not a
Business Day, then the next Business Day, beginning in [_________] [____].
Due Date: As to any Mortgage Loan, the day of the month on which the
Monthly Payment is due from the Mortgagor.
Due Period: With respect to each Distribution Date for scheduled
payments of both interest and principal, the period from and including the
second day of the month preceding the month of such Distribution Date to and
including the first day of the month of such Distribution Date.
Electronic Ledger: The electronic master record of home equity mortgage
loans maintained by the Seller.
Eligible Account: A segregated account that is (i) maintained with a
depository institution whose debt obligations at the time of any deposit therein
have the highest short-term debt rating by the Rating Agencies and whose
accounts are insured to the maximum extent provided by either the Savings
Association Insurance Fund ("SAIF") or the Bank Insurance Fund ("BIF") of the
Federal Deposit Insurance Corporation established by such fund with a minimum
long-term unsecured debt rating of A by S&P and A2 by ▇▇▇▇▇'▇, and which is any
of (A) a federal savings and loan association duly organized, validly existing
and in good standing under the federal banking laws, (B) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (C) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (D) a principal
subsidiary of a bank holding company; (ii) a segregated trust account maintained
with the corporate trust department of a federal or state chartered depository
institution or trust company, having capital and surplus of not less than
$50,000,000, acting in its fiduciary capacity; (iii) maintained at
[__________________________________] so long as its debt obligations at the time
of any deposit therein have a short-term debt rating of at least A-1 for S&P,
P-1 for ▇▇▇▇▇'▇ and F-1 for Fitch; or (iv) otherwise acceptable to each Rating
Agency as evidenced by a letter from each Rating Agency to the Trustee, without
reduction or withdrawal of the then current ratings of the Certificates without
giving effect to the Certificate Insurance 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 (3) 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 S&P, "P-1" for ▇▇▇▇▇'▇ and "F-1+" for
Fitch);
(iii) certificates of deposit, time deposits and bankers'
acceptances 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 S&P and Fitch in their
respective highest unsecured short-term debt rating category;
-12-
(iv) commercial paper (having original maturities of not more
than ninety (90) days) of any corporation incorporated under the laws
of the United States or any state thereof which on the date of
acquisition has been rated by S&P and ▇▇▇▇▇'▇ and, if rated by Fitch,
Fitch in their respective highest short-term rating categories;
(v) short term investment funds ("STIFS") sponsored by any
trust company or national banking association incorporated under the
laws of the United States or any state thereof which on the date of
acquisition has been rated by each Rating Agency in their respective
highest rating category of long term unsecured debt;
(vi) interests in any money market fund which at the date of
acquisition of the interests in such fund including any such fund that
is managed by the Trustee or an Affiliate of the Trustee or for which
the Trustee or an Affiliate acts as advisor and throughout the time as
the interest is held in such fund has a rating of "AAA" by S&P, "Aaa"
by ▇▇▇▇▇'▇ or "AAA" by Fitch; and
(vii) other obligations or securities that are acceptable to
each Rating Agency as an Eligible Investment hereunder and will not
result in a reduction in the then current rating of the Certificates,
as evidenced by a letter to such effect from such Rating Agency 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; provided, further, that
no instrument described hereunder may be purchased at a price greater than par
if such instrument may be prepaid or called at a price less than its purchase
price prior to its stated maturity; and provided further, that if S&P is rating
any of the Certificates, an instrument described hereunder shall be rated the
applicable rating of S&P set forth above.
Eligible Substitute Mortgage Loan: A Mortgage Loan substituted by the
Seller for a Defective Mortgage Loan which must, on the date of such
substitution: (i) have an outstanding Principal Balance after deducting all
scheduled principal payments due in the month of substitution (or in the case of
a substitution of more than one Mortgage Loan for a Defective Mortgage Loan, an
aggregate Principal Balance), not in excess of and not less than 95% of the
Principal Balance of the Defective Mortgage Loan; (ii) have a Loan Rate not less
than the Loan Rate of the Defective Mortgage Loan and not more than 1% in excess
of the Loan Rate of such Defective Mortgage Loan; (iii) if such Defective
Mortgage Loan is an adjustable-rate Mortgage Loan, have a Loan Rate based on the
same Loan Index with adjustments to such Loan Rate made on the same interval
between Interest Rate Adjustment Dates as that of the Defective Mortgage Loan
and have a Margin that is not less than the Margin of the Defective Mortgage
Loan and not more than one hundred (100) basis points higher than the Margin for
the Defective Mortgage Loan; (iv) have a Mortgage of the same or higher level of
priority as the Mortgage relating to the Defective Mortgage Loan at the time
such Mortgage was transferred to the Trust; (v) have a remaining term to
maturity not more than six (6) months earlier and not later than the remaining
term to maturity of the Defective Mortgage Loan; (vi) comply with each
representation and warranty set forth in Section 2.04 (deemed to be made as of
the date of substitution); (vii) have an original Combined Loan-to-Value Ratio
not greater than that of the Defective Mortgage Loan; (viii) if such Defective
Mortgage Loan is an adjustable-rate Mortgage Loan, have a Lifetime Rate Cap and
a Periodic Rate Cap no lower than the Lifetime Rate Cap and Periodic Rate Cap,
respectively, applicable to such Defective Mortgage Loan; (ix) have a credit
risk not less than the credit risk of the Defective Mortgage Loan; and (x) be of
the same type of Mortgaged Property as the Defective Mortgage Loan or a detached
single family residence. More than one Eligible Substitute Mortgage Loan may be
substituted for a Defective Mortgage Loan if such Eligible Substitute Mortgage
Loans meet the foregoing attributes in the aggregate.
-13-
ERISA Restricted Certificate: The Class M-1, Class M-2, Class B and
Class BIO Certificates and each Residual Certificate.
Escrow Repair Loan: A Mortgage Loan as to which the Servicer holds a
portion of the proceeds in escrow pending repair of the related Mortgaged
Property as specified in the related Mortgage and Mortgage Note.
Event of Default: As defined in Section 8.01.
Excess Funding Amount: As to either Loan Group, the Pre-Funded Amount
remaining on deposit in the Pre-Funding Account at the end of the Funding Period
and allocated to such Loan Group.
Excess Interest: As to any Distribution Date, the Available Funds
remaining after the application of payments pursuant to clauses (1) through (8)
of Section 5.01(a).
Excess Overcollateralization Amount: As to any Distribution Date, the
lesser of (i) the Aggregate Principal Amount for such Distribution Date and (ii)
the excess, if any, of (x) the Overcollateralization Amount (assuming 100% of
the Aggregate Principal Amount is distributed on the Offered Certificates) over
(y) the Required Overcollateralization Amount.
Expense Fee Rate: The sum of the Servicing Fee Rate and the Trustee Fee
Rate, which is [____]% per annum.
▇▇▇▇▇▇ ▇▇▇: ▇▇▇▇▇▇ ▇▇▇ (formerly known as the Federal National Mortgage
Association).
FDIC: The Federal Deposit Insurance Corporation or any successor
thereto.
Final Scheduled Distribution Date: As to any Class of Certificates, the
Distribution Date occurring in the respective month set forth below:
-14-
Final Scheduled
Class Distribution Date
----- -----------------
A-1F [________] [____]
A-1A [________] [____]
IO [________] [____]
M-1 [________] [____]
M-2 [________] [____]
B [________] [____]
First Lien: With respect to any Mortgage Loan which is a second
priority lien, the mortgage loan relating to the corresponding Mortgaged
Property having a first priority lien.
Fiscal Agent: As defined in the Certificate Insurance Policy.
Fitch: Fitch, Inc. or its successor in interest.
Foreclosure Profits: 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 Principal Balance (plus accrued and unpaid interest
thereon at the applicable Loan Rate from the date interest was last paid (or
advanced and not reimbursed) through the date of receipt of the final
Liquidation Proceeds) of such Liquidated Mortgage Loan immediately prior to the
final recovery of its Liquidation Proceeds.
▇▇▇▇▇▇▇ Mac: ▇▇▇▇▇▇▇ Mac (formerly known as the Federal Home Loan
Mortgage Corporation).
Funding Period: The period from the Closing Date until the earlier of,
(i) the date on which the amount on deposit in the Pre-Funding Account is less
than $100,000 and (ii) the close of business on [_________] [___], [____].
GAAP: Generally accepted accounting principles as in effect from time
to time, consistently applied.
Guaranteed Distributions: For any Distribution Date and each Class of
Senior Certificates, the sum of (x) the Class Monthly Interest Amount on each
Class of Senior Certificates, plus (y) the Subordination Deficit, plus (z)
without duplication of clause (y) the outstanding Class Principal Balance of
each Class of Senior Certificates (other than the Notional Amount Certificates)
on their respective Final Scheduled Distribution Dates after giving effect to
distributions thereon on that Distribution Date, determined in accordance with
the original terms of the Senior Certificates when issued and without regard to
any subsequent amendment or modification of the Senior Certificates or this
Agreement except amendments or modifications to which the Certificate Insurer
has given its prior written consent. Guaranteed Distributions shall not include,
nor shall coverage be provided under the Certificate Insurance Policy in respect
of, any taxes, withholding or other charges imposed by a governmental authority
due to, or in connection with, the payment of any Guaranteed Distributions to a
Holder.
-15-
Initial Interest Coverage Account: The Initial Interest Coverage
Account established pursuant to Section 4.02.
Initial Mortgage Loan Schedule: The schedule of Initial Mortgage Loans
included in the Trust as of the Closing Date, specifying with respect to each
such Initial Mortgage Loan the information set forth on Exhibit C attached
hereto.
Initial Mortgage Loans: The Mortgage Loans transferred to the Trust on
the Closing Date pursuant to Section 2.01, as set forth in Exhibit C hereto.
Insurance Agreement: The Insurance Agreement dated as of [_________]
[___], [____], among the Depositor, the Servicer, the Seller, and the
Certificate Insurer, including any amendments and supplements thereto.
Insurance Proceeds: Proceeds paid by any insurer (other than the
Certificate Insurer) pursuant to any insurance policy covering a Mortgage Loan
or Mortgaged Property, or amounts required to be paid by the Servicer pursuant
to Section 3.05, net of any component thereof (i) covering any expenses incurred
by or on behalf of the Servicer in connection with obtaining such proceeds, (ii)
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.
Insured Payments: As to any Distribution Date, amounts actually paid
under the Certificate Insurance Policy.
Interest Period: As to the Class A-1F and Class IO Certificates, the
calendar month preceding the month of the applicable Distribution Date,
calculated on the basis of a 360-day year comprised of twelve 30-day months. As
to the Adjustable Rate Certificates, the period from the preceding Distribution
Date (or in the case of the first Distribution Date, from the Closing Date)
through the day preceding the applicable Distribution Date, calculated on the
basis of a 360-day year and the actual number of days in the applicable Interest
Period.
Interest Rate Adjustment Date: With respect to each adjustable-rate
Mortgage Loan, the date or dates on which the Loan Rate is subject to adjustment
in accordance with the related Mortgage Note.
Interest Remittance Amount: As of any Distribution Date, the portion of
Available Funds that constitutes amounts in respect of interest.
LIBOR Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York or in the city
of London, England are required or authorized by law to be closed.
-16-
Lifetime Rate Cap: With respect to each adjustable-rate Mortgage Loan,
the maximum Loan Rate permitted over the life of such Mortgage Loan, as provided
by the terms of the related Mortgage Note.
Liquidated Mortgage Loan: As to any Distribution Date, a Mortgage Loan
with respect to which the Servicer has determined, in accordance with the
servicing procedures specified herein as of the end of the preceding Prepayment
Period, that all Liquidation Proceeds which it expects to recover with respect
to such Mortgage Loan (including the disposition of the related REO Property)
have been received.
Liquidation Loan Losses: For each Liquidated Mortgage Loan the amount,
if any, by which the Principal Balance thereof plus accrued and unpaid interest
thereon is in excess of the Liquidation Proceeds realized thereon net of
unreimbursed Servicing Fees, Servicing Advances and Monthly Advances with
respect thereto.
Liquidation Proceeds: Proceeds (including Insurance Proceeds) received
in connection with the liquidation of any Mortgage Loan or related REO Property,
whether through trustee's sale, foreclosure sale or otherwise.
Loan Index: With respect to each Interest Rate Adjustment Date for each
adjustable-rate Mortgage Loan that is identified on the Mortgage Loan Schedule
as having a LIBOR Loan Index, the average of the interbank offered rate for
six-month U.S. dollar denominated deposits in the London Market, as determined
according to the terms of the related Note.
Loan Group: Either Loan Group 1 or Loan Group 2.
Loan Group 1: The Mortgage Loans identified on the Mortgage Loan
Schedule as being part of Loan Group 1.
Loan Group 2: The Mortgage Loans identified on the Mortgage Loan
Schedule as being part of Loan Group 2.
Loan Rate: With respect to any Mortgage Loan 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 Principal Balance.
Maintenance: With respect to any Cooperative Unit, the rent paid by the
Mortgagor to the Cooperative Corporation pursuant to the Proprietary Lease.
Majority Certificateholder: The Holder or Holders of Certificates
evidencing Voting Rights in excess of 51% in the aggregate.
Margin: As to any adjustable-rate Mortgage Loan, the percentage set
forth as the "Margin" for such Mortgage Loan on the Mortgage Loan Schedule.
Monthly Advance: An advance made by the Servicer pursuant to Section
3.15.
-17-
Monthly Payment: The scheduled monthly payment of principal and/or
interest required to be made by a Mortgagor on the related Mortgage Loan.
Moody's: ▇▇▇▇▇'▇ Investors Service, Inc. or its successor in interest.
Mortgage: The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Mortgage Loan.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to the Mortgage File pursuant to this Agreement.
Mortgage Loan Schedule: With respect to any date, the schedule of
Mortgage Loans constituting assets of the Trust, which on the Closing Date shall
consist of the Initial Mortgage Loan Schedule, together with each Subsequent
Mortgage Loan Schedule reflecting the Subsequent Mortgage Loans transferred to
the Trust after the Closing Date. The Initial Mortgage Loan Schedule is the
schedule set forth herein as Exhibit C, which schedule sets forth as to each
Initial Mortgage Loan: (i) the Cut-Off Date Principal Balance, (ii) the account
number, (iii) the original principal amount, (iv) the CLTV as of the date of the
origination of the related Initial Mortgage Loan, (v) the Due Date, (vi) the
Loan Rate as of the Cut-Off Date, (vii) the first date on which a Monthly
Payment is or was due under the Mortgage Note, (viii) the original stated
maturity date of the Mortgage Note and if the Mortgage Loan is a Balloon Loan,
the amortization terms, (ix) the remaining number of months to maturity as of
the Cut-Off Date, (x) the state in which the related Mortgaged Property is
situated, (xi) the type of property, (xii) the lien status, (xiii) with respect
to each adjustable-rate Mortgage Loan, (a) the Periodic Rate Cap, (b) the
Margin, (c) the Lifetime Rate Cap and (d) the next Interest Rate Adjustment Date
after the Cut-Off Date and (xiv) the applicable Loan Group. The Seller shall
indicate to the Trustee which Mortgage Loans, if any, are Cooperative Loans. The
Mortgage Loan Schedule will be amended by the Seller from time to time to
reflect the substitution of an Eligible Substitute Mortgage Loan for a Defective
Mortgage Loan from time to time hereunder.
Mortgage Loans: The mortgage loans that are transferred and assigned to
the Trustee pursuant to Sections 2.01, 2.05 and 2.13, together with the Related
Documents, exclusive of Mortgage Loans that are transferred to the Servicer or
the Seller, as the case may be, from time to time pursuant to Section 2.02, 2.04
or 3.16, as from time to time are held by the Custodian on behalf of the Trustee
as a part of the Trust, such mortgage loans originally so held being identified
in the Mortgage Loan Schedule delivered on the Closing Date.
Mortgage Note: With respect to a Mortgage Loan, the note pursuant to
which the related mortgagor agrees to pay the indebtedness evidenced thereby
which is secured by the related Mortgage.
Mortgaged Property: The underlying property, including real property
and improvements thereon, securing a Mortgage Loan, which, with respect to a
Cooperative Loan, is the related Cooperative Shares and Proprietary Lease.
Mortgagor: The obligor or obligors under a Mortgage Note.
-18-
Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan,
Liquidation Proceeds net of unreimbursed Servicing Fees, Servicing Advances and
Monthly Advances with respect thereto.
Net Loan Rate: With respect to any Mortgage Loan as to any day, the
Loan Rate less the Expense Fee Rate.
Net Rate Cap Carryover: As to any Distribution Date and any Class of
Offered Certificates (other than the Class IO Certificates), the sum of (i) the
excess, if any, of the related Class Monthly Interest Amount, calculated at the
applicable Certificate Rate (without regard to the Available Funds Cap), over
the Class Monthly Interest Amount for such Distribution Date, (ii) any Net Rate
Cap Carryover remaining unpaid from prior Distribution Dates and (iii) interest
on the amount in clause (ii) for the related Interest Accrual Period calculated
at the applicable Certificate Rate (without regard to the Available Funds Cap).
Net Rate Cap Fund: The account established and maintained pursuant to
Section 5.08.
Net Rate Cap Fund Deposit: As defined in Section 5.08.
Ninety Day Delinquency Rate: As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the aggregate
Principal Balances of the Mortgage Loans that are (a) ninety (90) or more days
delinquent as of the last day of such Prepayment Period plus (b) REO Property
and Mortgage Loans in foreclosure or in bankruptcy and the denominator of which
is the Pool Balance as of the last day of the related Due Period.
Nonrecoverable Advances: With respect to any Mortgage Loan, (i) any
Servicing Advance or Monthly Advance previously made and not reimbursed pursuant
to Section 3.03(ii) or (ii) a Servicing Advance or Monthly Advance proposed to
be made in respect of a Mortgage Loan or REO Property which, in the good faith
business judgment of the Servicer, as evidenced by an Officer's Certificate
delivered to the Seller and the Trustee no later than the Business Day following
such determination, would not be ultimately recoverable pursuant to Section
3.03(ii).
Notional Amount: The Notional Amount of the Class IO Certificates for
any Distribution Date prior to the [37th] Distribution Date will equal the
lesser of (i) the Pool Balance as of the end of the second preceding Due Period
and (ii) the applicable amount set forth below:
Distribution Date Notional Amount
[1 through 3 $[________]
4 through 6 $[________]
7 through 9 $[________]
10 through 12 $[________]
13 through 15 $[________]
16 through 18 $[________]
19 through 21 $[________]
22 through 24 $[________]
25 through 27 $[________]
28 through 30 $[________]
31 through 33 $[________]
34 through 36] $[________]
-19-
On and after the [37th] Distribution Date, the Notional Amount of the
Notional Amount Certificates will be zero.
Notional Amount Certificates: The Class IO Certificates.
OC Floor: An amount equal to 0.50% of the aggregate Original Class
Principal Balance of the Offered Certificates as of the Closing Date (i.e.,
$[______]).
Offered Certificates: The Senior Certificates and the Subordinate
Certificates.
Officer's Certificate: A certificate signed by the President, an
Executive Vice President, a Senior Vice President, a First Vice President, a
Vice President, Assistant Vice President, the Treasurer, Assistant Treasurer,
Assistant Secretary, Controller or Assistant Controller of the Servicer and
delivered to the Trustee or the Custodian.
Opinion of Counsel: A written opinion of counsel reasonably acceptable
to the Trustee, who may be in-house counsel for the Servicer, the Depositor or
the Seller (except that any opinion relating to the qualification of the Trust
as a REMIC or compliance with the REMIC Provisions must be an opinion of
independent outside counsel) and who, in the case of opinions delivered to each
Rating Agency or the Certificate Insurer, is reasonably acceptable to it.
Optional Termination Date: The Distribution Date following the Due
Period at the end of which the Pool Balance is less than 10% of the sum of the
aggregate Principal Balance of the Initial Mortgage Loans as of the related
Cut-Off Date and the amount deposited in the Pre-Funding Account on the Closing
Date.
Original Capitalized Interest Deposit: $[_________].
Original Class Principal Balance: As to the Class BIO Certificates and
the Residual Certificates, $0. As to any Class of Offered Certificates, the
respective amount set forth below opposite such Class:
-20-
Original Class
Class Principal Balance
----- -----------------
A-1F $[________]
A-1A $[________]
IO [(1)]
M-1 $[________]
M-2 $[________]
B $[________]
Total $[________]
(1) This Class has no Class Principal Balance, but will accrue interest on its
Notional Amount.
Original Pre-Funded Amount: $[________] of which $[________] is
allocated to Loan Group 1 and $[________] is allocated to Loan Group 2.
Original Pool Balance: The sum of (i) the aggregate Cut-Off Date
Principal Balance of the Initial Mortgage Loans as of the Closing Date and (ii)
the aggregate unpaid principal balances of the Subsequent Mortgage Loans as of
the related Cut-Off Date.
Outstanding Class Interest Carryover Shortfall: As to any Class of
Certificates and any Distribution Date, the amount of Class Interest Carryover
Shortfall for such Distribution Date.
Overcollateralization Amount: As to any Distribution Date, the excess,
if any, of (i) the sum of (x) the Pool Balance as of the end of the related Due
Period and (y) the Pre-Funded Amount as of the end of the related Due Period
over (ii) the aggregate Class Principal Balance of the Certificates after giving
effect to the distribution of the Principal Distribution Amount on such
Distribution Date.
Overfunded Amount: As to any Subsequent Transfer Date, the excess, if
any, of (x) the sum of (i) the amount on deposit on the Initial Interest
Coverage Account on such date and (ii) investment earnings on such amount at the
rate of 2.5% per annum from such Subsequent Transfer Date to the next
Pre-Funding Distribution Date over (y) the Capitalized Interest Requirement for
each remaining Pre-Funding Distribution Date.
Ownership Interest: As to any Certificate or security interest in such
Certificate, including any interest in such Certificate as the Holder thereof
and any other interest therein, whether direct or indirect, legal or beneficial,
as owner or as pledgee.
Paying Agent: Any paying agent appointed pursuant to Section 6.05.
Percentage Interest: With respect to any Offered Certificate, the
percentage obtained by dividing the denomination of such Certificate by the
aggregate of the denominations of all Certificates of the same Class. With
respect to a Residual Certificate, the portion of the Class evidenced thereby as
stated on the face thereof, which shall be either 99.999999% or, but only with
respect to the Tax Matters Person Residual Interest held by the Tax Matters
Person, 0.000001%. With respect to a Class BIO Certificate, the percentage set
forth on the face thereof.
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Periodic Rate Cap: With respect to each adjustable-rate Mortgage Loan
with respect to which the related Mortgage Note provides for a periodic rate
cap, the maximum percentage increase or decrease in the Loan Rate permitted for
such Mortgage Loan over the Loan Rate in effect as of an Interest Rate
Adjustment Date, as set forth on the Mortgage Loan Schedule.
Permitted Transferee: Any Person other than (i) the United States or
any State or any political subdivision thereof or any agency or instrumentality
of any of the foregoing; (ii) a foreign government, international organization
or any agency or instrumentality of either of the foregoing; (iii) an
organization which is exempt from tax imposed by Chapter 1 of the Code
(including the tax imposed by section 511 of the Code on unrelated business
taxable income) (except certain farmers' cooperatives described in Code section
521) on any excess inclusions (as defined in Section 860E(c)(1)) with respect to
any Residual Certificate; (iv) rural electric and telephone cooperatives
described in Code section 1381(a)(2)(C); (v) a Person that is not (a) a citizen
or resident of the United States, (b) a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, (c) an estate whose income from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States or (d) a trust if a court within the United States is
able to exercise primary supervision of the administration of the trust and one
or more United States fiduciaries have the authority to control all substantial
decisions of the trust; or (vi) any other Person so designated by the Trustee
based on an Opinion of Counsel to the effect that any transfer to such Person
may cause the Trust to fail to qualify as a REMIC at any time the Certificates
are outstanding. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Code section 7701 or
successor provisions. A corporation will not be treated as an instrumentality of
the United States or of any State or political subdivision thereof if all of its
activities are subject to tax, and, with the exception of the ▇▇▇▇▇▇▇ Mac, a
majority of its board of directors is not selected by such governmental unit.
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
Pool Balance: With respect to any date, the aggregate of the Principal
Balances of all Mortgage Loans as of such date.
Pre-Funded Amount: As of the Closing Date, the Original Pre-Funded
Amount. As of any date thereafter, the amount on deposit in the Pre-Funding
Account, excluding any Pre-Funding Earnings included therein.
Pre-Funding Account: The Pre-Funding Account established pursuant to
Section 4.02.
Pre-Funding Distribution Date: Each Distribution Date during the
Funding Period and the Distribution Date immediately following the end of the
Funding Period.
-22-
Pre-Funding Earnings: As of any date of determination, the amount of
investment earnings or income, net of any losses from such investments, on
deposit in the Pre-Funding Account.
Premium Amount: As to any Distribution Date, the product of the Premium
Percentage divided by 12 and the aggregate Class Principal Balance of the Class
A Certificates as of the first day of the calendar month in which such
Distribution Date occurs.
Premium Letter: The letter, dated the Closing Date, from the
Certificate Insurer to the Seller setting forth the Premium Amount and other
amounts.
Premium Percentage: The per annum rate at which the premium due to the
Certificate Insurer accrues, as set forth in the Premium Letter.
Prepayment Assumption: With respect to the fixed-rate Mortgage Loans, a
conditional rate of prepayment equal to [___]% per annum in the first month of
the life of the fixed rate Mortgage Loans and an additional amount of
approximately [________]% (precisely [___] percent per annum) in each month
thereafter until the twelfth month; beginning in the twelfth month and in each
month thereafter during the life of the Mortgage Loans, a conditional prepayment
rate of [___]% per annum each month is assumed. With respect to the
adjustable-rate Mortgage Loans, a conditional rate of prepayment equal to [___]%
per annum in the first month of the life of the adjustable-rate mortgage loans
and an additional amount of approximately [_____]% (precisely [___] percent per
annum) in each month thereafter until the 30th month; beginning in the 30th
month and in each month thereafter during the life of the mortgage loans, a
conditional prepayment rate of [___]% per annum each month is assumed.
Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject during the related Due Period of a
voluntary Principal Prepayment an amount equal to the excess, if any, of (i) 30
days' interest on the Principal Balance of such Mortgage Loan at the Loan Rate
(or at such lower rate as may be in effect for such Mortgage Loan pursuant to
application of the Civil Relief Act), net of the Servicing Fee Rate (which shall
constitute payment of the Servicing Fee with respect to such Mortgage Loan),
over (ii) the amount of interest actually remitted by the Mortgagor in
connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the preceding calendar
month.
Principal Balance: As to any Mortgage Loan and any day, other than a
Liquidated Mortgage Loan, the related Cut-Off Date Principal Balance, minus all
collections credited against the Cut-Off Date Principal Balance of any such
Mortgage Loan. For purposes of this definition, a Liquidated Mortgage Loan shall
be deemed to have a Principal Balance equal to the Principal Balance of the
related Mortgage Loan immediately prior to the final recovery of related
Liquidation Proceeds and a Principal Balance of zero thereafter.
Principal Distribution Amount: As to any Distribution Date, the lesser
of (a) the aggregate Class Principal Balances of the Offered Certificates
immediately preceding such Distribution Date and (b) sum of (i) the Aggregate
Principal Amount minus the Excess Overcollateralization Amount and (ii) the
Subordination Increase Amount.
-23-
Principal Prepayment: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Mortgage
Loan in full (without regard to any prepayment penalty that may have been
collected by the Servicer in connection with such payment of principal).
Proprietary Lease: With respect to any Cooperative Unit, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.
Prospectus: The base prospectus of the Depositor dated [_________]
[___], [____].
Prospectus Supplement: The prospectus supplement dated [_________]
[___], [____], relating to the offering of the Offered Certificates.
Purchase Price: As to any Mortgage Loan repurchased on any date
pursuant to Section 2.02, 2.04 or 3.16, an amount equal to the sum of (i) the
unpaid Principal Balance thereof, (ii) the greater of (a) all unpaid accrued
interest thereon to the end of the Due Period preceding the Distribution Date on
which such Purchase Price is included in Available Funds and (b) thirty (30)
days' interest thereon, computed at the applicable Loan Rate; provided, however,
that if the purchaser is the Servicer, the amount described in clause (ii) shall
be computed at the Loan Rate net of the Servicing Fee Rate (which shall
constitute payment of the Servicing Fee with respect to such Mortgage Loan),
(iii) if the purchaser is the Seller, (x) any unreimbursed Servicing Advances
with respect to such Mortgage Loan and (y) expenses reasonably incurred or to be
incurred by the Servicer, the Trust or the Trustee in respect of the breach or
defect giving rise to the purchase obligation and (iv) the amount of any
penalties, fines, forfeitures, legal fees and related costs, judgments and any
other costs, fees and expenses incurred by or imposed on the Trustee, the
Servicer or the Trust or with respect to which any of them are liable arising
from a breach by the Seller of its representations and warranties in Section
2.04.
Rating Agency: Any statistical credit rating agency, or its successor,
that rated the Offered Certificates at the request of the Depositor at the time
of the initial issuance of the Certificates. 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 Seller, notice of which
designation shall be given to the Trustee. References herein to the highest
short term unsecured rating category of a Rating Agency shall mean "A-1" or
better in the case of S&P, "P-1" or better in the case of Moody's and "F-1" or
better in the case of Fitch. References herein to the highest long-term rating
category of a Rating Agency shall mean "AAA" in the case of S&P and Fitch and
"Aaa" in the case of Moody's.
Recognition Agreement: With respect to any Cooperative Loan, an
agreement between the Cooperative Corporation and the originator of such
Mortgage Loan, which establishes the rights of such originator in the
Cooperative Property.
Record Date: As to the Certificates and the first Distribution Date,
the Closing Date. As to the Class A-1F, Class IO and Class BIO Certificates and
the Residual Certificates and any other Distribution Date, the last Business Day
of the month immediately preceding the month in which the related Distribution
Date occurs. As to the Adjustable Rate Certificates and any other Distribution
Date, the Business Day preceding such Distribution Date; provided, however, that
if the Adjustable Rate Certificates are no longer Book-Entry Certificates, the
"Record Date" shall be the last Business Day of the month immediately preceding
the month in which the related Distribution Date occurs.
-24-
Reference Bank Rate: As to any Interest Period relating to the
Adjustable Rate Certificates 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
aggregate Class Principal Balance of the Adjustable Rate Certificates; 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
Trustee after consultation with the Seller, as of 11:00 A.M., New York City
time, on such date for loans in U.S. Dollars to leading European Banks for a
period of one month in amounts approximately equal to the aggregate Class
Principal Balance of the Adjustable Rate Certificates. If no such quotations can
be obtained, the Reference Bank Rate shall be the Reference Bank Rate applicable
to the preceding Interest Period.
Reference Banks: Three major banks that are engaged in the London
interbank market, selected by the Seller after consultation with the Trustee.
Regular Certificates: The Offered Certificates and the Class BIO
Certificates.
Reimbursement Amount: As to any Distribution Date, the amount, if any,
owing to the Certificate Insurer under the Insurance Agreement.
Related Documents: As defined in Section 2.01.
Released Mortgaged Property Proceeds: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law and mortgage servicing standards
the Servicer would use in servicing mortgage loans for its own account and this
Agreement.
REMIC: A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
REMIC I: The segregated pool of assets consisting of the assets of the
Trust other than the REMIC I Interests, the REMIC II Interests, the Initial
Interest Coverage Account, the Pre-Funding Account and the Net Rate Cap Fund.
REMIC I Certificates: As defined in Section 2.07.
REMIC I Regular Interest: As defined in Section 2.07.
REMIC II: The segregated pool of assets consisting of the REMIC I
Regular Interests.
REMIC II Certificates: As defined in Section 2.07.
REMIC II Regular Interest: As defined in Section 2.07.
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REMIC III: The segregated pool of assets consisting of the REMIC II
Regular Interests.
REMIC III Certificates: As defined in Section 2.07.
REMIC Certificate Maturity Date: The "latest possible maturity date" as
that term is defined in Section 2.09.
REMIC Change of Law: Any proposed, temporary or final regulation,
revenue ruling, revenue procedure or other official announcement or
interpretation relating to any REMIC and the REMIC Provisions issued after the
Closing Date.
REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REO Property: A Mortgaged Property that is acquired by the Servicer on
behalf of the Trust in foreclosure or by deed in lieu of foreclosure.
Required Overcollateralization Amount: As to any Distribution Date (a)
prior to the Stepdown Date, the product of (i) [___]% and (ii) the aggregate
Original Class Principal Balance of the Offered Certificates; and (b) on and
after the Stepdown Date, the greater of (i) the lesser of (x) the product of
[___]% and the aggregate Original Class Principal Balance of the Offered
Certificates and (y) the product of [___]% and the Pool Balance as of the end of
the related Due Period and (ii) the OC Floor; provided, however, that on each
Distribution Date during the continuance of (a) a Cumulative Loss Event, the
Required Overcollateralization Amount will equal the lesser of (x) the product
of [___]% and the aggregate Original Class Principal Balance of the Offered
Certificates and (y) the product of [___]% and the Pool Balance as of the end of
the related Due Period or (b) a Delinquency Event (and a Cumulative Loss Event
is not then continuing), the Required Overcollateralization Amount will equal
the Required Overcollateralization Amount in effect as of the immediately
preceding Distribution Date.
Residential Dwelling: A one- to five-family dwelling, a five- to
eight-family dwelling, a mixed use property, a unit in a planned unit
development, a unit in a condominium development, a townhouse, a unit in a
cooperative or a mobile home treated as real property under local law.
Residual Certificates: The Class R-1, Class R-2 and Class R-3
Certificates collectively.
Responsible Officer: When used with respect to the Trustee, any officer
assigned to the corporate trust group (or any successor thereto), including any
vice president, assistant vice president, trust officer, any assistant
secretary, any trust officer or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Agreement. When used with respect to the Depositor, the Seller or Servicer, the
President or any Vice President, Assistant Vice President or any Secretary or
Assistant Secretary.
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SAIF: The Savings Association Insurance Fund, as from time to time
constituted, created under the Financial Institutions Reform, Recovery and
Enhancement Act of 1989, or, if at any time after the execution of this
Agreement the Savings Association Insurance Fund is not existing and performing
duties now assigned to it, the body performing such duties on such date.
Security Agreement: With respect to any Cooperative Loan, the agreement
between the owner of the related Cooperative Shares and the originator of the
related Mortgage Note, which defines the terms of the security interest in such
Cooperative Shares and the related Proprietary Lease.
Seller: Delta.
Senior Certificate: Any Certificate executed and authenticated by the
Trustee substantially in the form set forth in Exhibit A and designated as a
Class A or Class IO Certificate pursuant to Section 6.01.
Senior Certificateholder: The Holder of a Senior Certificate.
Senior Enhancement Percentage: As to any Distribution Date, the
percentage equivalent of a fraction, the numerator of which is the sum of (i)
the aggregate Class Principal Balances of the Subordinate Certificates and (ii)
the Overcollateralization Amount (in each case, prior to taking into account the
distribution of the Principal Distribution Amount on such Distribution Date) and
the denominator of which is the Pool Balance as of the last day of the related
Due Period.
Senior Portion: As to any Distribution Date, the percentage equivalent
of a fraction the numerator of which is the aggregate Class Principal Balance of
the Class A Certificates and the denominator of which is the aggregate Class
Principal Balance of the Offered Certificates.
Senior Principal Distribution Amount: As to (a) any Distribution Date
prior to the Stepdown Date or during the continuance of a Delinquency Event, the
lesser of (i) 100% of the Principal Distribution Amount and (ii) the aggregate
Class Principal Balances of the Senior Certificates, and (b) any other
Distribution Date, an amount equal to the lesser of (x) the Principal
Distribution Amount and (y) the excess, if any, of (i) the aggregate Class
Principal Balance of the Senior Certificates immediately prior to such
Distribution Date over (ii) the lesser of (x) the product of [___]% and the Pool
Balance as of the last day of the related Due Period, minus the Subordination
Required Overcollateralization Amount for that Distribution Date and (y) the
Pool Balance as of the last day of the related Due Period minus the OC Floor.
Servicer: [_____________________________], or any successor thereto or
any successor hereunder.
Servicer Termination Test: The Servicer Termination Test is failed if
either (x) Cumulative Net Losses for the Mortgage Loans exceed [___]% of the
aggregate Original Class Principal Balance of the Offered Certificates or (y)
the most recent Three Month 90-Day Delinquency Rate exceeds [___]%.
-27-
Servicing Advances: All reasonable and customary "out of pocket" costs
and expenses incurred in the performance by the Servicer of its servicing
obligations, including, but not limited to, the cost of (i) the preservation,
restoration and protection of the Mortgaged Property, (ii) any enforcement or
judicial proceedings, including foreclosures and any litigation related to a
Mortgage Loan, (iii) the management and liquidation of the REO Property,
including reasonable fees paid to any independent contractor in connection
therewith, (iv) compliance with the obligations under Section 3.04, 3.06 or 3.19
and (v) in connection with the liquidation of a Mortgage Loan, expenditures
relating to the purchase or maintenance of the First Lien pursuant to Section
3.17, all of which reasonable and customary out-of-pocket costs and expenses are
reimbursable to the Servicer to the extent provided in Sections 3.03(ii) and
(vi), and 3.06.
Servicing Certificate: A certificate completed and executed by a
Servicing Officer on behalf of the Servicer.
Servicing Compensation: The Servicing Fee and other amounts to which
the Servicer is entitled pursuant to Section 3.08.
Servicing Fee: As to each Distribution Date and each Mortgage Loan, the
monthly fee payable to the Servicer, which is calculated as an amount equal to
the product of one-twelfth of the Servicing Fee Rate and the Principal Balance
thereof at the beginning of the related Due Period.
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 by the Servicer, as such list may be amended from time to time.
Servicing Transfer Costs: All reasonable costs and expenses incurred by
the Successor Servicer in connection with the transfer of servicing from a
predecessor servicer, including, without limitation, any reasonable costs or
expenses associated with the complete transfer of all electronic servicing data
and the completion, correction or manipulation of such electronic servicing data
as may be required by the Successor Servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Successor
Servicer to service the Mortgage Loans properly and effectively.
Sixty Day Delinquency Rate: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate Principal
Balances of the Mortgage Loans that are (a) 60 or more days delinquent as of the
last day of the related Prepayment Period plus (b) REO Property and Mortgage
Loans in foreclosure or in bankruptcy and the denominator of which is the Pool
Balance as of the last day of the related Due Period.
S&P: Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. or its successor in interest.
-28-
Startup Day: The day designated as such pursuant to Section 2.08.
Stepdown Date: The later to occur of (x) the earlier to occur of (i)
the Distribution Date in [__________] [____] and (ii) the Distribution Date on
which the aggregate Class Principal Balance of the Senior Certificates is
reduced to zero, and (y) the first Distribution Date on which the Senior
Enhancement Percentage (assuming 100% of the Principal Distribution Amount is
distributed on the Offered Certificates) is at least equal to [___]%.
Subordinate Certificates: Any Certificate executed and authenticated by
the Trustee substantially in the form set forth in Exhibit A and designated as a
Class M-1, Class M-2 or Class B Certificate pursuant to Section 6.01.
Subordinate Portion: As to Subordinate Certificates and any
Distribution Date, 100% minus the Senior Portion.
Subordination Deficiency: As to any Distribution Date, the excess, if
any, of (i) the Required Overcollateralization Amount for such Distribution Date
over (ii) the Overcollateralization Amount for such Distribution Date after
giving effect to the distribution of the Aggregate Principal Amount on such
Distribution Date.
Subordination Deficit: For any Distribution Date, the amount, if any,
by which the aggregate Class Principal Balance of the Offered Certificates
exceeds the Pool Balance as of the last day of the related Due Period, in each
case, after giving effect to all distributions of principal and allocations of
Liquidated Loan Losses on such Distribution Date.
Subordination Increase Amount: As to any subsequent Distribution Date,
the lesser of (i) the Subordination Deficiency and (ii) the Excess Interest.
Subordination Required Overcollateralization Amount: As to any
Distribution Date on which a Delinquency Event does not exist, the Required
Overcollateralization Amount without giving effect to the OC Floor calculation.
As to any other Distribution Date, the Required Overcollateralization Amount.
Subsequent Mortgage Loan Schedule: As of any date of determination, the
schedule that is identified as the schedule of Subsequent Mortgage Loans and is
attached to the Subsequent Transfer Agreement.
Subsequent Mortgage Loans: The Mortgage Loans identified on the
Subsequent Mortgage Loan Schedule.
Subsequent Transfer Agreement: A Subsequent Transfer Agreement entered
into between the Seller and the Trustee, substantially in the form attached as
Exhibit D.
Subsequent Transfer Date: Each date during the Funding Period on which
Subsequent Mortgage Loans are sold to the Trust.
-29-
Subservicer: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies the requirements set forth in Section
3.01(b) in respect of the qualification of a Subservicer.
Subservicing Agreement: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 3.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee.
Substitution Adjustment: As to any date on which a substitution occurs
pursuant to Section 2.05, the sum of (a) the excess of (i) the aggregate
Principal Balances of all Defective Mortgage Loans to be replaced by Eligible
Substitute Mortgage Loans (after application of principal payments received on
or before the date of substitution of any Eligible Substitute Mortgage Loans as
of the date of substitution) over (ii) the Principal Balance of such Eligible
Substitute Mortgage Loans and (b) the greater of (x) accrued and unpaid interest
on such excess through the Due Period relating to the Distribution Date for
which such Substitution Adjustment will be included as part of Available Funds
and (y) thirty (30) days' interest on such excess calculated on a 360-day year
in each case at the Loan Rate and (c) the amount of any unreimbursed Servicing
Advances made by the Servicer with respect to such Defective Mortgage Loan and
(d) the amount referred to in clause (iv) of the definition of Purchase Price in
respect of such Defective Mortgage Loan.
Successor Servicer: As defined in Section 8.02.
Tax Matters Person: As defined in Section 2.11.
Tax Matters Person Residual Interest: A 0.000001% interest in each of
the Class R-1, Class R-2 and Class R-3 Certificates, which shall be issued to
and held by the Tax Matters Person.
Three Month Delinquency Rate: As to any Distribution Date the
arithmetic average of the Sixty (60) Day Delinquency Rates for the three (3)
Distribution Dates preceding such Distribution Date.
Three Month 90-Day Delinquency Rate: As to any Distribution Date the
arithmetic average of the Ninety Day Delinquency Rates for the three
Distribution Dates preceding such Distribution Date.
Trust: The trust created by this Agreement, the corpus of which
consists of the Mortgage Loans, such assets as shall from time to time be
deposited in the Collection Account, the Initial Interest Coverage Account, the
Pre-Funding Account and the Distribution Account in accordance with this
Agreement, property that secured a Mortgage Loan and that has become REO
Property, certain hazard insurance policies maintained by the Mortgagors or the
Servicer in respect of the Mortgage Loans and all proceeds of each of the
foregoing.
Trustee: [_____________________], or any successor Trustee appointed in
accordance with this Agreement that has accepted such appointment in accordance
with this Agreement.
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Trustee Fee: As to any Distribution Date, an amount equal to the
product of (i) one-twelfth of the Trustee Fee Rate and (ii) the sum of (x) the
Pool Balance as of the beginning of the related Due Period and (y) the
Pre-Funded Amount as of the beginning of the related Due Period.
Trustee Fee Rate: [___]% per annum, of which [___]% per annum is
allocable for custodial services and [___]% per annum is allocable for trustee
services.
Voting Rights: The right to vote evidenced by a Certificate as follows:
the Class BIO Certificates, in the aggregate, shall evidence Voting Rights equal
to the percentage equivalent of a fraction, the numerator of which is the
Required Overcollateralization Amount and the denominator of which is the Pool
Balance; the Certificates, other than the Class BIO Certificates, shall evidence
Voting Rights equal to 100% minus the Voting Rights evidenced by the Class BIO
Certificates. The Voting Rights allocated to the Certificates, other than the
Class BIO Certificates, shall be allocated 1% to the Notional Amount
Certificates and 1% to the Residual Certificates, in the aggregate and the
remainder among the other Classes of Offered Certificates in proportion to their
respective Class Principal Balances. Voting Rights allocated to a Class of
Certificates shall be allocated among the Certificates of such Class in
proportion to their respective Percentage Interests.
Section 1.02. Interest Calculations. All calculations of interest that
are made in respect of the Principal Balance of the Mortgage Loans shall be made
on the basis of a 360-day year consisting of twelve 30-day months. The
Certificate Rates for the Certificates shall be calculated on the basis set
forth in the definition of Interest Period. The calculation of the Servicing Fee
and the Trustee 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 Initial
Mortgage Loans; Original
Issuance of Certificates
Tax Treatment
Section 2.01. Conveyance of Initial Mortgage Loans.
(a) The Seller, concurrently with the execution and delivery of this
Agreement, does hereby transfer, assign, set over and otherwise convey, to the
Depositor, without recourse, (subject to Sections 2.02 and 2.04) (i) all of its
right, title and interest in and to each Initial Mortgage Loan, including the
Cut-Off Date Principal Balance and all collections in respect of interest and
principal received after the Cut-Off Date (other than payments in respect of
accrued interest and principal due on or before [_________] [___], [____]); (ii)
property which secured such Mortgage Loan and which has been acquired by
foreclosure or deed in lieu of foreclosure; (iii) its interest in any insurance
policies in respect of the Initial Mortgage Loans; (iv) such amounts as may be
deposited into and held by the Trustee in the Pre-Funding Account and the
Initial Interest Coverage Account, together with all investment earnings on such
amounts; and (v) all proceeds of any of the foregoing.
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Immediately upon the conveyance referred to in the preceding paragraph,
the Depositor does hereby transfer, assign, set over and otherwise convey to the
Trustee on behalf of Certificateholders and the Certificate Insurer, without
recourse, all of the Depositor's right title and interest in and to each asset
conveyed to the Depositor by the Seller, including all of the rights of the
Depositor to require the Seller to comply with its obligations under this
Agreement. In addition, on or prior to the Closing Date, the Depositor shall
cause the Certificate Insurer to deliver the Certificate Insurance Policy to the
Trustee.
In connection with such transfer, assignment and conveyance the Seller
shall deliver to, and deposit with, the Trustee or the Custodian on behalf of
the Trustee, on or before the Closing Date, the following documents or
instruments with respect to each Initial Mortgage Loan (the "Related Documents")
and the related Mortgage Loan Schedule in computer readable format:
(i) The original Mortgage Note, with all prior and intervening
endorsements showing a complete chain of endorsements from the
originator of the Mortgage Loan to the Person so endorsing the Mortgage
Loan to the Trustee, endorsed by such Person "Pay to the order of
[________________________________________] without recourse" and
signed, by facsimile or manual signature, in the name of the Seller by
a Responsible Officer;
(ii) Any of: (1) the original Mortgage and related power of
attorney, if any, with evidence of recording thereon, (2) a copy of the
Mortgage and related power of attorney, if any, certified as a true
copy of the original Mortgage or power of attorney by a Responsible
Officer of the Seller by facsimile or manual signature or by the
closing attorney or by an officer of the title insurer or agent of the
title insurer that issued the related title insurance policy, in each
case, if the original has been transmitted for recording until such
time as the original is returned by the public recording office or (3)
a copy of the original recorded Mortgage and related power of attorney,
if any, certified by the public recording office;
(iii) The original Assignment of Mortgage in recordable form,
from the Seller in blank, or to
"[-------------------------------------------]";
(iv) The original lender's policy of title insurance or a true
copy thereof or, if such original lender's title insurance policy has
been lost, a copy thereof certified by the appropriate title insurer to
be true and complete or, if such lender's title insurance policy has
not been issued as of the Closing Date, a marked up commitment (binder)
to issue such policy;
(v) All intervening assignments, if any, showing a complete
chain of assignments from the originator to the Seller, including any
recorded warehousing assignments, with evidence of recording thereon,
or a copy thereof certified by a Responsible Officer of the Seller by
facsimile or manual signature, or by the closing attorney or by an
officer of the title insurer or agent of the title insurer that issued
the related title insurance policy, as a true copy of the original of
such intervening assignments if the original has been transmitted for
recording until such time as the original is returned by the public
recording office or a copy of the original recorded intervening
assignments certified by the public recording office;
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(vi) Originals of all assumption, written assurance,
substitution and modification agreements, if any; and
(vii) In the case of a Cooperative Loan, the originals of the
following documents or instruments:
(a) The Cooperative Shares, together with a stock power in
blank;
(b) The executed Security Agreement;
(c) The executed Proprietary Lease;
(d) The executed Recognition Agreement;
(e) The executed assignment of Recognition Agreement;
(f) The executed UCC-1 financing statements with evidence of
recording thereon which have been filed in all places required to
perfect the Seller's interest in the Cooperative Shares and the
Proprietary Lease; and
(g) Executed UCC-3 financing statements or other appropriate
UCC financing statements required by state law, evidencing a complete
and unbroken line from the mortgagee to the Trustee with evidence of
recording thereon (or in a form suitable for recordation).
In instances where the original recorded Mortgage is not delivered as
provided above, and in instances where intervening assignments called for by
clause (v) above are unavailable, the Seller will deliver or cause to be
delivered the original recorded Mortgage and intervening assignments to the
Trustee or the Custodian on behalf of the Trustee promptly upon receipt thereof
but in no event later than one year after the Closing Date.
The Seller hereby confirms to the Depositor and the Trustee that it has
caused the portions of the Electronic Ledger relating to the Mortgage Loans to
be clearly and unambiguously marked, and has made the appropriate entries in its
general accounting records, to indicate that such Mortgage Loans have been
transferred to the Trustee, as designee of the Depositor, and constitute part of
the Trust in accordance with the terms of the trust created hereunder.
(b) The parties hereto intend that the transactions set forth herein be a sale
by the Seller to the Depositor of all the Seller's right, title and interest in
and to the Mortgage Loans and other property described above and the sale by the
Depositor to the Trust of all the Depositor's right, title and interest in and
to the Mortgage Loans and other property described above. In the event either
transaction set forth herein is deemed not to be a sale, the Seller hereby
grants to the Depositor, and the Depositor hereby grants to the Trustee, a
security interest in all of its respective right, title and interest in, to and
under the Mortgage Loans and other property described above; and this Agreement
shall constitute a security agreement under applicable law. The Seller, the
Depositor and the Trustee shall, to the extent consistent with this Agreement,
take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of the
Agreement.
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Except as may otherwise expressly be provided herein, neither the
Seller, the Depositor, the Servicer nor the Trustee shall (and the Servicer
shall ensure that no Subservicer shall) assign, sell, dispose of or transfer any
interest in the Trust or any portion thereof, or permit the Trust or any portion
thereof to be subject to any lien, claim, mortgage, security interest, pledge or
other encumbrance of, any other Person.
In the event that the parties hereto have failed to transfer the entire
legal ownership in and to each Mortgage Loan to the Trust, the parties hereto
intend that this document operate to transfer the entire equitable ownership
interest in and to each Mortgage Loan to the Trust.
(c) Within thirty (30) days of the Closing Date, the Seller, at its own
expense, shall prepare and send for recording the Assignments of Mortgage in
favor of the Trustee, in the appropriate real property or other records;
provided, however, that the Seller shall not be required to record Assignments
of Mortgage if the related Mortgaged Property is located in a jurisdiction in
which the recording thereof is not necessary to protect the interests of the
Trustee or Certificateholders in the related Mortgage as evidenced by an Opinion
of Counsel, in form and substance satisfactory to the Rating Agencies, delivered
to the Trustee and the Rating Agencies. With respect to any Assignment of
Mortgage as to which the related recording information is unavailable within
thirty (30) days following the Closing Date, such Assignment of Mortgage shall
be submitted for recording within thirty (30) days after receipt of such
information but in no event later than one year after the Closing Date. The
Trustee or the Custodian on behalf of the Trustee shall be required to retain a
copy of each Assignment of Mortgage submitted for recording. In the event that
any such Assignment of Mortgage is lost or returned unrecorded because of a
defect therein, the Seller, shall promptly prepare a substitute Assignment of
Mortgage or cure such defect, as the case may be, and thereafter the Seller,
shall be required to submit each such Assignment of Mortgage for recording. Any
failure of the Seller to comply with this Section 2.01(c) shall result in the
obligation of the Seller to purchase or substitute for the related Mortgage
Loans pursuant to the provisions of Section 2.02.
(d) Neither the Trustee nor the Custodian on behalf of the Trustee
shall have any responsibility for reviewing any Mortgage File except as
expressly provided in Section 2.02. Without limiting the effect of the preceding
sentence, in reviewing any Mortgage File pursuant to such subsection, neither
the Trustee nor the Custodian shall have any responsibility for determining
whether any document is valid and binding, whether the text of any assignment or
endorsement is in proper or recordable form (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, 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, but shall not be required to determine whether any Person
executing any document is authorized to do so or whether any signature thereon
is genuine.
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(e) Notwithstanding the delivery of the Opinion of Counsel referred to
in Section 2.01(c), Assignments of Mortgage shall be submitted by the Seller for
recording within five (5) Business Days after the earlier to occur of (i) a
transfer of the servicing of the Mortgage Loans from the Servicer and (ii) an
Event of Default.
Section 2.02. Acceptance by Trustee. The Trustee hereby acknowledges
the sale and assignment of the Mortgage Loans, and, subject to the review
provided for in this Section 2.02 and the period for delivery provided for in
Section 2.01, its receipt or that of the Custodian on behalf of the Trustee of
the Mortgage Files, and declares that the Trustee or the Custodian on behalf of
the Trustee holds and 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 Certificate
Insurer. If the Seller is given notice under this Section 2.02 that a Mortgage
File is defective or incomplete and if the Seller does not correct or cure such
omission or defect within the 90-day period specified in this Section 2.02, the
Seller shall purchase such Mortgage Loan from the Trustee (i) on the
Determination Date in the month following the month in which such 90-day period
expired at the Purchase Price of such Mortgage Loan or (ii) upon the expiration
of such 90-day period if the omission or defect would result in the related
Mortgage Loan not being a Qualified Mortgage Loan for purposes of Section
860G(a)(3) of the Code. The Purchase Price for the purchased Mortgage Loan shall
be delivered to the Servicer for deposit in the Collection Account (and the
Servicer shall deposit such amount upon receipt) no later than the applicable
Determination Date or the Business Day preceding the expiration of such 90-day
period, as the case may be; and, upon receipt by the Trustee or the Custodian on
behalf of the Trustee of written notification of such deposit signed by a
Responsible Officer of the Seller, the Trustee or the Custodian on behalf of the
Trustee shall release to the Seller the related Mortgage File and the Trustee
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as shall be necessary to vest in the Seller or its
designee any Mortgage Loan released pursuant hereto. It is understood and agreed
that the obligation of the Seller to purchase any Mortgage Loan as to which a
material defect in or omission of a constituent document exists shall constitute
the sole remedy against the Seller respecting such defect or omission available
to the Servicer (in its role as such), the Certificateholders, or the Trustee on
behalf of Certificateholders. An Opinion of Counsel to the effect set forth in
Section 2.05(d) shall be delivered to the Trustee in connection with any such
repurchase.
The Seller, promptly following the transfer of (i) a Defective Mortgage
Loan from or (ii) an Eligible Substitute Mortgage Loan to the Trust pursuant to
this Section 2.02 or Section 2.05, as the case may be, shall amend the Mortgage
Loan Schedule, appropriately ▇▇▇▇ the Electronic Ledger and make appropriate
entries in its general account records to reflect such transfer and the addition
of any Eligible Substitute Mortgage Loan, if applicable.
On the Closing Date or no later than the 45th day following the Closing
Date, the Trustee or the Custodian on behalf of the Trustee shall certify to the
Seller, the Depositor and the Servicer (and the Trustee if the Custodian is so
certifying) that it has reviewed each Mortgage File and that, as to each
Mortgage Loan listed in the related Mortgage Loan Schedule (other than any
Mortgage Loan paid in full or any Mortgage Loan specifically identified in the
certification in the form annexed hereto as Exhibit O as not covered by such
certification), (i) all documents constituting part of such Mortgage File
required to be delivered to it pursuant to paragraphs (i) - (v) and (vii) of
Section 2.01(a) are in its possession, (ii) such documents have been reviewed by
it and appear regular on their face and relate to such Mortgage Loan, (iii)
based on its examination and only as to the foregoing, the information set forth
in the Mortgage Loan Schedule which corresponds to items (ii) and (iii) of the
definition of "Mortgage Loan Schedule" accurately reflects information set forth
in the Mortgage File. If within such 45-day period the Trustee or the Custodian
on behalf of 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 or the Custodian on behalf of the Trustee determines that
such Mortgage File is otherwise defective in any material respect, the Trustee
or the Custodian on behalf of the Trustee shall promptly upon the conclusion of
its review notify in the form of an exception report and the Seller shall have a
period of ninety (90) days after such notice within which to correct or cure any
such defect.
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On the 360th day following the Closing Date, the Trustee or the
Custodian on behalf of the Trustee shall deliver to the Seller and the Servicer
an updated exception report showing the documents outstanding pursuant to
Section 2.01(a) along with a final certification annexed hereto as Exhibit P
from the previous certification issued in the form of Exhibit O. The Trustee or
the Custodian on behalf of the Trustee shall also maintain records adequate to
determine the date on which any document required to be delivered to it after
such 360th day following the Closing Date must be delivered to it, and on each
such date, the Trustee or the Custodian on behalf of the Trustee shall review
the related Mortgage File to determine whether such document has, in fact, been
delivered. After the delivery of the final certification, a form of which is
attached hereto as Exhibit P, (i) the Trustee or the Custodian on behalf of the
Trustee shall provide to the Servicer and the Seller (and to the Trustee if
delivered by the Custodian), no less frequently than monthly, updated exception
reports showing the documents outstanding pursuant to Section 2.01(a) until all
such exceptions have been eliminated and (ii) the Seller shall provide to the
Trustee or the Custodian on behalf of the Trustee and the Servicer, no less
frequently than monthly, updated certifications indicating the then current
status of exceptions until all such exceptions have been eliminated; provided
that the delivery of the final certification shall not act as a waiver of any of
the rights the Certificateholders may have with respect to such exceptions, and
all rights are reserved with respect thereto.
Neither the Trustee nor the Custodian makes any representations as to
and shall not be responsible to verify (i) the validity, sufficiency, legality,
due authorization, recordation or genuineness of any document or (ii) the
collectability, insurability or effectiveness of any of the Mortgage Loans.
Section 2.03. Representations and Warranties Regarding the Seller, the
Servicer and the Depositor.
(a) The Seller represents and warrants that, as of the Closing Date:
(i) The Seller is a corporation licensed as a mortgage banker
duly organized, validly existing and in good standing under the laws of
the state of its incorporation and has, and had at all relevant times,
full corporate power to originate the Mortgage Loans, to own its
property, to carry on its business as presently conducted and to enter
into and perform its obligations under this Agreement. The Seller has
all necessary licenses and is qualified to transact business in and is
in good standing under the laws of each state where a Mortgaged
Property is located or is otherwise exempt under applicable law from
such qualification or is otherwise not required under applicable law to
effect such qualification and no demand for such qualification has been
made upon the Seller by any state having jurisdiction;
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(ii) The execution and delivery of this Agreement by the
Seller and the performance by it of and compliance with the terms of
this Agreement will not violate the Seller's articles of incorporation
or by-laws or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in
the breach or acceleration of, any material contract, agreement or
other instrument to which the Seller is a party or which may be
applicable to the Seller or any of its assets;
(iii) The Seller has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement to
be consummated by it, has duly authorized the execution, delivery and
performance of this Agreement, and has duly executed and delivered this
Agreement. This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of the Seller, enforceable against it in accordance
with the terms hereof, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or
other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(iv) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and the performance by it and
compliance with the terms of this Agreement will not constitute a
violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and
adversely affect the condition (financial or otherwise) or operations
of the Seller or any of its properties or materially and adversely
affect the performance of any of its duties hereunder;
(v) There are no actions or proceedings against, or
investigations of, the Seller pending or, to the knowledge of the
Seller, threatened, before any court, administrative agency or other
tribunal (A) that, if determined adversely, would prohibit its entering
into this Agreement, (B) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or (C) that, if
determined adversely, would prohibit or materially and adversely affect
the performance by the Seller of any of its obligations under, or the
validity or enforceability of, this Agreement;
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Seller of, or compliance by the Seller with,
this Agreement, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date;
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(vii) The Seller did not sell the Mortgage Loans to the Trust
with any intent to hinder, delay or defraud any of its creditors; and
the Seller will not be rendered insolvent as a result of the sale of
the Mortgage Loans to the Trust;
(viii) The Seller acquired title to the Mortgage Loans in good
faith, without notice of any adverse claim;
(ix) [Reserved];
(x) No Officer's Certificate, statement, report or other
document prepared by the Seller and furnished or to be furnished by it
pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of material fact;
(xi) The transfer, assignment and conveyance of the Mortgage
Notes and the Mortgages by the Seller pursuant to this Agreement are
not subject to the bulk transfer laws or any similar statutory
provisions in effect in any applicable jurisdiction;
(xii) The transactions contemplated by this Agreement are in
the ordinary course of business of the Seller; and
(xiii) The Seller has caused or hereby agrees to cause to be
performed any and all acts required to be performed to preserve the
rights and remedies of the Trustee in any insurance policies applicable
to the Mortgage Loans, including, without limitation, any necessary
notifications of insurers, assignments of policies or interests
therein, and establishments of co-insured, joint loss payee and
mortgagee rights in favor of the Trustee.
(b) The Servicer represents and warrants that, as of the Closing Date:
(i) The Servicer is duly organized, validly existing and in
good standing under the laws of [_______________] and has, and had at
all relevant times, full power to service the Mortgage Loans, to own
its property, to carry on its business as presently conducted and to
enter into and perform its obligations under this Agreement;
(ii) The execution and delivery of this Agreement by the
Servicer and the performance by it of and compliance with the terms of
this Agreement will not violate the Servicer's charter or by-laws or
constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other instrument
to which the Servicer is a party or which may be applicable to the
Servicer or any of its assets;
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(iii) The Servicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement to
be consummated by it, has duly authorized the execution, delivery and
performance of this Agreement, and has duly executed and delivered this
Agreement. This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of the Servicer, enforceable against it in
accordance with the terms hereof, except as such enforcement may be
limited by insolvency, reorganization, receivership, moratorium or
other similar laws relating to or affecting the rights of creditors
generally or the rights of creditors of insured institutions, and by
general equity principles (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(iv) The Servicer is not in violation of, and the execution
and delivery of this Agreement by the Servicer and the performance by
it and compliance with the terms of this Agreement will not constitute
a violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and
adversely affect the condition (financial or otherwise) or operations
of the Servicer or any of its properties or materially and adversely
affect the performance of any of its duties hereunder;
(v) There are no actions or proceedings against, or
investigations of, the Servicer pending or, to the knowledge of the
Servicer, threatened, before any court, administrative agency or other
tribunal (A) that, if determined adversely, would prohibit its entering
into this Agreement, (B) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or (C) that, if
determined adversely, would prohibit or materially and adversely affect
the performance by the Servicer of any of its obligations under, or the
validity or enforceability of, this Agreement;
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Servicer of, or compliance by the Servicer with,
this Agreement, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date;
(vii) No Officer's Certificate, statement, report or other
document prepared by the Servicer and furnished or to be furnished by
it pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of material fact;
(viii) The Servicer believes that the Servicing Fee Rate
provides a reasonable level of base compensation to the Servicer for
servicing the Mortgage Loans on the terms set forth herein;
(ix) The transactions contemplated by this Agreement are in
the ordinary course of business of the Servicer; and
(x) The collection practices used by the Servicer with respect
to the Mortgage Loans have been, in all material respects, legal,
proper, prudent and customary in the non-conforming mortgage servicing
business.
(c) The Depositor represents and warrants that, as of the Closing Date:
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(i) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the state of Delaware
and has, and had at all relevant times, full power to own its property,
to carry on its business as presently conducted and to enter into and
perform its obligations under this Agreement;
(ii) The execution and delivery of this Agreement by the
Depositor and the performance by it of and compliance with the terms of
this Agreement will not violate the Depositor's charter or by-laws or
constitute a default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in the breach or
acceleration of, any material contract, agreement or other instrument
to which the Depositor is a party or which may be applicable to the
Depositor or any of its assets;
(iii) The Depositor has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement to
be consummated by it, has duly authorized the execution, delivery and
performance of this Agreement, and has duly executed and delivered this
Agreement. This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of the Depositor, enforceable against it in
accordance with the terms hereof, except as such enforcement may be
limited by insolvency, reorganization, receivership, moratorium or
other similar laws relating to or affecting the rights of creditors
generally, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(iv) The Depositor is not in violation of, and the execution
and delivery of this Agreement by the Depositor and the performance by
it and compliance with the terms of this Agreement will not constitute
a violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental
agency having jurisdiction, which violation would materially and
adversely affect the condition (financial or otherwise) or operations
of the Depositor or any of its properties or materially and adversely
affect the performance of any of its duties hereunder;
(v) There are no actions or proceedings against, or
investigations of, the Depositor pending or, to the knowledge of the
Depositor, threatened, before any court, administrative agency or other
tribunal (A) that, if determined adversely, would prohibit its entering
into this Agreement, (B) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or (C) that, if
determined adversely, would prohibit or materially and adversely affect
the performance by the Depositor of any of its obligations under, or
the validity or enforceability of, this Agreement;
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, this Agreement, or for the consummation of the transactions
contemplated by this Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date; and
(vii) With respect to each Initial Mortgage Loan and following
the transfer of the Initial Mortgage Loans to it by the Seller, the
Depositor had good title to the Initial Mortgage Loans and the Mortgage
Notes were subject to no offsets, defenses or counterclaims.
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(d) The representations and warranties set forth in this Section 2.03
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 Certificate
Insurer, the Person discovering such breach shall give prompt written notice to
the other parties. Within sixty (60) days of its discovery or its receipt of
notice of such breach, or, with the prior written consent of a Responsible
Officer of the Trustee, such longer period specified in such consent, the
Seller, the Depositor or the Servicer, as the case may be, shall cure such
breach in all material respects.
Section 2.04. Representations and Warranties of the Seller Regarding
the Mortgage Loans.
(a) The Seller represents and warrants to the Servicer, Depositor and
the Trustee on behalf of the Certificateholders as follows as of the Closing
Date:
1. The information set forth on the Mortgage Loan Schedule is
complete, true and correct as of the dates as of which the information
therein is given;
2. The Mortgage Notes and the Mortgages have not been assigned
or pledged by the Seller to any Person other than warehouse lenders,
and immediately prior to the transactions herein contemplated, the
Seller had good and marketable title thereto, and was the sole owner
and holder of the Mortgage Loans free and clear of any and all liens,
claims, encumbrances, participation interests, equities, pledges,
charges or security interests of any nature (collectively, a "Lien"),
other than any such Lien released simultaneously with the sale
contemplated herein, and had full right and authority, subject to no
interest or participation of, or agreement with, any other party, to
sell and assign the same pursuant to this Agreement, and immediately
upon the transfer and assignment of each Mortgage Loan as contemplated
by this Agreement, the Trust will be the sole beneficial owner of, each
Mortgage Loan free and clear of any lien, claim, participation
interest, mortgage, security interest, pledge, charge or other
encumbrance or other interest of any nature;
3. With respect to any Mortgage Loan that is not a Cooperative
Loan, each Mortgage is a valid and existing lien on the property
therein described, and each Mortgaged Property is free and clear of all
encumbrances and liens having priority over the lien of the Mortgage,
except (i) liens for real estate taxes and special assessments not yet
due and payable, (ii) covenants, conditions and restrictions, rights of
way, easements and other matters of public record as of the date of
recording such Mortgage, such exceptions appearing of record being
acceptable to mortgage lending institutions generally or specifically
reflected in the appraisal made in connection with the origination of
the related Mortgage Loan, (iii) 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, (iv)
in the case of a Mortgaged Property that is a condominium or an
individual unit in a planned unit development, liens for common charges
permitted by statute and (v) in the case of a Mortgage Loan secured by
a second lien on the related Mortgaged Property, the related First
Lien. Any security agreement, chattel mortgage or equivalent document
related to the Mortgage and delivered to the Trustee or the Custodian
on behalf of the Trustee establishes in the Seller a valid and
subsisting lien on the property described therein, and the Seller has
full right to sell and assign the same to the Trust;
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4. The terms of each Mortgage Note and Mortgage have not been
impaired, altered or modified in any respect, except by a written
instrument which has been recorded, if necessary to protect the
interests of the Trust, and which has been delivered to the Trustee or
the Custodian on behalf of the Trustee. The substance of any such
alteration or modification is reflected on the Mortgage Loan Schedule;
5. No instrument of release or waiver has been executed in
connection with any Mortgage Loan, and no Mortgagor has been released,
in whole or in part, except in connection with an assumption agreement
which has been approved by the primary mortgage guaranty insurer, if
any, and which has been delivered to the Trustee or the Custodian on
behalf of the Trustee;
6. Except with respect to delinquencies described in clause
(12) hereof, no Mortgagor is in default in complying with the terms of
its Mortgage Note or Mortgage, and the Seller has not waived any
default, breach, violation or event of acceleration except that the
Seller may have accepted late payments, and all taxes, governmental
assessments, insurance premiums or water, sewer and municipal charges
which previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every
such item which remains unpaid and which has been assessed but is not
yet due and payable. The Seller has not advanced funds or induced,
solicited or knowingly received any advance of funds by a party other
than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for interest accruing from the
date of the Mortgage Note or date of disbursement of the Mortgage
proceeds, whichever is more recent, to the day which precedes by one
(1) month the Due Date of the first installment of principal and
interest;
7. There is no proceeding pending or threatened for the total
or partial condemnation of any Mortgaged Property, nor is such a
proceeding currently occurring, and such property is undamaged by
waste, fire, earthquake or earth movement, windstorm, flood, tornado or
otherwise, so as to affect adversely the value of the Mortgaged
Property as security for the Mortgage Loan or the use for which the
premises were intended;
8. There are no mechanics' or similar liens or claims which
have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such lien) affecting any
Mortgaged Property which are, or may be, liens prior or equal to, or
coordinate with, the lien of the Mortgage except those that are stated
in the title insurance policy and for which related losses are
affirmatively insured against by such policy;
9. All of the improvements that were included for the purpose
of determining the Appraised Value of each Mortgaged Property lie
wholly within the boundaries and building restriction lines of such
property, and no improvements on adjoining properties encroach upon the
Mortgaged Property except those that are stated in the title insurance
policy and for which related losses are affirmatively insured against
by such policy;
-42-
10. No improvement located on or being part of any Mortgaged
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of the Mortgaged Property
and, with respect to the use and occupancy of the same, including, but
not limited to, certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities and the Mortgaged Property is lawfully occupied under
applicable law;
11. All parties that have had any interest in any Mortgage
Loan, whether as mortgagee, assignee, pledgee or otherwise, are (or,
during the period in which they held and disposed of such interest,
were) (1) in compliance with any and all licensing requirements of the
United States and of the laws of the state wherein the Mortgaged
Property is located that are applicable to such parties and (2)(A)
organized under the laws of such state or (B) qualified to do business
in such state or exempt from such qualification in a manner so as not
to affect adversely the enforceability of such Mortgage Loan or (C)
federal savings and loan associations or national banks having
principal offices in such state or (D) not doing business in such
state;
12. With respect to the Initial Mortgage Loans, as of
September 1, 2001, (i) all payments required to be made on each Initial
Mortgage Loan under the terms of the related Mortgage Note have been
made, except for approximately [0.95]% of the Initial Mortgage Loans
(by Principal Balance as of [_________] [___], [____]) which are up to
[59] days delinquent and (ii) no payment required to be made on any
Initial Mortgage Loan has been more than [59] days delinquent more than
once during the twelve (12) month period immediately preceding
[_________] [___], [____];
13. Each of the documents and instruments included in a
Mortgage File is duly executed and in due and proper form and each such
document or instrument is in a form generally acceptable to prudent
institutional mortgage lenders that regularly originate or purchase
mortgage loans;
14. The Mortgage Notes and the related Mortgages are genuine,
and each is the legal, valid and binding obligation of the maker
thereof, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other similar laws relating to or affecting
the rights of creditors generally, and by general equity principles
(regardless of whether such enforcement is considered in a proceeding
in equity or at law). All parties to the Mortgage Note and the Mortgage
had legal capacity to execute the Mortgage Note and the Mortgage, and
each Mortgage Note and Mortgage have been duly and properly executed by
such parties. The Mortgagor is a natural person who is a party to the
Mortgage Note and the Mortgage in an individual capacity, and not in
the capacity of a trustee or otherwise;
-43-
15. Any and all requirements of any federal, state or local
law, including, without limitation, usury, truth-in-lending, real
estate settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws, applicable to the origination and
servicing of the Mortgage Loans or otherwise applicable to the Mortgage
Loans have been complied with, and the Seller has and shall maintain in
its possession, available for the Trustee's and the Certificate
Insurer's inspection, and shall deliver to the Trustee or the
Certificate Insurer, as applicable, upon demand, evidence of compliance
with all such requirements;
16. Except for Escrow Repair Loans, the proceeds of the
Mortgage Loans have been fully disbursed, there is no requirement for
future advances thereunder and any and all requirements as to
completion of any on-site or off-site improvements and as to
disbursements of any escrow funds therefor have been complied with. All
costs, fees and expenses incurred in making, closing or recording the
Mortgage Loan have been paid;
17. Each Mortgage Loan is covered by an ALTA mortgage title
insurance policy or such other form of policy acceptable to ▇▇▇▇▇▇ ▇▇▇
or ▇▇▇▇▇▇▇ Mac, issued by and constituting the valid and binding
obligation of a title insurer generally acceptable to prudent mortgage
lenders that regularly originate or purchase mortgage loans comparable
to the Mortgage Loans for sale to prudent investors in the secondary
market that invest in mortgage loans such as the Mortgage Loans and
qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring the Seller, its successors and assigns,
as to the first priority lien of the Mortgage in the case of a Mortgage
Loan secured by a First Lien on the related Mortgaged Property and the
second priority lien of the Mortgage in the case of a Mortgage Loan
secured by a second lien on the related Mortgaged Property, in the
original principal amount of the Mortgage Loan. The Seller is the sole
named insured of such mortgage title insurance policy, the assignment
to the Trustee of the Seller's interest in such mortgage title
insurance policy does not require the consent of or notification to the
insurer or the same has been obtained, and such mortgage title
insurance policy is in full force and effect and will be in full force
and effect and inure to the benefit of the Trustee upon the
consummation of the transactions contemplated by this Agreement. No
claims have been made under such mortgage title insurance policy and no
prior holder of the related Mortgage, including the Seller, has done,
by act or omission, anything that would impair the coverage of such
mortgage title insurance policy;
18. All improvements upon the Mortgaged Properties are insured
by a generally acceptable insurer against loss by fire, hazards of
extended coverage and such other hazards as are customary in the area
where the Mortgaged Property is located pursuant to insurance policies
conforming to the requirements of this Agreement. If a Mortgaged
Property was, at the time of origination of the related Mortgage Loan,
in an area identified on a Flood Hazard Boundary Map or Flood Hazard
Rate Map issued by the Federal Emergency Management Agency as having
special flood hazards (and if the flood insurance policy referenced
herein has been made available), a flood insurance policy is in effect
with respect to such Mortgaged Property with a generally acceptable
carrier in an amount representing coverage described in this Agreement.
All individual insurance policies (collectively, the "hazard insurance
policy") are the valid and binding obligation of the insurer and
contain a standard mortgagee clause naming the Seller, its successors
and assigns, as mortgagee. All premiums thereon have been paid. The
Mortgage obligates the Mortgagor thereunder to maintain all such
insurance at the Mortgagor's cost and expense, and upon the Mortgagor's
failure to do so, authorizes the holder of the Mortgage to obtain and
maintain such insurance at the Mortgagor's cost and expense and to seek
reimbursement therefor from the Mortgagor;
-44-
19. No Mortgage Loan is subject to any right of rescission,
set-off, counterclaim or defense, including the defense of usury, nor
will the operation of any of the terms of any Mortgage Note or the
related Mortgage, or the exercise of any right thereunder in accordance
with the terms thereof, render either the Mortgage Note or the Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto;
20. Each Mortgage Loan was originated or purchased and
reunderwritten by the Seller;
21. Except with respect to any Balloon Loan, each Mortgage
Loan is payable in equal monthly installments of principal and interest
which would be sufficient, in the absence of late payments, to fully
amortize such loan within the term thereof, beginning no later than
sixty (60) days after disbursement of the proceeds of the Mortgage
Loan. Each Mortgage Loan bears a fixed interest rate for the term of
the Mortgage Loan or an adjustable-interest rate based on the related
Loan Index. Each Balloon Loan has an original term of not less than
fifteen (15) years and provides for level monthly payments based on a
thirty (30) year amortization schedule and a final Monthly Payment
substantially greater than the preceding Monthly Payments;
22. Each Mortgage contains a customary provision for the
acceleration of the payment of the unpaid principal balance of the
Mortgage Loan in the event the related Mortgaged Property is sold
without the prior consent of the holder thereunder;
23. No Mortgage Loan is a construction loan;
24. The Mortgage Notes are not and have not been secured by
any collateral, pledged account or other security except the lien of
the corresponding Mortgage and the security interest of any applicable
security agreement or chattel mortgage referred to in clause 3 above;
25. Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the
benefits of the security, including (i) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (ii) otherwise by
judicial or nonjudicial foreclosure. There is no homestead or other
exemption available to the Mortgagor that would interfere with the
right to sell the Mortgaged Property at a trustee's sale or the right
to foreclose the Mortgage;
-45-
26. With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in
such Mortgage, and no fees or expenses are or will become payable by
the Trustee or the Certificateholders to the trustee under the deed of
trust, except in connection with a trustee's sale after default by the
Mortgagor, which fees and expenses shall constitute Servicing Advances;
27. Each Mortgaged Property is located in the state identified
in the Mortgage Loan Schedule. No residence or dwelling is a
manufactured dwelling that is not treated as real property under local
law. No Mortgaged Properties are held under a ground lease;
28. The Mortgage Loans were underwritten in accordance with
the Seller's underwriting guidelines described in the Prospectus under
the heading "The Seller--Underwriting";
29. There exist no deficiencies with respect to escrow
deposits and payments, if such are required, for which customary
arrangements for repayment thereof have not been made, and no escrow
deposits or payments of other charges or payments due the Seller have
been capitalized under any Mortgage or the related Mortgage Note;
30. No Mortgage Loan was originated under a buy-down plan;
31. Other than as provided by this Agreement, there is no
obligation on the part of the Seller or any other party to make
payments in addition to those made by the Mortgagors;
32. With respect to each Mortgage Loan, the Seller is in
possession of a complete Mortgage File, except those documents
delivered to the Trustee or Custodian on behalf of the Trustee, and
there are no custodial agreements in effect adversely affecting the
right or ability of the Seller to make the document deliveries required
hereby;
33. No Mortgage Loan was selected for inclusion under this
Agreement on any basis which was intended to have a material adverse
effect on the Certificateholders;
34. No Mortgage Loan has a shared appreciation or other
contingent interest feature;
35. With respect to each Mortgage Loan secured by a second
lien on the related Mortgaged Property:
(a) if the Combined Loan-to-Value Ratio is higher
than 80%, either the related First Lien does not provide for a
balloon payment or, if the related First Lien does provide for
a balloon payment, the maturity date of the second lien is
prior to the maturity date of the First Lien;
-46-
(b) the related First Lien does not provide for
negative amortization;
(c) either no consent for the Mortgage Loan secured
by a second lien on the related Mortgaged Property is required
by the holder of the related First Lien or such consent has
been obtained and is contained in the Mortgage File; and
(d) except with respect to no more than [10]% of the
Initial Mortgage Loans which are fixed-rate Mortgage Loans
secured by a second lien on the related Mortgaged Property,
measured by outstanding Principal Balances as of the Cut-Off
Date, the related First Lien is not held by an individual;
36. Each Mortgage Loan conforms, and all the Mortgage Loans in
the aggregate conform, in all material respects to the description
thereof set forth in the Prospectus Supplement;
37. A full appraisal on forms approved by [▇▇▇▇▇▇ ▇▇▇] or
[▇▇▇▇▇▇▇ Mac] was performed in connection with the origination of each
Mortgage Loan. Each appraisal meets guidelines that would be generally
acceptable to prudent mortgage lenders that regularly originate or
purchase mortgage loans comparable to the Mortgage Loans for sale to
prudent investors in the secondary market that invest in mortgage loans
such as the Mortgage Loans;
38. To the best of the Seller's knowledge, no Mortgaged
Property was, as of the related Cut-Off Date, located within a one-mile
radius of any site listed in the National Priorities List as defined
under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or on any similar state list of
hazardous waste sites which are known to contain any hazardous
substance or hazardous waste;
39. None of the Mortgage Loans are subject to a bankruptcy
proceeding;
40. No more than [___]% of the aggregate Principal Balance of
all the Initial Mortgage Loans as of the Cut-Off Date relates to
Mortgage Loans originated or purchased under the Seller's limited
documentation program, non-income verification program for
self-employed borrowers or stated income program;
41. Each Mortgage Loan constitutes a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code;
42. Each Cooperative Loan is secured by a valid, subsisting
and enforceable perfected first lien and security interest in the
related Mortgaged Property, subject only to (i) the rights of the
Cooperative Corporation to collect Maintenance and assessments from the
Mortgagor, (ii) the lien of the Blanket Mortgage, if any, on the
Cooperative Property and of real property taxes, water and sewer
charges, rents and assessments on the Cooperative Property not yet due
and payable, and (iii) other matters to which like Cooperative Units
are commonly subject which do not materially interfere with the
benefits of the security intended to be provided by the Security
Agreement or the use, enjoyment, value or marketability of the
Cooperative Unit. Each original UCC financing statement, continuation
statement or other governmental filing or recordation necessary to
create or preserve the perfection and priority of the first priority
lien and security interest in the Cooperative Shares and Proprietary
Lease has been timely and properly made. Any security agreement,
chattel mortgage or equivalent document related to the Cooperative Loan
and delivered to the Seller or its designee establishes in the Seller a
valid and subsisting perfected first lien on and security interest in
the property described therein, and the Seller has full right to sell
and assign the same;
-47-
43. Each Cooperative Corporation qualifies as a "cooperative
housing corporation" as defined in Section 216 of the Code;
44. Each adjustable-rate Mortgage Loan is secured by a first
lien;
45. Each Mortgage Loan will comply with the undertakings in,
and no Mortgage Loan will be subject to the requirement for
retrospective relief pursuant to, either (a) the Stipulated Order on
Consent, dated as of September 17, 1999, among Delta Funding
Corporation, Delta Financial Corporation and the Office of the Attorney
General of the State of New York or (b) the Remediation Agreement,
dated as of September 17, 1999, between Delta Funding Corporation and
the Banking Department of the State of New York; and
46. Each Mortgage Loan in Loan Group 1 bears interest at a
fixed rate for the life of the Mortgage Loan.
(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 or the Custodian on behalf of the Trustee and the
termination of the rights and obligations of the Servicer pursuant to Section
7.04 or 8.01. Upon discovery by the Seller, the Servicer or a Responsible
Officer of the Trustee of a breach of any of the foregoing representations and
warranties, which materially and adversely affects the value of, or the
interests of the Trust, the Certificateholders or the Certificate Insurer in,
the related Mortgage Loan, the party discovering such breach shall give prompt
written notice to the other parties. Within sixty (60) days of its discovery or
its receipt of notice of breach, the Seller shall use all reasonable efforts to
cure such breach in all material respects or shall purchase such Mortgage Loan
from the Trust or substitute an Eligible Substitute Mortgage Loan as provided in
Section 2.05 for such Mortgage Loan. Any such purchase by the Seller shall be at
the Purchase Price, and in each case shall be accomplished in the manner set
forth in Section 2.02. The Trustee shall enforce the Seller's obligations under
this subparagraph. It is understood and agreed that the obligation of the Seller
to cure, substitute or purchase any Mortgage Loan as to which such a breach has
occurred and is continuing shall constitute the sole remedy against the Seller
respecting such breach available to the Servicer (in its role as such), the
Certificateholders or the Trustee on behalf of Certificateholders. An Officer's
Certificate and Opinion of Counsel to the effect set forth in Section 2.05(d)
shall be delivered to the Trustee in connection with any such repurchase.
-48-
Section 2.05. Substitution of Mortgage Loans.
(a) On a Determination Date within two (2) years following the Closing
Date and which is on or before the date on which the Seller would otherwise be
required to repurchase a Mortgage Loan under Section 2.02 or 2.04, the Seller
may deliver to the Trustee or the Custodian on behalf of the Trustee one or more
Eligible Substitute Mortgage Loans in substitution for any one or more of the
Defective Mortgage Loans which the Seller would otherwise be required to
repurchase pursuant to Section 2.02 or 2.04.
(b) The Seller shall notify the Servicer and the Trustee in writing not
less than five (5) Business Days before the related Determination Date which is
on or before the date on which the Seller would otherwise be required to
repurchase such Mortgage Loan pursuant to Section 2.02 or 2.04 of its intention
to effect a substitution under this Section 2.05. On such Determination Date
(the "Substitution Date"), the Seller shall deliver to the Trustee or the
Custodian on behalf of the Trustee (1) the Eligible Substitute Mortgage Loans to
be substituted for the Defective Mortgage Loans, (2) a list of the Defective
Mortgage Loans to be substituted for by such Eligible Substitute Mortgage Loans,
(3) an Officer's Certificate (A) stating that the aggregate Principal Balance of
all Eligible Substitute Mortgage Loans (determined with respect to each Eligible
Substitute Mortgage Loan as of the Determination Date on which it was
substituted) including the principal balance of Eligible Substitute Mortgage
Loans being substituted on such Determination Date does not exceed an amount
equal to 5% of the aggregate Original Class Principal Balance as of the Closing
Date, (B) stating that all conditions precedent to such substitution specified
in subsection (a) have been satisfied and attaching as an exhibit a supplemental
Mortgage Loan schedule (the "Supplemental Mortgage Loan Schedule") setting forth
the same type of information as appears on the Mortgage Loan Schedule and
representing as to the accuracy thereof and (C) confirming that the
representations and warranties contained in Section 2.04 are true and correct in
all material respects with respect to the Substitute Mortgage Loans on and as of
such Determination Date, provided that remedies for the inaccuracy of such
representations are limited as set forth in Sections 2.02, 2.04 and this Section
2.05, (4) an Opinion of Counsel to the effect set forth below and (5) a
certificate stating that cash in the amount of the related Substitution
Adjustment, if any, has been delivered to the Servicer for deposit in the
Collection Account. Upon receipt of the foregoing, the Trustee or the Custodian
on behalf of the Trustee shall release such Defective Mortgage Loans to the
Seller.
(c) Concurrently with the satisfaction of the conditions set forth in
Sections 2.05(a) and (b) above and the transfer of such Eligible Substitute
Mortgage Loans to the Trustee pursuant to Section 2.05(a), Exhibit C to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include the
information set forth on the Supplemental Mortgage Loan Schedule with respect to
such Eligible Substitute Mortgage Loans, and all references in this Agreement to
Mortgage Loans shall include such Eligible Substitute Mortgage Loans and be
deemed to be made on or after the related Substitution Date, as the case may be,
as to such Eligible Substitute Mortgage Loans.
(d) In connection with any Mortgage Loan that the Seller is required to
purchase or replace, the Seller shall deliver to the Trustee an Opinion of
Counsel to the effect that such purchase or substitution will not cause (x) any
federal tax to be imposed on the Trust, including, without limitation, any
Federal tax imposed on "prohibited transactions" under Section 860F(a)(1) of the
Code or on "contributions after the start-up day" under Section 860G(d)(1) of
the Code or (y) any portion of any REMIC to fail to qualify as a REMIC at any
time that any Certificate is outstanding. In the event that such opinion
indicates that a repurchase or substitution will result in the imposition of a
prohibited transaction tax, give rise to net taxable income or be deemed a
contribution to a REMIC after its Startup Day, the Seller shall not be required
to repurchase or replace any such Mortgage Loan unless and until the Servicer
has determined and given the Seller and the Trustee written notice that there is
an actual or imminent default with respect thereto or that such defect or breach
adversely affects the enforceability of such Mortgage Loan.
-49-
Section 2.06. Execution and Authentication of Certificates. The Trustee
on behalf of the Trust shall cause to be executed, authenticated and delivered
on the Closing Date to or upon the order of the Seller, in exchange for the
Mortgage Loans, concurrently with the sale, assignment and conveyance to the
Trustee of the Mortgage Loans, each Class of Certificates in authorized
denominations or Percentage Interests, together evidencing the ownership of the
entire Trust.
Section 2.07. Designation of Interests in REMICs.
(a) The Trustee shall elect that each of REMIC I, REMIC II and REMIC
III (which together constitute the Trust) shall be treated as a REMIC under
Section 860D of the Code. Any inconsistencies or ambiguities in this Agreement
or in the administration of this Agreement shall be resolved in a manner that
preserves the validity of such REMIC elections. The assets of REMIC I shall
include the Mortgage Loans, the Accounts (other than the Pre-Funding Account,
the Net Rate Cap Fund and the Initial Interest Coverage Account), any REO
Property, and any proceeds of the foregoing. The REMIC I Regular Interests (as
defined below) shall constitute the assets of REMIC II. The REMIC II Regular
Interests shall constitute the assets of REMIC III.
(b) REMIC I will be evidenced by (x) [the REMIC I classes] (together,
the "REMIC I Regular Interests"), which (i) will be uncertificated and
non-transferable, and (ii) are hereby designated as the "regular interests" in
REMIC I and (y) the [___________], which are hereby designated as the single
"residual interest" in REMIC I (the REMIC I Regular Interests, together with the
[_____________], the "REMIC I Certificates"). The REMIC I Regular Interests
(other than the [Class ___] Certificates) shall be recorded on the records of
REMIC I as being issued to and held by the Trustee on behalf of REMIC II.
The REMIC I Certificates will have the following designations, initial
principal balances and pass-through rates:
Pass-
REMIC I Initial Through
Certificates Balance Rate
------------ ------- ----
[___] $ [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [________] [(1)]
[___] [0] [0%]
-50-
[(1)] [The Pass-Through Rate on these REMIC I Regular Interests
shall at any time of determination equal the weighted average
of the Net Loan Rates of the Mortgage Loans, provided that
the Pass-Through Rate for the first month during the
Pre-Funding Period shall not exceed the weighted average of
the Certificate Rates of the REMIC III Regular Certificates.]
On each Distribution Date, principal collections and realized losses on
the Mortgage Loans shall be allocated sequentially, in reverse order to which
they are listed above, to the REMIC I Regular Interests, until the principal
balance of each such class is reduced to zero. The Class [R-1] Certificates
shall have no principal balance and no pass-through rate and shall be entitled
to only those distributable assets, if any, remaining in REMIC I on each
Distribution Date after all amounts required to be distributed to the REMIC I
Regular Interests and applicable Trust expenses have been paid. It is expected
that there will not be any distributions on the Class [R-1] Certificate.
(c) REMIC II will be evidenced by (x) [the REMIC II Classes] (2) below,
[Class II-Q] Interests (the "REMIC II Regular Interests"), which will be
uncertificated and non-transferable and are hereby designated as the "regular
interests" in REMIC II and (y) the Class [R-2] Certificates, which are hereby
designated as the single "residual interest" in REMIC II (the REMIC II Regular
Interests, together with the Class [R-II] Certificates, the "REMIC II
Certificates"). The REMIC II Regular Interests shall be recorded on the records
of REMIC II as being issued to and held by the Trustee on behalf of REMIC III.
-51-
Interest from the REMIC I Regular Interests that is allocable to
payments of principal on the Mortgage Loans (the "Turbo Amount") will not be
paid directly as principal to the REMIC II Regular Interests, but instead a
portion of the interest payable with respect to the Class [II-Q] Interest which
equals [1]% of the Turbo Amount will be payable as a reduction of the principal
balances of the Class [II-A-1F, Class II-A-1A, Class II-M-1, Class II-M-2 and
Class II-B] Interests in the same manner in which the Turbo Amount is allocated
among the Class [A-1F, Class A-1A, Class M-1, Class M-2 and Class B]
Certificates, respectively (and will be accrued and added to principal on the
Class II-Q Interest). Principal payments on the REMIC I Regular Interests shall
be allocated [99]% to the Class [II-Q] Interest and [1]% to the Class [II-A-1F,
Class II-A-1A, Class II-M-1, Class II-M-2 and Class II-B] Interests, until paid
in full. The aggregate amount of principal allocated to the Class [II-A-1F,
Class II-A-1A, Class II-M-1, Class II-M-2 and Class II-B] Interests shall be
apportioned among such classes in the same manner as principal is payable with
respect to the Class [A-1F, Class A-1A, Class M-1, Class M-2 and Class B]
Certificates, respectively. Notwithstanding the above, principal payments on
REMIC I Regular Interests that are attributable to the Excess
Overcollateralization Amount shall be allocated to the Class [II-Q] Interest.
Realized losses shall be applied such that after all distributions have been
made on such Distribution Date (i) the principal balances of the Class [II-A-1F,
Class II-A-1A, Class II-M-1, Class II-M-2 and Class II-B] Interests are each
[1]% of the principal balances of the Class [A-1F, Class A-1A, Class M-1, Class
M-2 and Class B] Certificates, respectively; and (ii) the aggregate principal
balance of the Class [II-Q] Interest is equal to the sum of the aggregate
Principal Balance of the Mortgage Loans and the Pre-Funded Amount, less an
amount equal [1]% of the aggregate Class Principal Balances of the Certificates.
The REMIC II Certificates will have the following designations and pass-through
rates, and distributions of principal and interest thereon shall be allocated to
the Certificates in the following manner:
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal Interest
------------ ------- ---- --------- --------
[_____] $ [_______] [(1)] [(3)] [(4),(5)]
[_____] [_______] [(1)] [(3)] [(4),(5)]
[_____] [_______] [(1)] [(3)] [(4),(5)]
[_____] [_______] [(1)] [(3)] [(4),(5)]
[_____] [_______] [(1)] [(3)] [(4),(5)]
[_____] [_______] [(1)] [(3)] [(4),(5)]
[_____] [_______] [(1)] [(3)] [(4),(5)]
[_____] [_______] [(1)] [(3)] [(4),(5)]
---------------
[(1)] [The Pass-Through Rate on these REMIC II Regular Interests shall at any
time of determination equal the weighted average of the Pass-Through
Rates of the REMIC I Regular Interests, after first subtracting [___]%
from the Pass-Through Rates of each of such regular interests (other
than the Class IQ Interest) for the Distribution Dates indicated below
for each of such regular interests, but for the first month during the
Pre-Funding Period such Pass-Through Rate shall not exceed the weighted
average of the Certificate Rates on the REMIC III Regular
Certificates.]
6.00% Subtraction 6.00% Subtraction
REMIC I Distribution REMIC I Distribution
Certificates Dates Certificates Dates
------------ ----- ------------ -----
[____] [1 - 36] [____] [1 - 18]
[____] [1 - 33] [____] [1 - 15]
[____] [1 - 30] [____] [1 - 12]
[____] [1 - 27] [____] [1 - 9]
[____] [1 - 24] [____] [1 - 6]
[____] [1 - 21] [____] [1 - 3]
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[(2)] [Interest on the Class II-A-IO will equal the sum of 12 strips of
interest, with each strip being a strip off the principal balance of a
REMIC I Regular Interest at [___]% per annum for the Distribution Dates
indicated in the table in note (1) for such regular interest, and 0.0%
thereafter. Each of the 12 interest strips comprising the interest on
the Class II-A-IO shall constitute 12 separate components of the Class
II-A-IO, each of which shall be designated as a separate REMIC II
Regular Interest.]
[(3)] [Principal will be allocated to and apportioned among the Class A-1F
Class A-1A, Class M-1, Class M-2 and Class B Certificates, in the same
proportion as principal is payable with respect to such Certificates,
except that a portion of such principal in an amount up to the Excess
Overcollateralization Amount shall first be allocated as a payment of
interest to the Class BIO Certificates, and all principal will be
allocated as a payment of interest to the Class BIO Certificates after
the principal balances of the other Regular Certificates have been
reduced to zero.]
[(4)] [Except as provided in note (5), interest will be allocated among the
Class ▇-▇▇, ▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇, Class M-2 and Class B Certificates
in the same proportion as interest is payable on such Certificates.]
[(5)] [Any interest with respect to this REMIC II Regular Interest in excess
of the product of (i) 100 times the weighted average coupon of the
Class II-A-1F, Class II-A-1A, Class II-M-1, Class II-M-2, Class II-B
and Class II-Q, where each of such classes, other than the Class II-Q
Interest is first subject to a cap and floor equal to the Class ▇-▇▇,
▇▇▇▇▇ ▇-▇▇, ▇▇▇▇▇ ▇-▇, Class M-2 and Class B Pass-Through Rates,
respectively, and the Class II-Q Interest is subject to a cap equal to
0%, and (ii) the principal balance of this REMIC II Regular Interest,
shall not be allocated to the other Certificates but will be allocated
to the Class BIO Certificates. However, the Class BIO Certificates
shall be subordinated to the extent provided in Section 5.01.]
[(6)] [On each Distribution Date, available funds, if any, remaining in REMIC
II after payments of interest and principal, as designated above, will
be distributed to the Class R-2 Certificate. It is expected that there
will not be any distributions on the Class R-2 Certificates.]
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(d) The Class A-1F, Class A-1A, Class M-1, Class M-2, Class B, Class
A-IO and Class BIO Certificates are hereby designated as "regular interests"
with respect to REMIC III (the "REMIC III Regular Interests") and the Class R-3
Certificate is hereby designated as the single "residual interest" with respect
to REMIC III. On each Distribution Date, Available Funds, if any, remaining in
REMIC III after payments of interest and principal as designated herein shall be
distributed to the Class R-3 Certificates. It is expected that there will not be
any distributions on the Class R-3 Certificates.
Section 2.08. Designation of Startup Day of REMIC. The Closing Date is
hereby designated as the "start-up day" of each REMIC within the meaning of
Section 860G(a)(9) of the Code.
Section 2.09. REMIC Certificate Maturity Date. Solely for purposes of
satisfying Section 1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest
possible maturity date" of the regular interests in each REMIC is the
Distribution Date in [__________], [____].
Section 2.10. Tax Returns and Reports to Certificateholders.
(a) For federal income tax purposes, each REMIC comprising the Trust
shall have a calendar year and shall maintain its books on the accrual method of
accounting.
(b) The Tax Matters Person shall prepare, or cause to be prepared,
execute and deliver to the Trustee, the Servicer or Certificateholders, as
applicable, any income tax information returns for each taxable year with
respect to the Trust containing such information at the times and in the manner
as may be required by the Code or state or local tax laws, regulations or rules,
and shall furnish or cause to be furnished to the Trust and the
Certificateholders the schedules, statements or information at such times and in
such manner as may be required thereby. Within thirty (30) days of the Closing
Date, the Tax Matters Person shall furnish or cause to be furnished to the
Internal Revenue Service, on Form 8811 or as otherwise required by the Code, the
name, title, address and telephone number of the person that Holders of the
Certificates may contact for tax information relating thereto, together with
such additional information at the time or times and in the manner required by
the Code and shall apply for an employer identification number from the Internal
Revenue Service via Form SS-4 or any other acceptable method. Such federal,
state or local income tax or information returns shall be signed by the Trustee
or such other Person as may be required to sign such returns by the Code or
state or local tax laws, regulations or rules.
(c) In the first federal income tax return of the Trust for its short
taxable year ending [_________] [___], [____], a REMIC election shall be made
with respect to each of REMIC I, REMIC II and REMIC III for such taxable year
and all succeeding taxable years.
(d) The Tax Matters Person will maintain or cause to be maintained such
records relating to the Trust, including, but not limited to, the income,
expenses, assets and liabilities of the Trust, and adjusted basis of the Trust
property and assets determined at such intervals as may be required by the Code,
as may be necessary to prepare the foregoing returns, schedules, statements or
information.
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(e) The Servicer and the Trustee, upon request, shall promptly furnish
the Tax Matters Person with all such information as may be reasonably available
to, or in the possession of, the Servicer or the Trustee, as applicable and as
may be required in connection with the Tax Matters Person's REMIC reporting
obligations pursuant to this Agreement. The Tax Matters Person shall have no
responsibility for the lack of any information required in connection with REMIC
reporting obligations that is not provided to it by the Servicer or the Trustee,
as applicable.
Section 2.11. Tax Matters Person. The tax matters person with respect
to each REMIC (the "Tax Matters Person") shall be the holder of the Tax Matters
Person Residual Interest which initially is the Seller. The Tax Matters Person
shall at all times hold the Tax Matters Person Residual Interest and shall have
the same duties with respect to the Trust as those of a "tax matters partner"
under Subchapter C of Chapter 63 of Subtitle F of the Code. Each holder of a
Residual Certificate shall be deemed to have agreed, by acceptance thereof, to
be bound by this Section 2.11.
Section 2.12. REMIC Related Covenants. It is intended that each REMIC
formed hereunder shall constitute, and that the affairs of each REMIC shall be
conducted so as to qualify it as, a REMIC as defined in and in accordance with
the REMIC Provisions. For as long as the Trust shall exist, the Trustee, the
Servicer and the Tax Matters Person shall act in accordance herewith to assure
continuing treatment of each REMIC as a REMIC and avoid the imposition of tax on
the Trust. In particular:
(a) The Trustee shall not create, or knowingly permit the creation of,
any "interests" in any REMIC within the meaning of Code Section 860D(a)(2) other
than the interests represented by the Regular Certificates, the REMIC I Regular
Interests, the REMIC II Regular Interests and the Residual Certificates.
(b) Except as otherwise provided in the Code, the Seller shall not
grant and the Trustee shall not accept property unless (i) substantially all of
the property held in the Trust constitutes either "qualified mortgages" or
"permitted investments" as defined in Code Sections 860G(a)(3) and (5),
respectively, and (ii) no property shall be contributed to the Trust after the
Startup Day unless such grant would not subject any REMIC to the 100% tax on
contributions to a REMIC after its Startup Day imposed by Code Section 860G(d).
(c) The Trustee shall not accept on behalf of the Trust any fee or
other compensation for services (other than as otherwise provided herein) and
shall not accept on behalf of the Trust any income from assets other than those
permitted to be held by a REMIC.
(d) The Trustee shall not sell or permit the sale of all or any portion
of the Mortgage Loans (other than in accordance with Section 2.02, 2.04 or
3.16), unless such sale is pursuant to a "qualified liquidation" as defined in
Code Section 860F(a)(4)(A) and in accordance with Article VIII.
(e) The Trustee and the Tax Matters Person shall maintain books with
respect to each REMIC on a calendar year and on an accrual basis.
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(f) Upon filing with the Internal Revenue Service, the Tax Matters
Person shall furnish to the Holders of the Residual Certificates the Form 1066
and each Form 1066Q for the applicable REMIC and shall respond promptly to
written requests made not more frequently than quarterly by any Holder of
Residual Certificates with respect to the following matters:
(i) The original projected principal and interest cash flows
on the Closing Date on each class of regular and residual interests
created hereunder and on the Mortgage Loans, based on [___]% and [___]%
of the applicable Prepayment Assumption in the case of the fixed rate
and adjustable rate Mortgage Loans, respectively;
(ii) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each class of
regular and residual interests created hereunder and the Mortgage
Loans, based on [___]% and [___]% of the applicable Prepayment
Assumption in the case of the fixed rate and adjustable rate Mortgage
Loans, respectively;
(iii) The applicable percentage of the Prepayment Assumption
and any interest rate assumptions used in determining the projected
principal and interest cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each class of
regular or residual interests created hereunder and with respect to the
Mortgage Loans, together with each constant yield to maturity used in
computing the same;
(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of
each REMIC with respect to such regular interests or bad debt
deductions claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of
each REMIC; and
(vii) Any taxes (including penalties and interest) imposed on
each REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
In the event that any tax is imposed on "prohibited transactions" of
the Trust as defined in Section 860F(a)(2) of the Code, on the "net income from
foreclosure property" of a REMIC as defined in Section 860G(c) of the Code, on
any contribution to the Trust after the Startup Day pursuant to Section 860G(d)
of the Code, or any other tax (other than any minimum tax imposed by Section
24874 and 23153 of the California Revenue and Taxation Code) is imposed, such
tax shall be paid by (i) the Trustee, if such tax arises out of or results from
a breach by the Trustee of any of its obligations under this Agreement, (ii) the
Tax Matters Person, if such tax arises out of or results from a breach by the
Tax Matters Person of any of the obligations under this Agreement, (iii) the
Servicer, if such tax arises out of or results from a breach by the Servicer of
any of its obligations under this Agreement or (iv) otherwise the Holders of the
applicable Residual Certificates in proportion to their Percentage Interests. To
the extent any tax is chargeable against the Holders of the Residual
Certificates, notwithstanding anything to the contrary contained herein, the
Trustee is hereby authorized to retain from amounts otherwise distributable to
the Holders of the applicable Residual Certificates on any Distribution Date
sufficient funds to reimburse the Trustee for the payment of such tax (to the
extent that the Trustee has not been previously reimbursed or indemnified
therefor).
-56-
The Trustee shall not engage in a "prohibited transaction" (as defined
in Code Section 860F(a)(2)), except that, with the prior written consent of the
Seller, the Trustee may engage in the activities otherwise prohibited by the
foregoing clauses (b), (c) and (d), provided that the Seller shall have
delivered to the Trustee an Opinion of Counsel to the effect that such
transaction will not result in the imposition of a contribution or prohibited
transaction tax on the Trust and will not disqualify any REMIC from treatment as
a REMIC; and provided that the Seller shall have demonstrated to the
satisfaction of the Trustee that such action will not adversely affect the
rights of the holders of the Certificates and the Trustee and that such action
will not adversely impact the rating of the Offered Certificates.
(g) Except as provided below, the Tax Matters Person shall pay out of
its own funds, without any right of reimbursement, any and all tax related
expenses of the Trust (including, but not limited to, tax return preparation and
filing expenses and any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to the Trust that involve
the Internal Revenue Service or state tax authorities), other than the expense
of obtaining any Opinion of Counsel required pursuant to Sections 2.05, 3.06 and
10.02 and other than taxes except as specified herein. The Trustee and the Tax
Matters Person shall be entitled to be reimbursed for any professional fees or
expenses related to audits or any administrative or judicial proceedings that do
not result from any breach of their respective duties hereunder.
(h) On behalf of each REMIC, the Trustee, Servicer or Tax Matters
Person, as applicable, shall do the following:
(i) the Tax Matters Person shall prepare, sign and file, or
cause to be prepared and filed, in a timely manner, a U.S. Real Estate
Mortgage Investment Conduit Income Tax Return (Form 1066) and any other
Tax Return required to be filed by each REMIC, using a calendar year as
the taxable year for each REMIC;
(ii) the Tax Matters Person shall make, or cause to be made,
an election, on behalf of each REMIC, to be treated as a REMIC on the
federal tax return of each REMIC for its first taxable year;
(iii) the Tax Matters Person shall prepare and forward, or
cause to be prepared and forwarded, to the Servicer, the Seller, the
Trustee (which, subject to receipt thereof shall forward to the
Certificateholders) and to the Internal Revenue Service and any other
relevant governmental taxing authority all information returns or
reports as and when required to be provided to them in accordance with
the REMIC Provisions;
(iv) the Trustee, the Tax Matters Person and the Servicer
shall to the extent that the affairs of any REMIC are within its
control, conduct such affairs of each REMIC at all times that any
Certificates are outstanding so as to maintain the status of each REMIC
as a REMIC under the REMIC Provisions and any other applicable federal,
state and local laws, including, without limitation with respect to the
Trustee, information reports relating to "original issue discount," as
defined in the Code, based upon [___]% of the applicable Prepayment
Assumption for fixed rate Mortgage Loans and [___]% of the applicable
Prepayment Assumption for adjustable rate Mortgage Loans, calculated by
using the issue price of the Certificates;
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(v) the Trustee, the Servicer and Tax Matters Person shall not
knowingly or intentionally take any action or omit to take any action
that would cause the termination of the REMIC status of any REMIC;
(vi) the Trustee shall pay the amount of any and all federal,
state and local taxes upon the Trustee or the Certificateholders in
connection with the Trust or the Mortgage Loans, prohibited transaction
taxes as defined in Section 860F of the Code, other than any amount due
as a result of a transfer or attempted or purported transfer in
violation of Section 6.02, imposed on the Trust when and as the same
shall be due and payable (but such obligation shall not prevent the
Trustee or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Trustee from
withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings). The Trustee shall be entitled to
reimbursement for all such amounts in accordance with Section 2.12;
(vii) the Trustee and the Tax Matters Person shall ensure that
any such returns or reports filed on behalf of the Trust are properly
executed by the appropriate person;
(viii) the Tax Matters Person shall represent the Trust in any
administrative or judicial proceedings relating to an examination or
audit by any governmental taxing authority, request an administrative
adjustment as to any taxable year of the Trust, enter into settlement
agreements with any government taxing agency, extend any statute of
limitations relating to any item of the Trust and otherwise act on
behalf of the Trust in relation to any tax matter involving the Trust;
(ix) the Trustee and the Tax Matters Person shall as provided
in Section 6.02, make available information necessary for the
computation of any tax imposed (1) on transferors of residual interests
to transferees that are not Permitted Transferees or (2) on
pass-through entities, any interest in which is held by an entity which
is not a Permitted Transferee;
(x) the Trustee and the Tax Matters Person shall make
available to the Internal Revenue Service and those Persons specified
by the REMIC Provisions all information necessary to compute any tax
imposed (A) as a result of the Transfer of an Ownership Interest in a
Residual Certificate to any Person who is not a Permitted Transferee,
including the information described in Treasury regulations sections
1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to the "excess
inclusions" of such Residual Certificate and (B) as a result of any
regulated investment company, real estate investment trust, common
trust fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a Residual
Certificate having as among its record holders at any time any Person
that is not a Permitted Transferee. Reasonable compensation for
providing such information may be accepted by the Trustee; and
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(xi) the Trustee, the Servicer and the Tax Matters Person
shall cooperate with each other in connection with the foregoing
obligations, including signing any Tax Returns to the extent required
by law.
Section 2.13. Subsequent Transfers.
(a) Subject to the satisfaction of the conditions set forth in
paragraph (b) below and pursuant to the terms of each Subsequent Transfer
Agreement, in consideration of the Trustee's delivery, on behalf of the Trust,
on the related Subsequent Transfer Date to or upon the order of the Seller of
the purchase price therefor, the Seller shall on any Subsequent Transfer Date
sell, transfer, assign, set over and otherwise convey without recourse to the
Trust, all right, title and interest of the Seller in and to each Subsequent
Mortgage Loan transferred pursuant to such Subsequent Transfer Agreement,
including (i) the related Principal Balance as of the related Cut-Off Date after
giving effect to payments of principal due on or before the Cut-Off Date; (ii)
all collections in respect of interest and principal received after the related
Cut-Off Date (other than principal and interest due on or before such Cut-off
Date); (iii) property which secured such Subsequent Mortgage Loan and which has
been acquired by foreclosure or deed in lieu of foreclosure; (iv) its interest
in any insurance policies in respect of such Subsequent Mortgage Loan; and (v)
all proceeds of any of the foregoing. The transfer by the Seller of the
Subsequent Mortgage Loans set forth on the Subsequent Mortgage Loan Schedule to
the Trust shall be absolute and shall be intended by the Seller and all parties
hereto to be treated as a sale by the Seller to the Trust. If the assignment and
transfer of the Mortgage Loans and the other property specified in this Section
2.13 from the Seller to the Trust pursuant to this Agreement is held or deemed
not to be a sale or is held or deemed to be a pledge of security for a loan, the
Seller intends that the rights and obligations of the parties shall be
established pursuant to the terms of this Agreement and that, in such event, (i)
the Seller shall be deemed to have granted and does hereby grant to the Trust as
of such Subsequent Transfer Date a first priority security interest in the
entire right, title and interest of the Seller in and to the Subsequent Mortgage
Loans and all other property conveyed to the Trust pursuant to this Section 2.13
and all proceeds thereof and (ii) this Agreement shall constitute a security
agreement under applicable law. The purchase price shall be one hundred percent
(100%) of the Principal Balances of the Subsequent Mortgage Loans as of the
related Cut-Off Date. On or before each Subsequent Transfer Date, the Seller
shall deliver to, and deposit with the Trustee or the Custodian on behalf of the
Trustee, the Related Documents with respect to each Subsequent Mortgage Loan
transferred on such Subsequent Transfer Date, and the related Subsequent
Mortgage Loan Schedule in computer readable format with respect to such
Subsequent Mortgage Loans.
(b) The Seller shall transfer and deliver to the Trustee or the
Custodian on behalf of the Trustee the Subsequent Mortgage Loans and the other
property and rights related thereto described in paragraph (a) above only upon
the satisfaction of each of the following conditions on or prior to the
applicable Subsequent Transfer Date:
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(i) The Seller shall have provided the Servicer, the Trustee
and the Rating Agencies with an Addition Notice, which notice shall be
given not less than two Business Days prior to the applicable
Subsequent Transfer Date and shall designate the Subsequent Mortgage
Loans to be sold to the Trust and the aggregate Principal Balance of
such Mortgage Loans and the Rating Agencies shall not have informed the
Seller or the Trustee prior to the applicable Subsequent Transfer Date
that the inclusion of such Subsequent Mortgage Loans would result in
the downgrade or withdrawal of the ratings assigned to the Offered
Certificates without regard to the Certificate Insurance Policy;
(ii) The Seller shall have delivered to the Depositor, Trustee
and the Servicer a duly executed Subsequent Transfer Agreement in
substantially the form of Exhibit D;
(iii) The Seller shall have delivered to the Servicer for
deposit in the Collection Account all principal collected and interest
collected to the extent accrued and due after the related Cut-off Date;
(iv) As of each Subsequent Transfer Date, the Seller was not
insolvent nor will the Seller be made insolvent by such transfer nor is
the Seller aware of any pending insolvency;
(v) Such addition will not result in a material adverse tax
consequence to any REMIC or the Holders of the Certificates;
(vi) The Funding Period shall not have terminated;
(vii) The Seller shall have provided the Depositor, Trustee,
the Certificate Insurer and the Rating Agencies with an Opinion of
Counsel relating to the sale (i.e., "True Sale Opinion") of the
Subsequent Mortgage Loans to the Trustee, the enforceability of the
Subsequent Transfer Agreement and to the effect that the transfer of
such Subsequent Mortgage Loans will not adversely affect the status of
any REMIC as a REMIC which matters may be covered in the opinions
delivered on the Closing Date;
(viii) The aggregate Principal Balance of Subsequent Mortgage
Loans in Loan Group 1 and Loan Group 2 does not exceed the Original
Pre-Funded Amount allocated to the applicable Loan Group;
(ix) The conditions specified in Exhibit Q hereto shall be
met; and
(x) On the last Subsequent Transfer Date, the Trustee shall
have received an accountant's letter confirming that the
characteristics of the Mortgage Loans (including the Subsequent
Mortgage Loans), satisfy the parameters set forth in Exhibit Q hereto.
(c) The Seller, the Custodian and the Trustee shall comply with their
respective obligations set forth in Section 2.01, 2.02, 2.04 and 2.05 with
respect to the Subsequent Mortgage Loans delivered on each Subsequent Transfer
Date. References in such Sections to the Initial Mortgage Loans or Mortgage
Loans shall be deemed to refer to the Subsequent Mortgage Loans and references
to the Closing Date shall be deemed to refer to the applicable Subsequent
Transfer Date except that references to 360 days after the Closing Date shall
remain unchanged as shall representations made with specific reference to the
Initial Mortgage Loans.
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ARTICLE III
Administration and Servicing of Mortgage Loans
Section 3.01. The Servicer.
(a) It is intended that the Trust formed hereunder shall constitute,
and that the affairs of the Trust shall be conducted so as to qualify each REMIC
as, a "real estate mortgage investment conduit" ("REMIC") as defined in and in
accordance with the REMIC Provisions. In furtherance of such intentions, the
Servicer covenants and agrees that it shall not knowingly or intentionally take
any action or omit to take any action that would cause the termination of the
REMIC status of any REMIC.
(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans consistent with the terms of this Agreement. The
Servicer may enter into Subservicing Agreements for any servicing and
administration of Mortgage Loans with any institution which (i) is in compliance
with the laws of each state necessary to enable it to perform its obligations
under such Subservicing Agreement and (ii) is an Approved Servicer or is an
affiliate of the Servicer. The Servicer shall give notice to the Trustee of the
appointment of any Subservicer. Any such Subservicing Agreement shall be
consistent with and not violate the provisions of this Agreement. The Servicer
shall be entitled to terminate any Subservicing Agreement in accordance with the
terms and conditions of such Subservicing Agreement and either itself directly
service the related Mortgage Loans or enter into a Subservicing Agreement with a
successor subservicer which qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Subservicer or reference to actions taken through a Subservicer or
otherwise, the Servicer shall remain obligated and primarily liable for the
servicing and administering of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue of such Subservicing Agreements or arrangements or by virtue of
indemnification from the Subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and administering
the Mortgage Loans. For purposes of this Agreement, the Servicer shall be deemed
to have received payments on Mortgage Loans when the Subservicer has received
such payments. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer by such Subservicer, and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer and the Servicer alone, and the Trustee and Certificateholders
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer except as set
forth in Section 3.01(e). The Servicer shall be solely liable for all fees owed
by it to any Subservicer irrespective of whether the Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.
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(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Successor Servicer or
its designee approved by the Trustee shall thereupon assume all of the rights
and obligations of the Servicer under each Subservicing Agreement that the
Servicer may have entered into, unless the Successor Servicer or designee
approved by the Trustee elects to terminate any Subservicing Agreement. Any fee
payable in connection with such a termination will be payable by the outgoing
Servicer. If the Successor Servicer does not terminate the Subservicing
Agreements, the Successor Servicer, its designee or the successor servicer for
the Successor Servicer shall be deemed to have assumed all of the Servicer's
interest therein and to have replaced the Servicer as a party to each
Subservicing Agreement to the same extent as if the Subservicing Agreements had
been assigned to the assuming party, except that the Servicer shall not thereby
be relieved of any liability or obligations under the Subservicing Agreements
with regard to events that occurred prior to the date the Servicer ceased to be
the Servicer hereunder. The Servicer, at its expense and without right of
reimbursement therefor, shall, upon the request of the Successor Servicer,
deliver to the assuming party all documents and records relating to each
Subservicing Agreement and the Mortgage Loans then being serviced and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of the Subservicing
Agreements to the assuming party.
(f) Consistent with the terms of this Agreement, the Servicer may
waive, modify or vary any term of any Mortgage Loan or consent to the
postponement of strict compliance with any such term or in any manner grant
indulgence to any Mortgagor if in the Servicer's good faith determination such
waiver, modification, postponement or indulgence is not materially adverse to
the interests of the Certificateholders, provided, however, that (unless (x) the
Mortgagor is in default with respect to the Mortgage Loan, or such default is,
in the judgment of the Servicer, imminent and (y) such waiver, modification,
postponement or indulgence would not cause any REMIC to be disqualified or
otherwise cause a tax to be imposed on any REMIC) the Servicer may not permit
any modification with respect to any Mortgage Loan that would change the Loan
Rate, defer or forgive the payment of any principal or interest (unless in
connection with the liquidation of the related Mortgage Loan) or extend the
final maturity date on the Mortgage Loan. No costs incurred by the Servicer or
any Subservicer in respect of Servicing Advances shall, for the purposes of
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loan. Without limiting the generality of the foregoing, the
Servicer shall continue, and is hereby authorized and empowered to execute and
deliver on behalf of the Trustee and each Certificateholder, all instruments of
satisfaction or cancellation, or of partial or full release, discharge and all
other comparable instruments with respect to the Mortgage Loans and with respect
to the Mortgaged Properties. If reasonably required by the Servicer, the Trustee
shall 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 under this Agreement.
Notwithstanding anything to the contrary contained herein, the
Servicer, in servicing and administering the Mortgage Loans, shall employ or
cause to be employed procedures (including collection, foreclosure and REO
Property management procedures) and exercise the same care that it customarily
employs and exercises in servicing and administering mortgage loans for its own
account, in accordance with accepted mortgage servicing practices of prudent
lending institutions servicing mortgage loans similar to the Mortgage Loans and
giving due consideration to the Certificateholders' reliance on the Servicer.
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(g) Within ninety (90) days after such time as the Trustee receives the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 7.04, after receipt by the Trustee of the Opinion of Counsel required
pursuant to Section 7.04, the Successor Servicer shall assume all of the rights
and obligations of the Servicer, subject to Section 8.02; provided that if the
Servicer is removed pursuant to Section 8.02, the Successor Servicer shall
immediately be obligated to make Monthly Advances and Servicing Advances as
required in this Agreement. The Servicer shall, upon request of the Successor
Servicer but at the expense of the Servicer, deliver to the Successor Servicer
all documents and records relating to the Mortgage Loans and an accounting of
amounts collected and held by the Servicer and otherwise use its best efforts to
effect the orderly and efficient transfer of servicing rights and obligations to
the assuming party who shall be entitled to reimbursement by the Servicer (or,
to the extent not paid by the Servicer, by the Trust pursuant to Section
5.01(a)(16) for Servicing Transfer Costs.
(h) The Servicer shall deliver a list of Servicing Officers to the
Trustee on or before the Closing Date.
(i) Consistent with the terms of this Agreement, the Servicer may
consent to the placing of a lien senior to that of the Mortgage on the related
Mortgaged Property; provided that such senior lien secures a mortgage loan that
refinances a First Lien and the combined loan-to-value ratio of the related
Mortgage Loan immediately following the refinancing (based on the outstanding
principal balance of the Mortgage Loan and the original principal balance of
such refinanced mortgage loan) is not greater than the Combined Loan-to-Value
Ratio of such Mortgage Loan as of the related Cut-Off Date.
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 prepayment charge, 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 monthly information delivered by the
Servicer to the Trustee pursuant to Section 5.03.
(b) The Servicer shall establish and maintain a separate trust account
(the "Collection Account") titled "[________________________________________]"
The Collection Account shall be an Eligible Account. On the Closing Date, the
Seller shall cause to be deposited in the Collection Account any amounts
representing payments on and any collections in respect of the Mortgage Loans
received after the related Cut-Off Date (other than principal and interest
accrued and due on or prior to [_________] [___], [____]) and prior to the
Closing Date. The Servicer shall deposit within two (2) Business Days, following
receipt thereof the following payments and collections received or made by it
(without duplication):
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(i) all payments received after the related Cut-Off Date on
account of principal on the Mortgage Loans (exclusive of payments in
respect of principal on the Mortgage Loans which were due on or prior
to the related Cut-off Date) and all Principal Prepayments and
Curtailments collected after the related Cut-Off Date;
(ii) all payments received after the related Cut-Off Date on
account of interest on the Mortgage Loans (exclusive of payments in
respect of interest on the Mortgage Loans which have accrued and were
due on or prior to the related Cut-Off Date);
(iii) all Net Liquidation Proceeds net of Foreclosure Profits;
(iv) all Insurance Proceeds other than any portion thereof
constituting Net Liquidation Proceeds;
(v) all Released Mortgaged Property Proceeds;
(vi) any amounts payable in connection with the repurchase of
any Mortgage Loan and the amount of any Substitution Adjustment
pursuant to Sections 2.02, 2.04, 2.06 and 3.16; and
(vii) any amount required to be deposited in the Collection
Account pursuant to Sections 3.05, 3.06, 3.07, 5.02 or 5.05.
provided, however, that, with respect to each Due Period, the Servicer shall be
permitted to retain (x) from payments in respect of interest on a Mortgage Loan,
the Servicing Fee for such Mortgage Loan and (y) from payments from Mortgagors,
Liquidation Proceeds, Insurance Proceeds and Released Mortgaged Property
Proceeds, any unreimbursed Servicing Advances and Monthly Advances related
thereto. 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 Servicing Compensation or amounts received by the Servicer
for the accounts of Mortgagors for application toward the payment of taxes,
insurance premiums, assessments and similar items.
The Servicer may cause the institution maintaining the Collection
Account to invest any funds in the Collection Account in Eligible Investments
(including obligations of the Servicer or any of its Affiliates, if such
obligations otherwise qualify as Eligible Investments) pursuant to Section 5.05.
Section 3.03. Withdrawals from the Collection Account. The Servicer
shall withdraw or cause to be withdrawn funds from the Collection Account for
the following purposes:
(i) before 1:00 p.m. (New York City time) on (x) the third
Business Day preceding each Distribution Date, to withdraw the lesser
of the Available Funds then in the Collection Account and an amount
equal to the Guaranteed Distributions for such Distribution Date and
(y) on the related Deposit Date to withdraw the remaining Available
Funds, and, in each case, remit such funds to the Trustee for deposit
to the Distribution Account;
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(ii) to reimburse the Servicer for any accrued unpaid
Servicing Compensation which the Servicer would not have been required
to deposit in the Collection Account and for unreimbursed Monthly
Advances and Servicing Advances. The Servicer's right to reimbursement
for unpaid Servicing Fees and unreimbursed Servicing Advances shall be
limited to late collections on the related Mortgage Loan, including
Liquidation Proceeds, Released Mortgaged Property Proceeds, Insurance
Proceeds and such other amounts as may be collected by the Servicer
from the related Mortgagor or otherwise relating to the Mortgage Loan
in respect of which such reimbursed amounts are owed. The Servicer's
right to reimbursement for unreimbursed Monthly Advances shall be
limited to late collections on any Mortgage Loan and to Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and
any purchase or repurchase proceeds on related Mortgage Loans;
(iii) to withdraw any amount received from a Mortgagor that is
recoverable and sought to be recovered as a voidable preference by a
trustee in bankruptcy pursuant to the United States Bankruptcy Code in
accordance with a final, nonappealable order of a court having
competent jurisdiction;
(iv) to withdraw any funds deposited in the Collection Account
that were not required to be deposited therein (such as Servicing
Compensation) or were deposited therein in error and to pay such funds
to the appropriate Person;
(v) to withdraw funds necessary for the conservation and
disposition of REO Property pursuant to Section 3.06 to the extent not
advanced by the Servicer;
(vi) to reimburse the Servicer for Nonrecoverable Advances;
(vii) to pay to the Seller collections received in respect of
accrued interest and principal on the Mortgage Loans due on or before
the related Cut-Off Date;
(viii) to pay to the Servicer or the Trustee the portion of
any Purchase Price in respect of clause (iv) of the definition thereof
or of any Substitution Adjustment in respect of clause (d) of the
definition thereof to the extent paid in respect of amounts incurred by
or imposed on the Servicer or the Trustee, as the case may be;
(ix) to reimburse the Servicer for expenses incurred by it in
connection with the Mortgage Loans or Certificates and reimbursable
pursuant to Section 7.03 hereof provided that such amount shall only be
withdrawn following the withdrawal from the Collection Account for
deposit into the Distribution Account pursuant to clause (i)(y) above;
and
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(x) to clear and terminate the Collection Account upon the
termination of this Agreement and to pay any amounts remaining therein
to the applicable Class [R] Certificateholders.
Section 3.04. Maintenance of Hazard Insurance; Property Protection
Expenses. The Servicer shall cause to be maintained for each Mortgage Loan fire
and hazard insurance naming the Servicer 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, (ii) the combined principal balance owing on such Mortgage Loan
and any mortgage loan senior to such Mortgage Loan and (iii) the minimum amount
required to compensate for damage or loss on a replacement cost basis. 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, (ii) the combined
principal balance owing on such Mortgage Loan and any mortgage loan senior to
such Mortgage Loan and (iii) the minimum amount required to compensate for
damage or loss on a replacement cost basis at the time of such foreclosure, fire
and or deed in lieu of foreclosure plus accrued interest and the good-faith
estimate of the Servicer of related Servicing Advances 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 to the extent such flood insurance
is available and the Servicer has determined such insurance to be necessary in
accordance with accepted mortgage loan servicing standards for mortgage loans
similar to the Mortgage Loans. All such flood insurance shall be in amounts
equal to the least of (A) the amount in clause (i) above, (B) the amount in
clause (ii) above and (C) the maximum amount of insurance available under the
National Flood Insurance Act of 1968, as amended. 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. The costs and expenses
incurred by the Servicer in maintaining any such insurance shall constitute
Servicing Advances.
Section 3.05. Maintenance of Mortgage Impairment Insurance Policy. In
the event that the Servicer shall obtain and maintain a blanket policy with an
insurer having a General Policy rating of A:VIII or better in Best's Key Rating
Guide, then, to the extent such policy names the Servicer as loss payee and
provides coverage in an amount equal to the aggregate unpaid principal balance
on the Mortgage Loans without co-insurance, and otherwise complies with the
requirements of Section 3.04, the Servicer shall be deemed conclusively to have
satisfied its obligations with respect to fire and hazard insurance coverage
under Section 3.04, it being understood and agreed that such blanket policy may
contain a deductible clause, in which case the Servicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with Section 3.04, and there shall have been a loss which would have
been covered by such policy, deposit in the Collection Account the difference,
if any, between the amount that would have been payable under a policy complying
with Section 3.04 and the amount paid under such blanket policy. Upon the
request of the Trustee, the Servicer shall cause to be delivered to the Trustee,
a certified true copy of such policy. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Servicer agrees to prepare
and present, on behalf of itself, the Trustee, and the Certificateholders,
claims under any such policy in a timely fashion in accordance with the terms of
such policy.
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Section 3.06. Management and Realization Upon Defaulted Mortgage Loans.
The Servicer shall manage, conserve, protect and operate each REO Property for
the Certificateholders solely for the purpose of its prudent and prompt
disposition and sale; provided that the Servicer shall not be required to expend
its own funds in connection with any foreclosure or towards the restoration of
any property unless it shall determine (i) that such restoration and/or
foreclosure will increase the proceeds of liquidation of the Mortgage Loan after
reimbursement to itself of such expenses and (ii) that such expenses will be
recoverable to it through Liquidation Proceeds (respecting which it shall have
priority for purposes of withdrawals from the Certificate Account pursuant to
Section 3.03 hereof). The Servicer shall be responsible for all other costs and
expenses incurred by it in any such proceedings; provided that it shall be
entitled to reimbursement thereof from the proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 3.03 hereof. The Servicer
shall, either itself or through an agent selected by the Servicer, manage,
conserve, protect and operate the REO Property in the same manner that it
manages, conserves, protects and operates other foreclosed property for its own
account, and in the same manner that similar property in the same locality as
the REO Property is managed. The Servicer shall attempt to sell the same (and
may temporarily rent the same) on such terms and conditions as the Servicer
deems to be in the best interest of the Certificateholders.
The Servicer shall cause to be deposited, no later than two (2)
Business Days after the receipt thereof, in the Collection Account, all revenues
received with respect to the related REO Property and shall retain, or cause the
Trustee to withdraw therefrom, funds necessary for the proper operation,
management and maintenance of the REO Property and the fees of any managing
agent acting on behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer
for cash at such price, and upon such terms and conditions, as the Servicer
deems to be in the best interest of the Certificateholders and, as soon as
practicable thereafter, the expenses of such sale shall be paid out of the
proceeds of such sale. The cash proceeds of sale of the REO Property shall be
promptly deposited in the Collection Account, net of Foreclosure Profits and of
any related unreimbursed Servicing Advances, accrued and unpaid Servicing Fees
and unreimbursed Monthly Advances payable to the Servicer in accordance with
Section 3.03, for distribution to the Certificateholders in accordance with
Section 5.01.
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 either when no satisfactory arrangements can be made for
collection of delinquent payments pursuant to Section 3.02 subject to the
provisions contained in the last paragraph of this Section 3.06.
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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.
In the event any Mortgaged Property is acquired as aforesaid or
otherwise in connection with a default or imminent default on a Mortgage Loan,
the Servicer shall (i) dispose of such Mortgaged Property within three (3) years
after the close of the taxable year in which the Mortgaged Property was acquired
(the "grace period") or (ii) prior to the expiration of any extension to such
grace period which is requested on behalf of the Trust by the Servicer (at the
expense of the Trust) more than sixty (60) days prior to the end of the grace
period and granted by the Internal Revenue Service, unless the Trust shall have
received an Opinion of Counsel to the effect that the holding of such Mortgaged
Property subsequent to expiration of the grace period will not result in the
imposition of taxes on "prohibited transactions" as defined in Section 860F of
the Code or cause any REMIC to fail to qualify as a REMIC at any time that any
Regular Certificates are outstanding. Notwithstanding any other provision of
this Agreement, (i) no Mortgaged Property acquired by the Servicer pursuant to
this Section 3.06 shall be rented (or allowed to continue to be rented) or
otherwise used for the production of income by or on behalf of the Trust and
(ii) no construction shall take place on such Mortgaged Property in such a
manner or pursuant to any terms, in either case, that would cause such Mortgaged
Property to fail to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code or result in the receipt by the Trust of any "net
income from foreclosure property" which is subject to taxation within the
meaning of Sections 860G(c) and 857(b)(4)(B) of the Code. If a period greater
than the grace period is permitted under this Agreement and is necessary to sell
any REO Property, the Servicer shall give appropriate notice to the Trustee and
shall report monthly to the Trustee as to the progress being made in selling
such REO Property.
If the Servicer has actual knowledge that a Mortgaged Property which
the Servicer is contemplating acquiring in foreclosure or by deed in lieu of
foreclosure is located within a one-mile radius of any site with environmental
or hazardous waste risks known to the Servicer, the Servicer will notify the
Trustee prior to acquiring the Mortgaged Property. Nothing in this Section 3.06
shall affect the Servicer's right to deem certain advances proposed to be made
Nonrecoverable Advances. For the purpose of this Section 3.06, actual knowledge
of the Servicer means actual knowledge of a Responsible Officer of the Servicer
involved in the servicing of the relevant Mortgage Loan. Actual knowledge of the
Servicer does not include knowledge imputable by virtue of the availability of
or accessibility to information relating to environmental or hazardous waste
sites or the locations thereof.
Notwithstanding the other provisions of this Section 3.06 or any other
provision of this Agreement to the contrary, if any Mortgage Loan that is more
than 89 days delinquent as of the Closing Date (hereafter a "Foreclosure
Restricted Mortgage Loan") comes into and continues in default, the Servicer
will nevertheless not complete foreclosure upon, accept a deed in-lieu of
foreclosure of, or otherwise comparably convert the ownership of any property
securing such Foreclosure Restricted Mortgage Loan (hereafter, "Foreclosure
Restricted Property") if the value of such Foreclosure Restricted Property
(measured in all cases as the outstanding principal balance of the Foreclosure
Restricted Mortgage Loan plus accrued interest), when added to the value of all
other Foreclosure Restricted Property then held as part of the Trust, would
exceed 3/4 of one percent (0.75%) of the aggregate Principal Balance of all
Mortgage Loans then held as part of the Trust. Moreover, if, as of the next
Distribution Date, the value of all Foreclosure Restricted Property held as part
of the Trust will exceed one percent (1.00%) of the aggregate Principal Balance
of all Mortgage Loans held as part of the Trust, then prior to such Distribution
Date, the Servicer will sell as much Foreclosure Restricted Property as
necessary so that as of such Distribution Date, the value of all Foreclosure
Restricted Property held as part of the Trust will be less than one percent
(1.00%) of the aggregate Principal Balance of all Mortgage Loans held as part of
the Trust.
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Section 3.07. Trustee to Cooperate. Upon any Principal Prepayment, the
Servicer is authorized to execute, pursuant to the authorization contained in
Section 3.01(f), if the related Assignment of Mortgage has 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 or Custodian is holding the
Mortgage Files, from time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, the Trustee or Custodian shall, upon request
of the Servicer and delivery to the Custodian two (2) copies of a Request for
Release, one of which will be returned to the Servicer with the Mortgage File,
in the form annexed hereto as Exhibit I, signed by a Servicing Officer or in a
mutually agreeable electronic format which originates from a Servicing Officer,
release the related Mortgage File to the Servicer, and the Trustee or Custodian
shall execute such documents, in the forms provided by the Servicer, as shall be
necessary for the prosecution of any such proceedings or the taking of other
servicing actions. Such Request for Release shall obligate the Servicer to
return the Mortgage File to the Trustee or the Custodian, as the case may be,
when the need therefor by the Servicer no longer exists 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 Mortgage File shall be
released by the Trustee or 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 related Assignment
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 (any such assignment shall
unambiguously indicate that the assignment is for the purpose of collection
only) and, upon such assignment, such assignee for collection will thereupon
bring all required actions in its own name and otherwise enforce the terms of
the Mortgage Loan and deposit or credit 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 assignee for
collection shall promptly reassign such Mortgage Loan to the Trustee and return
it to the place where the related Mortgage File was being maintained.
Section 3.08. Servicing Compensation; Payment of Certain Expenses by
Servicer. Subject to Section 5.02, the Servicer shall be entitled to retain the
Servicing Fee in accordance with Section 3.02 as compensation for its services
in connection with servicing the Mortgage Loans. Moreover, prepayment charges,
late payment charges or other receipts not required to be deposited in the
Collection Account, including, without limitation, Foreclosure Profits and,
subject to Section 5.05, investment income on the Collection Account and the
Distribution Account shall be additional servicing compensation and retained by
the Servicer. The Servicer shall be required to pay all expenses incurred by it
in connection with its activities hereunder and shall not be entitled to
reimbursement therefor except as specifically provided herein.
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Section 3.09. Annual Statement as to Compliance.
(a) The Servicer will deliver to the Seller, the Trustee, the
Certificate Insurer and the Rating Agencies, on or before May 31 of each year,
beginning May 31, [____], an Officer's Certificate stating that (i) a review of
the activities of the Servicer during the preceding fiscal year 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 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. The Servicer shall promptly notify the Seller,
the Trustee and each Rating Agency upon any change in the basis on which its
fiscal year is determined.
(b) The Servicer shall deliver to the Trustee, the Certificate Insurer
and each of the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five (5) 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 Default.
Section 3.10. Annual Servicing Review. Not later than May 31 of each
year, beginning May 31, [____], the Servicer, at its expense, shall cause a firm
of independent public accountants which is a member of the American Institute of
Certified Public Accountants to furnish a letter or letters to the Seller, the
Trustee, the Certificate Insurer and each Rating Agency to the effect that such
firm has, with respect to the Servicer's overall servicing operations, examined
such operations in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers, and stating such firm's conclusions
relating thereto.
Section 3.11. Access to Certain Documentation and Information Regarding
the Mortgage Loans. The Servicer shall provide to the Seller, the Trustee, the
Custodian, the Certificate Insurer, Certificateholders which are federally
insured savings and loan associations, the Office of Thrift Supervision, the
FDIC and the supervisory agents and examiners of the Office of Thrift
Supervision access to the documentation in the Servicer's possession 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 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
3.11 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
3.11 as a result of such obligation shall not constitute a breach of this
Section 3.11.
Section 3.12. 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 servicer hereunder and (ii) a fidelity bond in
respect of its officers, employees or agents. Each such policy or policies and
bond shall, together, comply with the requirements from time to time of ▇▇▇▇▇▇
▇▇▇ for persons performing servicing for mortgage loans purchased by ▇▇▇▇▇▇ Mae.
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Section 3.13. Reports to the Securities and Exchange Commission. Within
fifteen (15) days after each Distribution Date, the Trustee shall, on behalf of
the Trust, cause to be filed with the Securities and Exchange Commission via the
Electronic Data Gathering and Retrieval System (▇▇▇▇▇), a Form 8-K with a copy
of the Remittance Report for such Distribution Date as an exhibit thereto. Prior
to January 30, 2002, the Trustee shall file a Form 15 Suspension Notification
with respect to the Trust, if applicable. Prior to March 30, 2002, the Trustee
shall file a Form 10-K, in substance conforming to industry standards, with
respect to the Trust. The Seller hereby grants to the Trustee a limited power of
attorney to execute and file each such document on behalf of the Seller. Such
power of attorney shall continue until either the earlier of (i) receipt by the
Trustee from the Seller of written termination of such power of attorney and
(ii) the termination of the Trust. Each of the Seller and the Servicer agrees to
promptly furnish to the Trustee, from time to time upon request, such further
information, reports, and financial statements within its control related to
this Agreement and the Mortgage Loans as the Trustee reasonably deems
appropriate to prepare and file all necessary reports with the Securities and
Exchange Commission
Section 3.14. Reports of Foreclosures and Abandonments of Mortgaged
Properties, Returns Relating to Mortgage Interest Received from Individuals and
Returns Relating to Cancellation of Indebtedness. The Servicer shall make
reports of foreclosures and abandonments of any Mortgaged Property for each year
beginning in [____]. The Servicer shall file reports relating to each instance
occurring during the previous calendar year in which the Servicer (i) on behalf
of the Trust 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 Sections 6050J, 6050H
and 6050P of the Code.
Section 3.15. Advances by the Servicer.
(a) Not later than 1:00 p.m. New York time on the Deposit Date related
to each Distribution Date, the Servicer shall remit to the Trustee for deposit
in the Distribution Account an amount to be distributed on the related
Distribution Date pursuant to Section 5.01, equal to the Monthly Payment due on
each Mortgage Loan during the related Due Period, but not received as of the
related Determination Date (net of the Servicing Fee) such amount being defined
herein as the "Monthly Advance"; provided, however that if the amount of
Available Funds withdrawn from the Collection Account on the third Business Day
before such Distribution Date is less than the Guaranteed Distributions for such
Distribution Date, on such third Business Day the Servicer shall remit to the
Trustee for deposit in the Distribution Account such portion of the aggregate
Monthly Advance for the Distribution Date as shall be necessary to eliminate the
shortfall. With respect to any Balloon Loan that is delinquent on its maturity
date, the Servicer will continue to make Monthly Advances with respect to such
Balloon Loan in an amount equal to one month's interest on the unpaid principal
balance at the applicable Loan Rate (net of the Servicing Fee) according to the
original amortization schedule for such Mortgage Loan. The obligation to make
Monthly Advances with respect to each Mortgage Loan shall continue until such
Mortgage Loan becomes a Liquidated Mortgage Loan.
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(b) Notwithstanding anything herein to the contrary, (i) no Servicing
Advance or Monthly Advance shall be required to be made hereunder if the
Servicer determines that such Servicing Advance or Monthly Advance would, if
made, constitute a Nonrecoverable Advance and (ii) no Monthly Advance or
Servicing Advance shall be required with respect to Civil Relief Act Interest
Shortfalls.
(c) All Monthly Advances and Servicing Advances, including any
Nonrecoverable Advances shall be reimbursed on a first in, first out basis.
(d) So long as the Servicer is [___________________________] or
otherwise has long-term debt rated at least investment grade by one of the
Rating Agencies, Monthly Advances may be made by the Servicer either (i) from
its own funds or (ii) from the Collection Account, to the extent of funds held
therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of Collection Account that amounts held for
future distribution have been, as permitted by this Section 3.15, used by the
Servicer in discharge of any such Monthly Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Monthly Advances to
be made by the Servicer with respect to the Mortgage Loans and REO Properties.
Any amounts held for future distribution and so used shall be appropriately
reflected in the Servicer's records and replaced by the Servicer by deposit in
the Collection Account on or before the next Deposit Date.
Section 3.16. Optional Purchase of Defaulted Mortgage Loans. The
Servicer, in its sole discretion, shall have the right to elect (by written
notice sent to the Trustee) to purchase for its own account from the Trust any
Mortgage Loan which is ninety (90) days or more delinquent in the manner and at
the price specified in Section 2.02. The Purchase Price for any Mortgage Loan
purchased hereunder shall be deposited in the Collection Account and the
Trustee, upon receipt of such deposit, shall release or cause to be released to
the purchaser of such Mortgage Loan the related Mortgage File and shall execute
and deliver such instruments of transfer or assignment prepared by the purchaser
of such Mortgage Loan, 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 purchaser of such Mortgage Loan 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 purchaser of such Mortgage Loan shall
thereupon own such Mortgage Loan, and all security and documents, free of any
further obligation to the Trustee or the Certificateholders with respect
thereto.
Section 3.17. Superior Liens. The Servicer shall file (or cause to be
filed) a request for notice of any action by a superior lienholder under a First
Lien for the protection of the Trustee's interest, where permitted by local law
and whenever applicable state law does not require that a junior lienholder be
named as a party defendant in foreclosure proceedings in order to foreclose such
junior lienholder's equity of redemption.
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If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations secured by the First Lien,
or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust, whatever actions are necessary to protect the interests of
the Certificateholders and/or to preserve the security of the related Mortgage
Loan, subject to the application of the REMIC Provisions in accordance with the
terms of this Agreement. The Servicer shall promptly notify the Trustee of any
such action or circumstances. The Servicer shall advance the necessary funds to
cure the default or reinstate the superior lien, if such advance is in the best
interests of the Certificateholders in accordance with the servicing standards
in Section 3.01. The Servicer shall not make such an advance except to the
extent that it determines in its reasonable good faith judgment that the advance
would be recoverable from Liquidation Proceeds on the related Mortgage Loan and
in no event in an amount that is greater than the Principal Balance of the
related Mortgage Loan. The Servicer shall thereafter take such action as is
necessary to recover the amount so advanced.
Section 3.18. Assumption Agreements. When a Mortgaged Property has been
or is about to be conveyed by the Mortgagor, the Servicer shall, to the extent
it has knowledge of such conveyance or prospective conveyance, exercise its
right to accelerate the maturity of the related Mortgage Loan under any
"due-on-sale" clause contained in the related Mortgage or Mortgage Note;
provided, however, that the Servicer shall not exercise any such right if the
"due-on-sale" clause, in the reasonable belief of the Servicer, is not
enforceable under applicable law. In such event, the Servicer shall enter into
an assumption and modification agreement with the person to whom such property
has been or is about to be conveyed, pursuant to which such person shall become
liable under the Mortgage Note and, unless prohibited by applicable law, the
Mortgagor shall remain liable thereon. The Servicer, in accordance with accepted
mortgage loan servicing standards for mortgage loans similar to the Mortgage
Loans, is also authorized to enter into a substitution of liability whereby such
person is substituted as mortgagor and becomes liable under the Mortgage Note.
The Servicer shall notify the Trustee that any such substitution or assumption
agreement has been completed by forwarding to the Trustee the original of such
substitution or assumption agreement which original shall be added by the
Trustee to the related Mortgage File and shall, for all purposes, be considered
a part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. In connection with any assumption or
substitution agreement entered into pursuant to this Section 3.18, the Servicer
shall not change the Loan Rate or the Monthly Payment, defer or forgive the
payment of principal or interest, reduce the outstanding principal amount or
extend the final maturity date on such Mortgage Loan.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 3.19. Payment of Taxes, Insurance and Other Charges. With
respect to each Mortgage Loan, the Servicer shall maintain accurate records
reflecting fire and hazard insurance coverage.
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With respect to each Mortgage Loan as to which the Servicer maintains
escrow accounts, the Servicer shall maintain accurate records reflecting the
status of ground rents, taxes, assessments, water rates and other charges which
are or may become a lien upon the Mortgaged Property and the status of primary
mortgage guaranty insurance premiums, if any, and fire and hazard insurance
coverage and shall obtain, from time to time, all bills for the payment of such
charges (including renewal premiums) and shall effect payment thereof prior to
the applicable penalty or termination date and at a time appropriate for
securing maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage. To the extent that a Mortgage does not provide for escrow
payments, the Servicer shall, if it has received notice of a default or
deficiency, monitor such payments to determine if they are made by the
Mortgagor. The Servicer shall maintain a third-party (which may be an Affiliate
of the Servicer) tax monitoring service.
Section 3.20. Advance Facility.
(a) With the prior written consent of the Certificate Insurer, the
Servicer is hereby authorized to enter in to a financing or other facility (any
such arrangement, an "Advance Facility") under which (1) the Servicer assigns or
pledges to another Person (an "Advancing Person") the Servicer's rights under
this Agreement to be reimbursed for any Monthly Advances or Servicing Advances
and/or (2) an Advancing Person agrees to fund some or all Monthly Advances
and/or Servicing Advances required to be made by the Servicer pursuant to this
Agreement. No consent of the Trustee, Certificateholders or any other party is
required before the Servicer may enter into an Advance Facility; provided,
however, that the consent of the Trustee shall be required before the Servicer
may cause to be outstanding at one time more than one Advance Facility with
respect to Monthly Advances or more than one Advance Facility with respect to
Servicing Advances. Notwithstanding the existence of any Advance Facility under
which an Advancing Person agrees to fund Monthly Advances and/or Servicing
Advances on the Servicer's behalf, the Servicer shall remain obligated pursuant
to this Agreement to make Monthly Advances and Servicing Advances pursuant to
and as required by this Agreement, and if Servicer enters into an Advance
Facility, and for so long as an Advancing Person remains entitled to receive
reimbursement for any Monthly Advances and/or Servicing Advances, as applicable,
pursuant to Section 3.02(b), Section 3.03(ii) or Section 3.03(vi) of this
Agreement, but instead the Servicer shall be required to include amounts
collected that would otherwise be retained by the Servicer to reimburse it for
previously unreimbursed Monthly Advances ("Monthly Advance Reimbursement
Amounts") and/or previously unreimbursed Servicing Advances ("Servicing Advance
Reimbursement Amounts" and together with Monthly Advance Reimbursement Amounts,
"Reimbursement Amounts")(in each case to the extent such type of Reimbursement
Amount is included in the Advance Facility), in the remittance to the Trustee
made pursuant to Section 3.03(i) of this Agreement, to the extent of amounts on
deposit in the Collection Account on the related Master Servicer Remittance
Date. Notwithstanding anything to the contrary herein, in no event shall Monthly
Advance Reimbursement Amounts or Servicing Advance Reimbursement Amounts be
included in "Available Funds" or distributed to Certificateholders. If the
Servicer makes a remittance to the Trustee of Reimbursement Amounts under
Section 3.03(i) as described above, the Servicer shall report to the Trustee the
portions of such remittance that consist of Available Funds, Monthly Advance
Reimbursement Amounts and Servicing Advance Reimbursement Amounts, respectively.
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(b) If the Servicer enters into an Advance Facility, the Servicer and
the related Advancing Person shall deliver to the Trustee a written notice and
payment instruction (an "Advance Facility Notice"), providing the Trustee with
written payment instructions as to where to remit Monthly Advance Reimbursement
Amounts and/or Servicing Advance Reimbursement Amounts (each to the extent such
type of Reimbursement Amount is included within the Advance Facility) on
subsequent Distribution Dates. The payment instruction shall require the
applicable Reimbursement Amounts to be distributed to the Advancing Person or to
a trustee or custodian (an "Advance Facility Trustee") designated in the Advance
Facility Notice. An Advance Facility Notice may only be terminated by the joint
written direction of the Servicer and the related Advancing Person (and any
related Advance Facility Trustee); provided, however, that the provisions of
this Section 3.20 shall cease to be applicable when all Monthly Advances and
Servicing Advances funded by an Advancing Person, and when all Monthly Advances
and Servicing Advances the rights to be reimbursed for which have been assigned
or pledged to an Advancing Person, have been repaid to the related Advancing
Person in full.
(c) Reimbursement Amounts shall consist solely of amounts in respect of
Monthly Advances and/or Servicing Advances made with respect to the Mortgage
Loans for which the Servicer would be permitted to reimburse itself in
accordance with Section 3.03(ii) or Section 3.03(vi) hereof, assuming the
Servicer had made the related Monthly Advance(s) and/or Servicing Advance(s).
Notwithstanding the foregoing, no Person shall be entitled to reimbursement from
funds held in the Collection Account for future distribution to
Certificateholders pursuant to the provisions of Section 3.15. Neither the
Trustee nor the Certificate Insurer shall have any duty or liability with
respect to the calculation of any Reimbursement Amount and shall be entitled to
rely without independent investigation on the Advance Facility Notice and on the
Servicer's report of the amount of Monthly Advance Reimbursement Amounts and
Servicing Advance Reimbursement Amounts that were included in the remittance
from the Servicer to the Trustee pursuant to Section 3.03(i). The Servicer shall
maintain and provide to any successor Servicer and (upon request) the
Certificate Insurer a detailed accounting on a loan-by-loan basis as to amounts
advanced by, pledged or assigned to, and reimbursed to any Advancing Person. The
successor Servicer shall be entitled to rely on any such information provided by
the predecessor Servicer, and the successor Servicer shall not be liable for any
errors in such information.
(d) An Advancing Person who receives an assignment or pledge of the
rights to be reimbursed for Monthly Advances and/or Servicing Advances, and/or
whose obligations hereunder are limited to the funding of Monthly Advances
and/or Servicing Advances shall not be required to meet the criteria for
qualification of a Sub-Servicer set forth in Section 3.01 hereof.
(e) The documentation establishing any Advance Facility shall require
that Reimbursement Amounts distributed with respect to each Mortgage Loan be
allocated to outstanding unreimbursed Monthly Advances or Servicing Advances (as
the case may be) made with respect to that Mortgage Loan on a "first-in,
first-out" (FIFO) basis. Such documentation shall also require the Servicer to
provide to the related Advancing Person or Advance Facility Trustee loan-by-loan
information with respect to each Reimbursement Amount distributed by the Trustee
to such Advancing Person or Advance Facility Trustee on each Distribution Date,
to enable the Advancing Person or Advance Facility Trustee to make the FIFO
allocation of each Reimbursement Amount with respect to each Mortgage Loan. The
Servicer shall remain entitled to be reimbursed by the Advancing Person or
Advance Facility Trustee for all Monthly Advances and Servicing Advances funded
by the Servicer to the extent the related rights to be reimbursed therefor have
not been assigned or pledged to an Advancing Person.
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(f) Notwithstanding anything to the contrary in this Agreement, the
Certificate Insurer is not and shall not be responsible to track or monitor
Reimbursement Amounts or any Advance Facility, and is not and shall not be
obligated to make any payment with respect to any Reimbursement Amount. The
Servicer who enters into an Advance Facility shall indemnify the Certificate
Insurer, the Trustee, the Trust and any successor resulting from any claim by
the related Advancing Person, except to the extent that such claim, loss,
liability or damage resulted from or arose out of negligence, recklessness or
willful misconduct on the part of the Certificate Insurer, the Trustee or the
successor Servicer, or failure by the successor Servicer or the Trustee to remit
funds as required by this Agreement or the commission of an act or omission to
act by the successor Servicer or the Trustee, and the passage of any applicable
cure or grace period, such that an Event of Default under this Agreement occurs
or such entity is subject to termination for cause under this Agreement.
(g) Notwithstanding anything to the contrary in this Section 3.20, the
Servicer shall consult with the Certificate Insurer in determining the manner in
which any Advance Facility shall affect a successor Servicer before the Servicer
shall enter into an Advance Facility. Any amendment to this Section 3.20 or to
any other provision of this Agreement that may be necessary or appropriate to
effect the terms of an Advance Facility as described generally in this Section
3.20, including amendments to add provisions relating to a successor Servicer,
may be entered into by the Trustee, the Seller and the Servicer without the
consent of any Certificateholder, but only with the consent of the Certificate
Insurer, notwithstanding anything to the contrary in Section 11.01 of or
elsewhere in this Agreement.
ARTICLE IV
Certificate Insurance Policy, Initial Interest Coverage Account
and Pre-Funding Account
Section 4.01. Certificate Insurance Policy. As soon as possible, and in
no event later than 11:00 a.m., New York time, on the second Business Day
immediately preceding each Distribution Date, the Trustee shall determine the
amount of Available Funds for such Distribution Date minus the amount of any
Premium Amount and any Trustee Fee to be paid on such Distribution Date.
If for any Distribution Date a Deficiency Amount exists, the Trustee
shall complete a notice in the form set forth as Exhibit A to the Certificate
Insurance Policy (the "Notice") and shall submit such Notice to the Fiscal Agent
no later than 12:00 noon, New York time, on the second Business Day preceding
such Distribution Date. The Notice shall constitute a claim for an Insured
Payment pursuant to the Certificate Insurance Policy. Upon receipt of the
Insured Payment, at or prior to the latest time payments of the Insured Payment
are to be made by the Certificate Insurer pursuant to the Certificate Insurance
Policy, on behalf of the Senior Certificateholders, the Trustee shall deposit
such Insured Payments in the Distribution Account and shall distribute such
Insured Payments only in accordance with Section 5.01(a)(2) and 5.01(a)(4), if
applicable.
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The Trustee shall receive, as attorney-in-fact of each Holder of a
Senior Certificate, any Insured Payment from the Certificate Insurer and
disburse the same to each Holder of a Senior Certificate in accordance with the
provisions of Article V. Insured Payments disbursed by the Trustee from proceeds
of the Certificate Insurance Policy shall not be considered payment by the Trust
nor shall such payments discharge the obligation of the Trust with respect to
such Senior Certificate, and the Certificate Insurer shall become the owner of
such unpaid amounts due from the Trust in respect of such Insured Payments as
the deemed assignee of such Holder and shall be entitled to receive the
Reimbursement Amount pursuant to Section 5.01(a)(5). The Trustee hereby agrees
on behalf of each Holder of a Senior Certificate for the benefit of the
Certificate Insurer that it and they recognize that to the extent the
Certificate Insurer makes Insured Payments, either directly or indirectly (as by
paying through the Trustee), to the Senior Certificateholders, the Certificate
Insurer will be entitled to receive the Reimbursement Amount pursuant to Section
5.01(a)(5).
It is understood and agreed that the intention of the parties is that
the Certificate Insurer shall not be entitled to reimbursement on any
Distribution Date for amounts previously paid by it unless on such Distribution
Date the Senior Certificateholders shall also have received the full amount of
the Guaranteed Distributions for such Distribution Date.
Section 4.02. Initial Interest Coverage Account and Pre-Funding
Account.
(a) The Trustee has heretofore established or caused to be established
and shall hereafter maintain or cause to be maintained a separate account
denominated the Initial Interest Coverage Account, which is and shall continue
to be an Eligible Account in the name of the Trustee and shall be designated
"[______________________________]". The Initial Interest Coverage Account shall
be treated as an "outside reserve fund" under applicable Treasury regulations
and will not be part of any REMIC. Any investment earnings on the Initial
Interest Coverage Account will be treated as owned by the Seller and will be
taxable to the Seller. The amount on deposit in the Initial Interest Coverage
Account shall be invested in Eligible Investments in accordance with the
provisions of Section 5.05.
The Trustee has heretofore established or caused to be established and
shall hereafter maintain or cause to be maintained a separate account
denominated the Pre-Funding Account, which is and shall continue to be an
Eligible Account in the name of the Trustee and shall be designated
"___________________________________." The Pre-Funding Account shall be treated
as an "outside reserve fund" under applicable Treasury regulations and will not
be part of any REMIC. Any Pre-Funding Earnings will be deposited into the
Initial Interest Coverage Account on each Pre-Funding Distribution Date;
provided, however, that if the final Subsequent Transfer Date occurs after the
Distribution Date in a month, on such Subsequent Transfer Date, the Trustee
shall (i) transfer the Excess Funding Amount from the Pre-Funding Account to the
Distribution Account, (ii) transfer the Pre-Funding Earnings to the Initial
Interest Coverage Account and (iii) close the Pre-Funding Account. The amount on
deposit in the Pre-Funding Account shall be invested in Eligible Investments at
the direction of the Seller in accordance with the provisions of Section 5.05.
All investment earnings on funds on deposit in the Initial Interest Coverage
Account and the Pre-Funding Account will be treated as owned by, and will be
taxable to, the Seller.
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(b) On the Closing Date, the Depositor will cause to be deposited the
Original Capitalized Interest Deposit into the Initial Interest Coverage Account
from the sale of the Offered Certificates. On the Closing Date, the Depositor
will cause to be deposited the Pre-Funded Amount in the Pre-Funding Account from
the sale of the Offered Certificates.
(c) On each Pre-Funding Distribution Date, the Trustee shall transfer
from the Initial Interest Coverage Account to the Distribution Account the
Capitalized Interest Requirement, if any, for such Distribution Date; provided,
however, that on the final Subsequent Transfer Date the Trustee shall (i)
transfer the Capitalized Interest Requirement, if any, for the following
Distribution Date from the Initial Interest Coverage Account to the Distribution
Account, (ii) remit the balance of the funds on deposit in the Initial Interest
Coverage Account to the Seller and (iii) close the Initial Interest Coverage
Account.
(d) On each Subsequent Transfer Date, (i) the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Mortgage Loans sold to the Trust
on such Subsequent Transfer Date, (ii) the Trustee shall withdraw the Overfunded
Amount, if any, from the Initial Interest Coverage Account and (iii) the Trustee
shall pay such amounts to or upon the order of the Seller, as designee of the
Depositor, with respect to such transfer.
(e) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Seller shall instruct the Trustee to withdraw such
amounts from the Pre-Funding Account on the immediately following Distribution
Date and deposit such amounts in the Distribution Account.
(f) Unless sooner closed as provided above, the Initial Interest
Coverage Account and Pre-Funding Account shall be closed at the close of
business on the Distribution Date immediately following the end of the Funding
Period. All amounts, if any, remaining in the Initial Interest Coverage Account
on such day shall be paid to the Seller, as designee of the Depositor.
Section 4.03. Claims Upon the Certificate Insurance Policy.
(a) The Trustee shall comply with the provisions of the Certificate
Insurance Policy with respect to claims upon the Certificate Insurance Policy.
(b) At the time of the execution and delivery of this Agreement, the
Trustee shall establish a separate special purpose trust account for the benefit
of Holders of the Senior Certificates referred to herein as the "Policy Payments
Account" and over which the Trustee shall have exclusive control and sole right
of withdrawal. The Trustee shall deposit any Insured Payment made under the
Certificate Insurance Policy in the Policy Payments Account and thereafter into
the Distribution Account for distribution of such amount only for purposes of
payment to Holders of the Senior Certificates of Guaranteed Distributions for
the Senior Certificates for which a claim was made and such amount may not be
applied to satisfy any costs, expenses or liabilities of the Trustee or the
Trust. Insured Payments made under the Certificate Insurance Policy shall be
disbursed by the Trustee to Senior Certificateholders in the same manner as
distributions on the Senior Certificates are made under Section 5.01. It shall
not be necessary for such distributions to be made by checks or wire transfers
separate from the check or wire transfer used to pay Guaranteed Distributions
with other funds available to make such distributions. However, the amount of
any Insured Payments made on the Senior Certificates to be paid from funds
transferred from the Policy Payments Account shall be noted in the Certificate
Register and in the statements to be furnished to Holders of the Certificates
pursuant to Section 5.03 hereof. Funds held in the Policy Payments Account shall
not be invested by the Trustee.
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On any Distribution Date with respect to which a claim has been made
under the Certificate Insurance Policy, the amount of any Insured Payment
received by the Trustee as a result of any claim under the Certificate Insurance
Policy and which is required to make distributions on the Senior Certificates
equal to Guaranteed Distributions on the Senior Certificates on such
Distribution Date, shall be withdrawn from the Policy Payments, Account,
deposited into the Distribution Account and applied directly by the Trustee,
together with all other funds to be withdrawn from the Distribution Account, to
the payment in full of Guaranteed Distributions on the Senior Certificates. Any
funds remaining in the Policy Payments Account on the first Business Day
following a Distribution Date shall be remitted in immediately available funds
to the Certificate Insurer, pursuant to the instructions of the Certificate
Insurer, by the end of such Business Day. The Trustee shall keep a complete and
accurate record of the amount of interest and principal paid in respect of any
Senior Certificate from moneys received under the Certificate Insurance Policy.
The Certificate Insurer shall have the right to inspect such records at
reasonable times during normal business hours upon reasonable prior written
notice to the Trustee.
(c) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action, of which a Responsible Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under the Bankruptcy Code (a "Preference Claim") of any distribution
made with respect to the Senior Certificates. Each Certificateholder of Senior
Certificates, by its purchase of Senior Certificates, the Depositor, the Seller,
the Servicer and the Trustee hereby agree that the Certificate Insurer (so long
as no Certificate Insurer Default exists) may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without limitation, (i) the
direction of any appeal of any order relating to such Preference Claim and (ii)
the posting of any surety, supersedes or performance bond pending any such
appeal.
ARTICLE V
Payments and Statements to
Certificateholders; Rights of Certificateholders
Section 5.01. Distributions.
(a) On each Distribution Date, the Trustee shall withdraw from (x) the
Policy Payments Account, any amounts on deposit therein and apply them to make
the Guaranteed Distributions and (y) the Distribution Account, Available Funds
for such Distribution Date, and apply such amounts in the following order of
priority, in each case, to the extent of the funds remaining therefor:
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(1) Concurrently, to the Trustee and the Certificate
Insurer, respectively, the Trustee Fee and the
Premium Amount for such Distribution Date;
(2) Concurrently, to each Class of Senior Certificates,
the related Class Interest Distribution for such
Distribution Date;
(3) Sequentially, to the Class M-1, Class M-2 and Class B
Certificates, in that order, the related Class
Monthly Interest Amounts for such Distribution Date;
(4) To the Class A Certificates, (x) the Senior Principal
Distribution Amount for such Distribution Date,
excluding any Subordination Increase Amount included
therein, and (y) the principal portion of any Insured
Payments for such Distribution Date, allocated as
provided in Section 5.01(b);
(5) To the Certificate Insurer, any amount owing to it
under the Insurance Agreement;
(6) To the Class M-1 Certificates, the Class M-1
Principal Distribution Amount for such Distribution
Date, excluding any Subordination Increase Amount
included therein;
(7) To the Class M-2 Certificates, the Class M-2
Principal Distribution Amount for such Distribution
Date, excluding any Subordination Increase Amount
included therein;
(8) To the Class B Certificates, the Class B Principal
Distribution Amount for such Distribution Date,
excluding any Subordination Increase Amount included
therein;
(9) To the Class A, Class M-1, Class M-2 and Class B
Certificates, the Subordination Increase Amount for
such Distribution Date applied in the same order as
other principal distributions on that Distribution
Date;
(10) To the Class M-1 Certificates, any related (a) Class
Interest Carryover Shortfall and then (b) Class
Principal Carryover Shortfall;
(11) To the Class M-2 Certificates, any related (a) Class
Interest Carryover Shortfall and then (b) Class
Principal Carryover Shortfall;
(12) To the Class B Certificates, any related (a) Class
Interest Carryover Shortfall and then (b) Class
Principal Carryover Shortfall;
(13) To the Class BIO Certificates for concurrent deposit
in the Net Rate Cap Fund, the Net Rate Cap Fund
Deposit;
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(14) Sequentially, to the Class A, Class M-1, Class M-2
and Class B Certificates, in that order, the related
Net Rate Cap Carryover, to be treated as paid from
and to the extent of funds on deposit in the Net Rate
Cap Fund;
(15) To the Class BIO Certificates, the Class BIO
Distribution Amount, less amounts distributed
pursuant to Section 5.01(a)(13) on such Distribution
Date;
(16) To the Successor Servicer and the Trustee, as
applicable, any Servicing Transfer Costs and other
amounts payable to the Successor Servicer or the
Trustee, as applicable, pursuant to Sections 3.01(g),
8.01 and 9.05, to the extent not otherwise paid by
the Servicer; and
(17) To the Class R-1 Certificateholders, Class R-2
Certificateholders and Class R-3 Certificateholders,
the remainder in REMIC I, REMIC II and REMIC III,
respectively.
On each Distribution Date, the Class Interest Distribution for each
Class of Senior Certificates will be distributed on an equal priority and any
shortfall in the amount required to be distributed as interest thereon to each
such Class will be allocated between such Classes pro rata based on the amount
that would have been distributed on each such Class in the absence of such
shortfall.
(b) Distributions of the Senior Principal Distribution Amount shall be
allocated between the Class A-1F and Class A-1A Certificates based on their
respective Class Allocation Percentages until the Class Principal Balance of
either of those Classes is reduced to zero. Thereafter, the Senior Principal
Distribution Amount will be allocated to the remaining Class of Class A
Certificates.
(c) [Reserved].
(d) The Trustee shall make distributions in respect of a Distribution
Date to each Certificateholder of record on the related Record Date (other than
as provided in Section 10.01 respecting the final distribution), in the case of
Holders of Offered Certificates, by check or money order mailed to such
Certificateholder at the address appearing in the Certificate Register, or, upon
written request by a Holder of an Offered Certificate delivered to the Trustee
at least five Business Days prior to the related Distribution Date, by wire
transfer or otherwise, and, in the case of Holders of Class BIO Certificates or
Residual Certificates, by wire transfer, if appropriate wiring instructions have
been received by the Trustee at least five (5) Business Days prior to the
related Distribution Date, or, if not, by check or money order to such
Certificateholder at the address appearing in the Certificate Register.
Distributions among Certificateholders of a Class shall be made in proportion to
the Percentage Interests evidenced by the Certificates of such Class held by
such Certificateholders.
(e) 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 Certificates. None of the Trustee, the Paying Agent, the Certificate
Registrar, the Depositor, the Servicer, the Certificate Insurer or the Seller
shall have any responsibility therefor except as otherwise provided by
applicable law.
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Section 5.02. Compensating Interest. Not later than the Determination
Date, the Servicer shall deposit to the Collection Account an amount equal to
the lesser of (A) the aggregate of the Prepayment Interest Shortfalls for the
related Distribution Date resulting from Principal Prepayments during the
related Prepayment Period and (B) an amount equal to the product of (i) 1/12,
(ii) 0.50% and (iii) the Pool Balance as of the first day of the related Due
Period. The Servicer shall not have the right to reimbursement for any amounts
deposited to the Collection Account pursuant to this Section 5.02.
Section 5.03. Statements.
(a) Not later than 1:00 p.m., New York time, on the fifth Business Day
prior to each Distribution Date, the Servicer shall deliver to the Trustee by
electronic means and to the Certificate Insurer via e-mail at [____________], a
computer file containing the loan level information necessary to permit the
Trustee to calculate the information required by clauses (i) through (xxvii)
below as of the end of the preceding Prepayment Period or Due Period, as
applicable, and such other information as the Trustee shall reasonably require.
Not later than each Distribution Date the Trustee shall prepare a statement (the
"Remittance Report") containing the information set forth below with respect to
such Distribution Date, which information shall be based upon the loan level
information furnished by the Servicer upon which the Trustee shall conclusively
rely without independent verification thereof:
(i) Available Funds and each Class' Certificate Rate for the
related Distribution Date;
(ii) the aggregate amount of the distribution to each Class of
Certificates on such Distribution Date;
(iii) the amount of the distribution set forth in paragraph
(i) above in respect of interest and the amount thereof in respect of
any Class Interest Carryover Shortfall, and the amount of any Class
Interest Carryover Shortfall remaining;
(iv) the amount of the distribution set forth in paragraph (i)
above in respect of principal and the amount thereof in respect of the
Class Principal Carryover Shortfall, and any remaining Class Principal
Carryover Shortfall;
(v) the amount of Excess Interest paid as principal;
(vi) the Servicing Fee, the Premium Amount and the
Reimbursement Amount;
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(vii) the Pool Balance as of the close of business on the last
day of the preceding Due Period;
(viii) the Class Principal Balance of each Class of
Certificates after giving effect to payments allocated to principal
above;
(ix) the Overcollateralization Amount and the Required
Overcollateralization Amount as of the close of business on the
Distribution Date, after giving effect to distributions of principal on
such Distribution Date;
(x) whether a Cumulative Loss Event or a Delinquency Event
has occurred and is continuing and the calculation thereof;
(xi) the number and Principal Balances of all Mortgage Loans
that were the subject of Principal Prepayments during the Due Period;
(xii) the amount of all Curtailments that were received during
the Due Period;
(xiii) the principal portion of all Monthly Payments received
during the Due Period;
(xiv) the interest portion of all Monthly Payments received on
the Mortgage Loans during the Due Period;
(xv) the amount of the Monthly Advances and the Compensating
Interest payment to be made on the Determination Date;
(xvi) the amount to be distributed to the Class BIO and Class
R Certificateholders, respectively for the Distribution Date;
(xvii) the weighted average remaining term to maturity of the
Mortgage Loans and the weighted average Loan Rate as of the first day
of the month prior to the Distribution Date;
(xviii) the amount of all payments or reimbursements to the
Servicer pursuant to Sections 3.03(ii) and (vi);
(xix) the number of Mortgage Loans outstanding at the
beginning and at the end of the related Due Period;
(xx) the amount of Liquidation Loan Losses experienced during
the preceding Due Period and the Cumulative Net Losses as a percentage
of the Cut-Off Date Pool Balance;
(xxi) as of the end of the preceding calendar month, the
number and Principal Balance of Mortgage Loans which are 30-59 days
delinquent; the number and Principal Balance of Mortgage Loans which
are 60-89 days delinquent; the number and Principal Balance of Mortgage
Loans which are 90 or more days delinquent (including the number and
Principal Balance of Mortgage Loans which are in foreclosure; the
number and Principal Balance of Mortgage Loans in bankruptcy; and the
number and Principal Balance of Mortgage Loans which are REO Property,
each separately set forth);
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(xxii) [Reserved];
(xxiii) the number and aggregate Principal Balance of Mortgage
Loans, other than Mortgage Loans in default or imminent default, that
were modified by the Servicer during the related Due Period;
(xxiv) the amount of Net Rate Cap Carryover distributed to
each Class of Offered Certificates, other than the Class IO
Certificates, and the amount of Net Rate Cap Carryover remaining for
each such Class;
(xxv) for each Pre-Funding Distribution Date, the amount in
the Initial Interest Coverage Account;
(xxvi) for each Pre-Funding Distribution Date, the remaining
amount in the Pre-Funding Account; and
(xxvii) the amount of the Insured Payments, if any, to be made
on such Distribution Date.
The Trustee shall make available such report to the Servicer, the
Seller, the Certificate Insurer, the Certificateholders, the Rating Agencies,
Bloomberg (at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇)
and Intex Solutions (at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇) on the Distribution Date; provided, however, that
the Trustee shall remove from the report the Premium Amount to be paid to the
Certificate Insurer prior to the submission to Bloomberg and Intex Solutions.
The Trustee may fully rely upon and shall have no liability with respect to
information provided by the Servicer.
To the extent that there are inconsistencies between the telecopy of
the Remittance Report and the hard copy thereof, the Servicer may rely upon the
latter.
In the case of information furnished pursuant to subclauses (ii),
(iii), (iv) and (vi) above, the amounts shall be expressed in a separate section
of the report as a dollar amount for each Class for each $1,000 original dollar
amount as of the related Cut-Off Date.
The Trustee will make the Remittance Report (and, at its option, any
additional files containing the same information in an alternative format)
available each month to Certificateholders, and the parties to this Agreement
via the Trustee's internet website. The Trustee's internet website shall
initially be located at [_________]. Assistance in using the website can be
obtained by calling the Trustee's customer service desk at [(___) [___]-[___]].
Parties that are unable to use the above distribution options are entitled to
have a paper copy mailed to them via first class mail by calling the customer
service desk and indicating such. The Trustee shall have the right to change the
way Remittance Reports are distributed in order to make such distribution more
convenient and/or more accessible to the above parties and the Trustee shall
provide timely and adequate notification to all above parties regarding any such
changes. As a condition to access the Trustee's internet website, the Trustee
may require registration and the acceptance of a disclaimer. The Trustee will
not be liable for the dissemination of information in accordance with this
Agreement. The Trustee shall also be entitled to rely on but shall not be
responsible for the content or accuracy of any information provided by third
parties for purposes of preparing the Remittance Report and may affix thereto
any disclaimer it deems appropriate in its reasonable discretion (without
suggesting liability on the part of any other party hereto).
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(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Regular Certificate, if requested in writing by
such Person, such information as is reasonably necessary to provide to such
Person a statement containing the information set forth in subclauses (iii) and
(iv) above, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared and furnished by the Trustee to
Certificateholders pursuant to any requirements of the Code as are in force from
time to time.
(c) On each Distribution Date, the Trustee shall forward to the Class R
Certificateholders a copy of the reports forwarded to the Holders of the Regular
Certificates in respect of such Distribution Date and a statement setting forth
the amounts actually distributed to the Class R Certificateholders on such
Distribution Date together with such other information as the Trustee deems
necessary or appropriate.
(d) Within a reasonable period of time after the end of each calendar
year, the Trustee shall deliver to each Person who at any time during the
calendar year was a Class R Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R Certificateholder. Such obligation of the Trustee
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be prepared by the Trustee or and furnished to
Certificateholders by the Trustee pursuant to any requirements of the Code as
from time to time in force.
(e) The Servicer and the Trustee shall furnish to the Certificate
Insurer, the Depositor, the Seller and each Certificateholder (if requested in
writing), during the term of this Agreement, such periodic, special or other
reports or information, whether or not provided for herein, as shall be
necessary, reasonable or appropriate with respect to the Certificateholder or
otherwise with respect to the purposes of this Agreement, all such reports or
information to be provided by and in accordance with such applicable
instructions and directions (if requested in writing) as the Certificateholder
may reasonably require; provided that the Servicer and the Trustee shall be
entitled to be reimbursed by such Certificateholder for their respective fees
and actual expenses associated with providing such reports, if such reports are
not generally produced in the ordinary course of their respective businesses or
readily obtainable.
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(f) Reports and computer diskettes or files furnished by the Servicer
pursuant to this Agreement shall be deemed confidential and of a proprietary
nature, and shall not be copied or distributed except to the extent required by
law or to the Rating Agencies. No Person entitled to receive copies of such
reports or diskettes or files or lists of Certificateholders shall use the
information therein for the purpose of soliciting the customers of the Seller or
for any other purpose except as set forth in this Agreement.
Section 5.04. Distribution Account. The Trustee shall establish with
itself, a separate account (the "Distribution Account") titled
"________________________________________." The Distribution Account shall be an
Eligible Account. The Trustee shall deposit any amounts representing payments on
and any collections in respect of the Mortgage Loans received by it immediately
following receipt thereof, including, without limitation, all amounts withdrawn
by the Servicer from the Collection Account pursuant to Section 3.03 for deposit
to the Distribution Account. Amounts on deposit in the Distribution Account may
be invested in Eligible Investments pursuant to Section 5.05.
Section 5.05. Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee shall be invested and reinvested by the Trustee,
as directed in writing by the Servicer (in the case of the Distribution Account)
or the Seller (in the case of any other Account) (the applicable Person, the
"Directing Party"), in one or more Eligible Investments bearing interest or sold
at a discount. If the applicable Directing Party does not provide investment
directions, or if the Directing Party is the Servicer and an Event of Default
shall have occurred and be continuing the Trustee shall invest all Accounts in
Eligible Investments described in paragraph (vi) of the definition of Eligible
Investments. No such investment in any Account shall mature later than the
Business Day immediately preceding the next Distribution Date (except that for
any such Account other than the Distribution Account (i) if such Eligible
Investment is an obligation of the Trustee or a money market fund for which the
Trustee or any Affiliate is the manager or the advisor, then such Eligible
Investment shall mature not later than such Distribution Date and (ii) any other
date may be approved by the Rating Agencies).
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom unless the
Trustee's failure to perform in accordance with this Section 5.05 is the cause
of such loss or charge.
(c) Subject to Section 9.01, the Trustee shall not in any way be held
liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Eligible Investment included therein
(except to the extent that the Trustee is the obligor and has defaulted thereon
or as provided in subsection (b) of this Section 5.05).
(d) The Trustee shall invest and reinvest funds in the Accounts held by
the Trustee, to the fullest extent practicable, in such manner as the applicable
Directing Party shall from time to time direct as set forth in Section 5.05(a),
but only in one or more Eligible Investments.
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(e) So long as no Event of Default shall have occurred and be
continuing, all net income and gain realized from investment of, and all
earnings on, funds deposited in the Collection Account shall be for the benefit
of the Servicer as Servicing Compensation (in addition to the Servicing Fee),
and shall be subject to withdrawal on or before the first Business Day of the
month following the month in which such income or gain is received. The Servicer
shall deposit in the Collection Account, the amount of any loss incurred in
respect of any Eligible Investment held therein which is in excess of the income
and gain thereon immediately upon realization of such loss, without any right to
reimbursement therefore from its own funds.
(f) All net income and gain realized from investment of, and all
earnings on, funds deposited in the Distribution Account shall be for the
benefit of (x) the Servicer for the period from the date of deposit to the
Deposit Date, as Servicing Compensation in addition to the Servicing Fee and (y)
the Trustee for the period from the Deposit Date to the Distribution Date, as
compensation (in addition to the Trustee Fee). Any such income shall be subject
to withdrawal on or before the first Business Day of the month following the
month in which such income or gain is received. The Servicer or the Trustee, as
applicable, shall deposit in the Distribution Account the amount of any loss
incurred in respect of any Eligible Investment held therein which is in excess
of the income and gain thereon payable to the Servicer or the Trustee, as the
case may be, immediately upon the realization of such loss, without any right to
reimbursement therefore from its own funds.
Section 5.06. Allocation of Losses. On each Distribution Date, the
Trustee shall determine the total of the Applied Realized Loss Amounts for such
Distribution Date. The Applied Realized Loss Amount for any Distribution Date
shall be applied by reducing the Class Principal Balance of each Class of
Subordinate Certificates beginning with the Class of Subordinate Certificates
then outstanding with the lowest relative payment priority, in each case until
the respective Class Principal Balance thereof is reduced to zero. Any Applied
Realized Loss Amount allocated to a Class of Subordinate Certificates shall be
allocated among the Subordinate Certificates of such Class in proportion to
their respective Percentage Interests.
Section 5.07. [Reserved].
Section 5.08. Net Rate Cap Fund.
(a) On the Closing Date, the Trustee shall establish and maintain in
its name, in trust for the benefit of the Offered Certificates, other than the
Class IO Certificates, the Net Rate Cap Fund and deposit therein the amount of
$5,000 paid to the Trustee by the Seller therefor. The Net Rate Cap Fund shall
be an Eligible Account, and funds on deposit therein shall be held separate and
apart from, and shall not be commingled with, any other moneys, including
without limitation, other moneys held by the Trustee pursuant to this Agreement.
The Net Rate Cap Fund shall be treated as an "outside reserve fund" under
applicable Treasury regulations and will not be part of any REMIC. Any
investment earnings on the Net Rate Cap Fund will be treated as owned by the
Class BIO Certificateholder and will be taxable to the Class BIO
Certificateholder. Distributions made or deemed deposited to any outside reserve
fund under this Agreement shall be treated as made to the owner of such fund.
The Trustee shall treat the Net Rate Cap Fund as having a nominal (zero) value
for the Holders of the Offered Certificates.
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(b) On each Distribution Date, the Trustee shall deposit amounts from
the Distribution Account to the Net Rate Cap Fund pursuant to Section
5.01(a)(13). The amount required to be deposited into the Net Rate Cap Fund on
any Distribution Date (the "Net Rate Cap Fund Deposit") will equal the lesser of
(i) amounts remaining after distributions pursuant to clauses (1) through (12)
of Section 5.01(a) and (ii) any Net Rate Cap Carryover for such Distribution
Date or, if no Net Rate Cap Carryover is payable on such Distribution Date, an
amount such that when added to other amounts already on deposit in the Net Rate
Cap Fund, the aggregate amount on deposit therein will be equal to $10,000. The
Trustee shall make withdrawals from the Net Rate Cap Fund to make distributions
pursuant to Section 5.01(a)(14) hereof.
(c) Funds in the Net Rate Cap Fund may be invested in Eligible
Investments. Any earnings on such amounts shall be payable to the Class BIO
Certificates. The Class BIO Certificates shall evidence ownership of the Net
Rate Cap Fund for federal tax purposes and shall direct the Trustee in writing
as to the investment of amounts therein.
(d) Upon termination of the Trust, any amounts remaining in the Net
Rate Cap Fund shall be distributed to the Certificateholders of the Class BIO
Certificates in the same manner as if distributed pursuant to Section
5.01(a)(15) hereof.
ARTICLE VI
The Certificates
Section 6.01. The Certificates. Each of the Offered Certificates, the
Class BIO Certificates, and the Residual Certificates shall be substantially in
the forms set forth in Exhibits A and B respectively, and shall, on original
issue, be executed, authenticated and delivered by the Trustee to or upon the
order of the Seller concurrently with the sale and assignment to the Trustee of
the Trust. Each Class of Offered Certificates shall be initially evidenced by
one or more certificates representing a fraction of the applicable Original
Class Principal Balance or Notional Amount, as applicable, and shall be held in
minimum dollar denominations of $25,000 and integral multiples of $1,000 in
excess thereof, except that one of each Class of the Offered Certificate may be
in a different denomination so that the sum of the denominations of all
outstanding Offered Certificates shall equal the aggregate Original Class
Principal Balance or Notional Amount, as applicable. The Residual Certificates
and Class BIO Certificates shall be held in minimum Percentage Interests of 20%.
The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by a Responsible Officer. 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 Certificates
or did not hold such offices at the date of such Certificate. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, unless such Certificate shall have been manually 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 Offered Certificates shall be Book-Entry Certificates. The Class
BIO Certificates and the Residual Certificates shall not be Book-Entry
Certificates.
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Section 6.02. Registration of Transfer and Exchange of Certificates.
(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 Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall initially serve as Certificate Registrar for
the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph, and, in the case of a Residual Certificate,
upon satisfaction of the conditions set forth below, 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 Certificates of the same aggregate
Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at any
such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute and authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of 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 such 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 Certificates; (iii) ownership
and transfers of registration of such 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 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.
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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 Seller 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 Seller is unable
to locate a qualified successor, (ii) the Seller, at its sole option elects to
terminate the book-entry system through the Depository or (iii) after the
occurrence of an Event of Default, the Certificate Owners of each Class of
Offered Certificates representing Percentage Interests aggregating not less than
51% advises the Trustee and Depository through the Financial Intermediaries and
the Depository Participants in writing that the continuation of a book-entry
system through the Depository to the exclusion of definitive, fully registered
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 each Class of Offered Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall at the Seller's expense, execute and authenticate the
Definitive Certificates. Neither the Seller 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, the Trustee, the Certificate Registrar, the Servicer,
any Paying Agent, the Certificate Insurer, the Depositor and the Seller shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
(d) Except with respect to the initial transfer of the Class BIO
Certificates and the Residual Certificates by the Seller, no transfer, sale,
pledge or other disposition of any Class BIO Certificates or any Residual
Certificate shall be made unless such disposition is exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
Act"), and any applicable state securities laws or is made in accordance with
the 1933 Act and laws. In the event of any such transfer, other than the
transfer of the Tax Matters Person Residual Interest to the Trustee in reliance
upon Rule 144A under the 1933 Act, the Trustee, the Depositor and the Seller
shall require either (i) a written Opinion of Counsel (which may be in-house
counsel) acceptable to and in form and substance reasonably satisfactory to the
Trustee, Depositor and the Seller that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from the
1933 Act or is being made pursuant to the 1933 Act, which Opinion of Counsel
shall not be an expense of the Trustee, the Servicer, the Depositor or the
Seller or (ii) the Trustee shall require the transferor to execute a transferor
certificate (in substantially the form attached hereto as Exhibit M) and the
transferee to execute an investment letter (in substantially the form attached
hereto as Exhibit N-1 or N-2) acceptable to and in form and substance reasonably
satisfactory to the Seller, Depositor and the Trustee certifying to the Seller,
Depositor and the Trustee the facts surrounding such transfer, which investment
letter shall not be an expense of the Trustee, the Servicer, the Depositor or
the Seller. The Holder of a Class BIO Certificates or a Residual Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify the
Trustee, the Depositor and the Seller 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.
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No transfer of an ERISA Restricted Certificate shall be made unless the
Trustee shall have received either (i) a representation from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee, such requirement is satisfied only by the Trustee's receipt of a
representation letter from the transferee substantially in the form of Exhibit
N-1 or Exhibit N-2, as appropriate), to the effect that such transferee is not
an employee benefit plan or arrangement subject to Section 406 of ERISA or a
plan subject to Section 4975 of the Code, or a person acting on behalf of any
such plan or arrangement or using the assets of any such plan or arrangement to
effect such transfer ("Benefit Plan Investor") or (ii) if an ERISA Restricted
Certificate which is an Offered Certificate is being purchased by an insurance
company, a representation that an insurance company 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 Sections I and III of PTCE 95-60 or (iii) if an ERISA Restricted
Certificate which is an Offered Certificate is purchased by a Benefit Plan
Investor, a representation that the Benefit Plan Investor understands that the
eligibility of the Certificates for purchase is conditioned upon such
Certificates being rated at least "BBB-" at the time of acquisition of such
Certificates by the Benefit Plan Investor or (iv) in the case of any ERISA
Restricted Certificate presented for registration in the name of a Benefit Plan
Investor, an Opinion of Counsel satisfactory to the Trustee, which Opinion of
Counsel shall not be an expense of either the Trustee or the Trust, addressed to
the Trustee, to the effect that the purchase or holding of such ERISA Restricted
Certificate will not result in prohibited transactions under ERISA and/or
Section 4975 of the Code and will not subject the Trustee to any obligation in
addition to those expressly undertaken in this Agreement or to any liability.
Notwithstanding anything else to the contrary herein, the representation
required by clause (i), (ii) or (iii) above with respect to any ERISA Restricted
Certificate that is a Book-Entry Certificate shall be deemed to have been made
by the Certificate Owner by virtue of such Certificate Owner's acquisition of
such Certificate; and any purported transfer of an ERISA Restricted Certificate
to or on behalf of a Benefit Plan Investor pursuant to clause (iv) above without
the delivery to the Trustee of an Opinion of Counsel satisfactory to the Trustee
as described above shall be void and of no effect.
Each Person who has or who acquires any Ownership Interest in a
Residual Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and to
have irrevocably appointed the Seller or its designee as its attorney-in-fact to
negotiate the terms of any mandatory sale under clause (v) below and to execute
all instruments of transfer and to do all other things necessary in connection
with any such sale, and the rights of each Person acquiring any Ownership
Interest in a Residual Certificate are expressly subject to the following
provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
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(ii) No Person shall acquire an Ownership Interest in a
Residual Certificate unless such Ownership Interest is a pro rata
undivided interest.
(iii) In connection with any proposed transfer of any
Ownership Interest in a Residual Certificate, the Trustee shall as a
condition to registration of the transfer, require delivery to it, in
form and substance satisfactory to it, of each of the following:
(A) an affidavit in the form of Exhibit G from the
proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring its
Ownership Interest in the Residual Certificate that is the
subject of the proposed transfer as a nominee, trustee or
agent for any Person who is not a Permitted Transferee; and
(B) a covenant of the proposed transferee to the
effect that the proposed transferee agrees to be bound by and
to abide by the transfer restrictions applicable to the
Residual Certificates.
(iv) Any attempted or purported transfer of any Ownership
Interest in a Residual Certificate in violation of the provisions of
this Section 6.02 shall be absolutely null and void and shall vest no
rights in the purported transferee. If any purported transferee shall,
in violation of the provisions of this Section 6.02, become a Holder of
a Residual Certificate, then the prior Holder of such Residual
Certificate that is a Permitted Transferee shall, upon discovery that
the registration of transfer of such Residual Certificate was not in
fact permitted by this Section 6.02, be restored to all rights as
Holder thereof retroactive to the date of registration of transfer of
such Residual Certificate. The Trustee shall be under no liability to
any Person for any registration of transfer of a Residual Certificate
that is in fact not permitted by this Section 6.02 or for making any
distributions due on such Residual Certificate to the Holder thereof or
taking any other action with respect to such Holder under the
provisions of the Agreement so long as the Trustee received the
documents specified in clause (iii). The Trustee shall be entitled to
recover from any Holder of a Residual Certificate that was in fact not
a Permitted Transferee at the time such distributions were made all
distributions made on such Residual Certificate. Any such distributions
so recovered by the Trustee shall be distributed and delivered by the
Trustee to the prior Holder of such Residual Certificate that is a
Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee shall have the
right but not the obligation, without notice to the Holder of such
Residual Certificate or any other Person having an Ownership Interest
therein, to notify the Seller to arrange for the sale of such Residual
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Seller or its Affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of such Residual
Certificate that is a Permitted Transferee, except that in the event
that the Trustee determines that the Holder of such Residual
Certificate may be liable for any amount due under this Section 6.02 or
any other provisions of this Agreement, the Trustee may withhold a
corresponding amount from such remittance as security for such claim.
The terms and conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Trustee, and it shall not be
liable to any Person having an Ownership Interest in a Residual
Certificate as a result of its exercise of such discretion.
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(vi) If any Person other than a Permitted Transferee acquires
any Ownership Interest in a Residual Certificate in violation of the
restrictions in this Section 6.02, then the Trustee, based on
information provided to the Trustee by the Seller will provide to the
Internal Revenue Service, and to the persons specified in Sections
860E(e)(3) and (6) of the Code, information needed to compute the tax
imposed under Section 860E(e)(5) of the Code on transfers of residual
interests to disqualified organizations.
The foregoing provisions of this Section 6.02(d) shall cease to apply to
transfers occurring on or after the date on which there shall have been
delivered to the Trustee, in form and substance satisfactory to the Trustee, (i)
written notification from each Rating Agency that the removal of the
restrictions on Transfer set forth in this Section 6.02 will not cause such
Rating Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause any REMIC to fail to
qualify as a REMIC.
Each Tax Matters Person Residual Interest shall at all times be
registered in the name of the Tax Matters Person.
(e) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, 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 Certificates surrendered for registration of transfer or exchange
shall be canceled 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, the Seller 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) in connection 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 Seller, the
Depositor, the Trustee, the Certificate Registrar, the Certificate Insurer, any
Paying Agent and any agent of any of them 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 Seller, the
Depositor, the Trustee, the Certificate Insurer, the Certificate Registrar nor
any agent of any of them shall be affected by notice to the contrary.
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Section 6.05. Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Certificateholders
from the Distribution 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 Seller.
(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 Certificateholders in trust for the
benefit of the 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.
ARTICLE VII
The Seller, The Depositor and The Servicer
Section 7.01. Liability of the Seller and the Servicer. The Seller, the
Depositor and the Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the Seller
or Servicer, as the case may be, herein.
Section 7.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Depositor, the Seller or the Servicer. Any corporation into
which the Seller, the Depositor or the Servicer may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Seller, the Depositor or the Servicer shall be a party, or any
corporation succeeding to the business of the Seller, the Depositor or the
Servicer, shall be the successor of the Seller, the Depositor or the Servicer,
as the case may be, hereunder, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, however, that the successor Servicer shall
satisfy all the requirements of Section 8.02 with respect to the qualifications
of a successor Servicer.
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Section 7.03. Limitation on Liability of the Seller, the Depositor, the
Servicer and Others. None of the Depositor, the Seller, the Servicer nor any of
the directors or officers or employees or agents of the Depositor, the Seller or
the Servicer shall be under any liability to the Trust or the Certificateholders
for any action taken or for refraining from the taking of any action by the
Servicer in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the
Seller or the Servicer or any such Person against any liability which would
otherwise be imposed by reason of its willful misfeasance, bad faith or
negligence in the performance of duties of the Depositor, the Seller or the
Servicer or by reason of its reckless disregard of its obligations and duties of
the Depositor, the Seller or the Servicer hereunder. The Depositor, the Seller
or the Servicer and any director or officer or employee or agent of the
Depositor, the Seller or 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 Depositor, the Seller or 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 or results from a breach of
representation by the Depositor, the Seller or the Servicer) and any loss,
liability or expense incurred by reason of its willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of its reckless
disregard of obligations and duties hereunder. The Depositor, the Seller or the
Servicer shall be under no obligation to appear in, prosecute or defend any
legal action that is not incidental to its duties hereunder and that in its
opinion, may involve it in any expense or liability; provided, however, that the
Servicer may undertake any such action which it may deem necessary or desirable
in respect of this Agreement, and the rights and duties of the parties hereto
and the interests of the 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. 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 each of the following conditions: (a) the
Servicer has proposed an Approved Servicer to the Seller, the Depositor and the
Trustee in writing and such proposed Approved Servicer is reasonably acceptable
to the Seller, the Depositor and the Trustee; and (b) each Rating Agency shall
have delivered a letter to the Trustee prior to the appointment of the Approved
Servicer stating that the proposed appointment of such Approved Servicer as
Servicer hereunder will not result in the reduction or withdrawal of the then
current ratings of the Offered Certificates; provided, however, that no such
resignation by the Servicer shall become effective until such successor servicer
or, in the case of (i) above, the Successor Servicer 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 Seller, the Depositor,
the Trustee and the Certificate Insurer.
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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, who agrees to conduct such duties in accordance
with standards comparable to those set forth in 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. The Servicer shall provide the Trustee with written notice
prior to the delegation of any of its duties to any Person other than any of the
Servicer's Affiliates or their respective successors and assigns.
Section 7.06. Indemnification of the Trust by the Servicer.
(a) 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 willful misfeasance, bad faith or
negligence in the performance of its activities in servicing or administering
the Mortgage Loans pursuant to 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 related to the Servicer's misfeasance, bad faith or
negligence. Any such indemnification shall not be payable from the assets of the
Trust. The provisions of this Section 7.06 shall survive the termination of this
Agreement.
(b) If the Servicer fails to make when due (without regard to any cure
period) any Monthly Advance or deposit required by it hereunder, the Servicer
shall pay the Trustee for the account of the Trustee interest at the prime rate
from the date on which such payment was due (without regard to any cure period)
to and including the date on which the Servicer makes such payment.
ARTICLE VIII
Default
Section 8.01. Events of Default.
(a) If any one of the following events ("Events of Default") shall
occur and be continuing:
(i) (A) The failure by the Servicer to make any Monthly
Advance which continues unremedied for a period of one (1) Business Day
after it was due; or (B) any other failure by the Servicer to deposit
in the Collection Account or the Distribution Account any deposit
required to be made under the terms of this Agreement which continues
unremedied for a period of two (2) Business Days after such deposit was
due;
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(ii) The failure by the Servicer to make any required
Servicing Advance which failure continues unremedied for a period of
sixty (60) days, or the failure by the Servicer duly to observe or
perform, in any material respect, any other covenants, obligations or
agreements of the Servicer as set forth in this Agreement, which
failure materially and adversely affects the interests of the
Certificateholders, without regard to the Certificate Insurance Policy,
continues unremedied for a period of sixty (60) days, after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trustee or to
the Servicer and the Trustee, by any Holder with Certificates
evidencing Voting Interests of at least [25]%; provided, however, that
in the case of a -------- ------- failure that cannot be cured within
sixty (60) days, the cure period may be extended if the Servicer can
demonstrate to the reasonable satisfaction of the Trustee and the
Certificate Insurer that the Servicer is diligently pursuing remedial
action;
(iii) The filing of a petition against the Servicer in 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,
marshaling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any
such decree or order unstayed and in effect for a period of thirty (30)
consecutive days;
(iv) The Servicer 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, marshaling
of assets and liabilities or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of 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, receiver, liquidator or similar person in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer; 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 bankruptcy
insolvency or reorganization statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its
obligations; or
(v) the Servicer Termination Test is failed;
(b) then, and in each and every such case, so long as an Event of
Default shall not have been remedied, (x) with respect solely to clause
(a)(i)(A) above, upon receipt of written notice or discovery by a Responsible
Officer of the Trustee of such failure, the Trustee shall give immediate
telephonic notice of such failure to a Servicing Officer of the Servicer and the
Trustee shall terminate all of the rights and obligations of the Servicer under
this Agreement and the Successor Servicer appointed in accordance with Section
8.02, shall immediately make such Monthly Advance and assume, pursuant to
Section 8.02, the duties of a successor Servicer and (y) in the case of clause
(a)(i)(B), (ii), (iii), (iv), and (v) above, the Trustee shall, at the direction
of the Holders of Offered Certificates evidencing not less than 51% of all of
the Voting Rights by notice then given in writing to the Servicer (and to the
Trustee if given by Holders of Certificates), 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 Seller. On or
after 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 Successor
Servicer pursuant to and under this Section 8.01; and, without limitation, the
Successor Servicer 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
Successor Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the Servicer hereunder, including, without
limitation, the transfer to the Successor Servicer for the administration by it
of all cash amounts that shall at the time be held by the predecessor Servicer
and to be deposited by it in the Collection Account, or that have been deposited
by the predecessor Servicer in the Collection Account or thereafter received by
the predecessor Servicer with respect to the Mortgage Loans. All Servicing
Transfer Costs and other reasonable out-of-pocket 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, to the extent not paid by the predecessor Servicer, by the Trust pursuant to
Section 5.01(a)(16) (or, if the predecessor Servicer is the Trustee, by the
initial Servicer), upon presentation of reasonable documentation of such costs
and expenses. If the predecessor Servicer is required but fails to pay the
amounts specified in the preceding sentence and such amounts are paid by the
Trust, the Trustee shall, at the direction and expense of the Class BIO
Certificateholders, take appropriate action to enforce such obligation and
recover such amounts on behalf of such Class BIO Certificateholders.
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(c) Upon the occurrence of an Event of Default, the Servicer shall act
as Servicer under this Agreement, subject to the right of removal set forth in
subsection (b) hereof, for an initial period commencing on the date on which
such Event of Default occurred and ending on the last day of the calendar
quarter in which such Event of Default occurred, which period shall be extended
by the Trustee (an "Extension Notice") for a succeeding quarterly period ending
on December 31, March 31, June 30 and September 30 of each year (each such
quarterly period for which the Servicer shall be designated to act as Servicer
hereunder, a "Term of Service") until such time as the Trustee receives written
direction from the Holders of Certificates evidencing at least 51% of the Voting
Rights not to deliver an Extension Notice, in which event the Trustee shall
follow such direction; provided that nothing in this clause (c) shall prohibit
the Trustee from removing (or prohibit Certificateholders from directing the
Trustee to remove) the Servicer pursuant to clause (b) above. In the event the
Trustee fails to deliver an Extension Notice prior to the end of any Term of
Service, the Servicer shall be automatically terminated.
(d) If the Successor Servicer or another Person succeeds to the
obligations of Servicer hereunder, the term of the Successor Servicer or such
Person shall not be limited unless and until an Event of Default thereafter
occurs with respect to such Successor Servicer or other Person. At such time,
the provisions of Section 8.01 (c) and (d) shall become applicable to the
then-acting Servicer and the Person then-obligated to succeed such then-acting
Servicer.
Section 8.02. Appointment of Successor.
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(a) The Depositor and the Trustee hereby appoint, and
[____________________________], hereby accepts appointment, on behalf of itself
or an affiliate, upon receipt by the Servicer of a notice of termination
pursuant to Section 8.01 or upon resignation of the Servicer pursuant to Section
7.04(i), to be the successor (the "Successor Servicer") 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 arising on and after its succession;
provided, however, that, without affecting the immediate termination of the
rights of the Servicer hereunder, it is understood and acknowledged by the
parties hereto that there will be a period of transition not to exceed 90 days
(the "Transition Period") before the servicing transfer is fully effected.
During the Transition Period, neither the Successor Servicer nor the
Trustee shall be responsible for the lack of information and documents that it
cannot reasonably obtain on a practicable basis under the circumstances.
As compensation therefor, the Successor Servicer shall be entitled to
such compensation as the Servicer would have been entitled to hereunder if no
such notice of termination had been given. Notwithstanding the above, if the
Successor Servicer is unwilling or legally unable to act as successor servicer,
the Trustee may 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
$25,000,000 and that is an Approved Servicer 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 the appointment of any
such successor Servicer will not result in the qualification, reduction or
withdrawal of the ratings assigned to the Offered Certificates by the Rating
Agencies. Pending appointment of a successor to the Servicer hereunder, unless
the Successor Servicer is prohibited by law from so acting, the Successor
Servicer 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 the 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 appointment of a successor Servicer shall not affect any
liability of the predecessor Servicer which may have arisen under this Agreement
prior to its termination as Servicer to pay any deductible under an insurance
policy pursuant to Section 3.05 or to indemnify the Trustee pursuant to Section
7.06, nor shall any successor Servicer be liable for any acts or omissions of
the predecessor Servicer or for any breach by such Servicer of any of its
representations or warranties contained herein or in any related document or
agreement. The Trustee or a successor Servicer shall have no responsibility or
obligation (i) to repurchase or substitute for any of the Mortgage Loans or (ii)
for any acts or omissions of a predecessor Servicer during the Transition
Period. 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 Successor Servicer, 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 (ii) maintain in force a policy or policies of insurance covering errors and
omissions in the performance of its obligations as Servicer hereunder and a
fidelity bond in respect of its officers, employees and agents to the same
extent as the Servicer is so required pursuant to Section 3.12.
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Section 8.03. Waiver of Defaults. The Majority Certificateholders may,
on behalf of all Certificateholders, waive any events permitting removal of the
Servicer as servicer pursuant to this Article VIII, provided, however, that the
Majority Certificateholders may not waive a default in making a required
distribution on a Certificate without the consent of the Holder of such
Certificate. Upon any waiver of a past default, such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto except to the
extent expressly so waived. Notice of any such waiver shall be given by the
Trustee to the Rating Agencies.
Section 8.04. 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 Certificate Insurer and to each Rating Agency.
Section 8.05. Rights of the Certificate Insurer. By accepting its
Senior Certificate, each holder of a Senior Certificate agrees that unless a
Certificate Insurer Default exists, the Certificate Insurer shall be deemed to
be the holder of the Senior Certificates for all purposes (other than with
respect to payment on the Senior Certificates) and shall have the right to
exercise all rights of the Certificateholders of the Senior Certificates under
this Agreement and under each Class of Senior Certificates without any further
consent of the Certificateholders. In addition, each Certificateholder of a
Senior Certificate agrees that unless a Certificate Insurer Default exists, the
rights specifically enumerated in this Agreement may be exercised by the
Certificateholders of a Senior Certificate only with the prior written consent
of the Certificate Insurer.
The Certificate Insurer may, in writing and in its sole discretion
renounce all or any of its rights under Section 8.05 or any requirement for the
Certificate Insurer's consent for any period of time.
Section 8.06. Certificate Insurer Default. Notwithstanding anything
elsewhere in this Agreement or in the Certificates to the contrary, if a
Certificate Insurer Default exists, or if and to the extent the Certificate
Insurer has delivered its written renunciation of its rights, the provisions of
this Article VIII and all other provisions of this Agreement which (a) permit
the Certificate Insurer to exercise rights of the Certificateholders of the
Senior Certificates, (b) restrict the ability of the Certificateholders of the
Senior Certificates, to act without the consent or approval of the Certificate
Insurer, (c) provide that a particular act or thing must be acceptable to the
Certificate Insurer, (d) permit the Certificate Insurer to direct (or otherwise
to require) the actions of the Trustee, the Servicer or the Certificateholders,
(e) provide that any action or omission taken with the consent, approval or
authorization of the Certificate Insurer shall be authorized hereunder or shall
not subject the party taking or omitting to take such action to any liability
hereunder or (f) which have a similar effect, shall be of no further force and
effect and the Trustee shall administer the Trust and perform its obligations
hereunder solely for the benefit of the Holders of the Certificates; provided,
however, that the Certificate Insurer's rights to consent to amendments, to
payments pursuant to Section 5.01(a)(5) and to receive reports and notices shall
not be affected by a Certificate Insurer Default and all other rights shall be
immediately reinstated following the cure of such Certificate Insurer Default.
Nothing in the foregoing sentence, nor any action taken pursuant thereto or in
compliance therewith, shall be deemed to have released the Certificate Insurer
from any obligation or liability it may have to any party or to the
Certificateholders of the Senior Certificates hereunder, under any other
agreement, instrument or document (including, without limitation, the
Certificate Insurance Policy) or under applicable law.
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ARTICLE IX
The Trustee
Section 9.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default 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 Default has occurred (which has not been cured) 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.
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. If any such instrument is found
not to be in the form specified in this Agreement, on its face, the Trustee
shall take action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will, at the expense of the Seller, provide notice thereof to the
Certificateholders and will, at the expense of the Seller, which expense shall
be reasonable given the scope and nature of the required action, take such
further action as directed by the Majority Certificateholders.
The Trustee may, in accordance with its duties hereunder, do all things
necessary and proper as may be required in connection with any secondary
mortgage licensing laws and similar requirements, including, but not limited to,
consenting to jurisdiction, and the appointment of agents for service of
process, in jurisdictions in which the Mortgaged Properties are located.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) prior to the occurrence of an Event of Default, and after
the curing or waiver of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall
not be liable except for the performance of such duties and obligations
as are specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the Trustee
and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
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(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 Holders of
Offered Certificates evidencing Percentage Interests 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 or
omitting to exercise 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 (a)(i) and (ii) of Section 8.01 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 or the Holders of
Offered Certificates evidencing Percentage Interests aggregating not
less than 51%. This paragraph shall not be construed to limit the
effect of the first paragraph of this Section 9.01.
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, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the 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.
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;
(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;
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(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 pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
may be incurred therein or thereby; 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 Default (which
has not been cured) 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;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) prior to the occurrence of an Event of Default and after
the curing of all Events of Default 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 the
Holders of Certificates evidencing Percentage Interests 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 Seller or, if paid by the
Trustee, shall be reimbursed by the Seller 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 until such time as the Trustee may act as
Servicer pursuant to Section 8.02;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian; and
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(viii) 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 such act.
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 Seller, 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, the Insurance Agreement, the Certificate
Insurance Policy 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 Servicer or for the use or application of any funds paid to
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 Seller, the Depositor 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 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, including,
without limitation, the Trustee's duty to review the Mortgage Files pursuant to
Section 2.02. Until such time as the Trustee shall have become the Successor
Servicer, the Trustee shall have no responsibility to perfect or maintain the
perfection of any security interest or lien granted to it hereunder.
Section 9.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee and may transact
any banking and trust business with the Seller or the Servicer.
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Section 9.05. Trustee Fees and Expenses. The Trustee will be paid the
Trustee Fee pursuant to Section 5.01 and such other amounts as agreed with the
Seller. The Seller 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 or the Insurance
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. In addition, the Seller covenants and agrees to indemnify the Trustee
and its officers, directors, employees and agents from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses incurred
in connection with or relating to this Agreement, the Insurance Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence of the Trustee in the performance
of its duties hereunder or by reason of the Trustee's reckless disregard of
obligations and duties hereunder. To the extent that amounts payable to the
Trustee under this Section 9.05, other than the Trustee Fee, are not paid by the
Seller, such amounts shall be payable to the Trustee by the Trust pursuant to
Section 5.01(a)(16). This Section 9.05 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 and a minimum long-term debt rating
of "Baa3", and 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. 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 Depositor, the Seller, the Servicer and each Rating
Agency. Upon receiving such notice of resignation, the Seller shall promptly
appoint a successor Trustee (approved in writing by the Servicer, so long as
such approval shall not unreasonably be withheld) by written instrument, in
duplicate, copies of which instrument shall be delivered to the resigning
Trustee and the Successor Trustee; provided, however, that any such successor
Trustee shall be subject to the prior written approval of the Servicer. If no
successor Trustee shall have been so appointed and having accepted appointment
within thirty (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 Seller or the Depositor 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, then the
Seller, the Depositor or the Servicer may remove the Trustee. If the Seller, the
Depositor or the Servicer removes the Trustee under the authority of the
immediately preceding sentence, the Seller shall promptly appoint a successor
Trustee by written instrument, in duplicate, copies of which instrument shall be
delivered to the Trustee so removed and to the successor Trustee.
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The Holders of Certificates evidencing Voting Rights aggregating over
50% of all Voting Rights may, at any time remove the Trustee by written
instrument or instruments delivered to the Servicer, the Seller, the Depositor
and the Trustee; and the Seller shall thereupon use its best efforts to appoint
a successor trustee in accordance with this Section 9.07.
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 Seller,
the Servicer and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as Trustee. The Depositor, the Seller, the
Servicer and the predecessor Trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Trustee all such rights, powers, duties
and obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.08 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 9.06.
If a successor Trustee is to become the Successor Servicer hereunder,
it shall be an Approved Servicer. If a successor Trustee is not to become the
Successor Servicer hereunder, the entity then acting as Successor Servicer
hereunder shall continue to act in such capacity until such time as an Approved
Servicer has agreed to assume the role of Successor Servicer hereunder.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 9.08, the Servicer shall mail notice of the succession of such
Trustee hereunder to all Holders of Certificates at their addresses as shown in
the Certificate Register and to the Certificate Insurer and each Rating Agency.
If the Servicer fails to mail such notice within thirty (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.
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Section 9.09. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided that such corporation 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.
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 Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
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 Servicer 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 Servicer shall not have joined in such
appointment within fifteen (15) days after the receipt by it of a request so to
do, or, in the case an Event of Default 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 Seller 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 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 Default,
the Trustee may accept the resignation or remove any separate trustee
or co-trustee.
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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
Seller 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 this
Agreement. Each of the undertakings and agreements made on the part of the
Trustee in the Certificates is made and intended not as a personal undertaking
or agreement by the Trustee but is made and intended for the purpose of binding
only the Trust.
Section 9.12. Trustee May Enforce Claims Without Possession of
Certificates; Inspection.
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such 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 of the Certificateholders or in respect of which such
judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the Servicer
and each Certificateholder upon reasonable notice during normal business hours,
access to all records maintained by the Trustee in respect of its duties
hereunder and access to officers of the Trustee responsible for performing such
duties. Upon request, the Trustee shall furnish the Seller, the Depositor, the
Servicer and any requesting Certificateholder with its most recent financial
statements. The Trustee shall cooperate fully with the Seller, the Depositor,
the Servicer and such Certificateholder and shall make available to the Seller,
the Depositor, the Servicer and such Certificateholder for review and copying
such books, documents or records as may be requested with respect to the
Trustee's duties hereunder. The Seller, the Depositor, the Servicer and the
Certificateholders shall not have any responsibility or liability for any action
or failure to act by the Trustee and are not obligated to supervise the
performance of the Trustee under this Agreement or otherwise.
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Section 9.13. Suits for Enforcement. In case an Event of Default or
other default by the Servicer or the Seller hereunder shall occur and be
continuing, the Trustee may proceed to protect and enforce its rights and the
rights of the 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.
Section 9.14. Appointment of Custodians. The Trustee may, with the
consent of the Depositor, the Seller and the Servicer (such consent to be
evidenced by their execution of a Custodial Agreement), appoint one or more
Custodians to hold all or a portion of the Mortgage Files as agent for the
Trustee, by entering into a Custodial Agreement. Each Custodian shall be a
depository institution or trust company subject to supervision by federal or
state authority, shall have combined capital and surplus of at least $50,000,000
and a minimum long-term debt rating of "Baa3" and shall be qualified to do
business in the jurisdiction in which it holds any Mortgage File.
ARTICLE X
Termination
Section 10.01. Termination.
(a) The respective obligations and responsibilities of the Depositor,
the Seller, the Servicer, the Custodian and the Trustee created hereby (other
than the obligation of the Trustee to make certain payments to
Certificateholders after the final Distribution Date and the obligation of the
Servicer to send certain notices as hereinafter set forth) shall terminate upon
notice to the Trustee of the later of (x) the distribution to Certificateholders
of the final payment or collection with respect to the last Mortgage Loan (or
Monthly Advances of same by the Servicer) and (y) the disposition of all funds
with respect to the last Mortgage Loan and the remittance of all funds due under
the Agreement and the payment of all amounts due and payable to the Certificate
Insurer and the Trustee. Notwithstanding the foregoing, in no event shall the
trust created hereby continue beyond the expiration of 21 years from the death
of the last surviving descendant of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of
the United States to the Court of St. ▇▇▇▇▇, living on the date hereof.
The Servicer may, at its option, terminate this Agreement on any
Distribution Date on or after the Optional Termination Date, by purchasing, on
such Distribution Date, all of the outstanding Mortgage Loans and REO Properties
at a price equal to the sum of (w) 100% of the aggregate Principal Balance of
the Mortgage Loans plus (x) the lesser of (A) the appraised value of any REO
Property as determined by the higher of two appraisals completed by two
independent appraisers selected by the Servicer and at the Servicer's expense
and (B) the Principal Balance of the Mortgage Loan related to such REO Property
plus (y) in each case, the greater of (i) the aggregate amount of accrued and
unpaid interest on the Mortgage Loans through the related Due Period and (ii)
thirty (30) days' accrued interest thereon at a rate equal to the Loan Rate, in
each case net of the Servicing Fee plus (z) any amounts due to the Certificate
Insurer under the Insurance Agreement (the "Termination Price").
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In connection with any such purchase pursuant to the preceding
paragraph, the Servicer shall deposit in the Distribution Account all amounts
then on deposit in the Collection Account (less amounts permitted to be
withdrawn by the Servicer pursuant to Section 3.03), which deposit shall be
deemed to have occurred immediately preceding such purchase.
Any such purchase shall be accomplished by deposit into the
Distribution Account on the Determination Date before such Distribution Date of
the Termination Price.
(b) Notice of any termination, specifying the Distribution Date (which
shall be a date that would otherwise be a Distribution Date) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders and the Certificate Insurer mailed not
earlier than the 15th day and not later than the 25th day of the month next
preceding the month of such final distribution specifying (i) the Distribution
Date upon which final distribution of the Certificates will be made upon
presentation and surrender of 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 Distribution Date is not
applicable, distributions being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
(c) On the final Distribution Date, the Trustee will withdraw from the
Distribution Account and remit to the Certificate Insurer the lesser of (x) the
amount available for distribution on such final Distribution Date, net of any
portion thereof necessary to pay Certificateholders pursuant to Sections 5.01
and (y) the unpaid amounts due and owing to the Certificate Insurer pursuant to
Section 5.01. Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the holders of Certificates on the Distribution
Date for such final distribution, in proportion to the Percentage Interests of
their respective Certificates and to the extent that funds are available for
such purpose, an amount equal to the amount required to be distributed to
Certificateholders pursuant to Section 5.01 for such Distribution Date.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate escrow account for the
benefit of such Certificateholders and the Servicer (if the Servicer has
exercised its right to purchase the Mortgage Loans) or the Trustee (in any other
case) shall give a second written notice to the remaining Certificateholders to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within one (1) year after the second notice all the
Offered Certificates shall not have been surrendered for cancellation, the
Trustee may take appropriate steps, or may appoint an agent to take appropriate
steps, to contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds on deposit in
such escrow account.
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Section 10.02. Additional Termination Requirements.
(a) In the event that the Servicer exercises its purchase option as
provided in Section 10.01, the Trust shall be terminated in accordance with the
following additional requirements, unless the Trustee shall have been furnished
with an Opinion of Counsel to the effect that the failure of the Trust to comply
with the requirements of this Section 10.02 will not (1) result in the
imposition of taxes on "prohibited transactions" of the Trust as defined in
Section 860F of the Code or (2) cause any REMIC to fail to qualify as a REMIC at
any time that any Regular Certificates are outstanding:
(i) Within ninety (90) days prior to the final Distribution
Date, the Servicer shall adopt and the Trustee shall sign a plan of
complete liquidation for each REMIC meeting the requirements of a
"Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan of
complete liquidation and at or prior to the final Distribution Date,
the Trustee shall sell all of the assets of the Trust to the Servicer
for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited (A) to the Trustee, as holder of the REMIC I
Regular Interests and REMIC II Regular Interests, the unpaid principal
balance thereof plus accrued interest thereon, (B) to each Class of
Certificates the amounts payable pursuant to Section 5.01, (C) to the
Certificate Insurer, all amounts owing to the Certificate Insurer under
this Agreement and the Insurance Agreement and (D) to the Class R-1
Certificateholders, Class R-2 Certificateholders and Class R-3
Certificateholders, all cash on hand in REMIC I, REMIC II and REMIC
III, respectively, after such payments.
(b) By their acceptance of the Certificates, the Holders thereof hereby
agree to appoint the Trustee as their attorney in fact to: (i) adopt such a plan
of complete liquidation (and the Certificateholders hereby appoint the Trustee
as their attorney in fact to sign such plan) as appropriate and (ii) to take
such other action in connection therewith as may be reasonably required to carry
out such plan of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
Miscellaneous Provisions
Section 11.01. Amendment.
(a) This Agreement may be amended from time to time by the Seller, the
Depositor, the Servicer, and the Trustee subject, in the case of any amendment
or modification which affects any right, benefit, duty or obligation of the
Certificate Insurer or the Custodian, to the consent of the Certificate Insurer
or the Custodian, as applicable, in each case without the consent of any of the
Certificateholders, (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 or the expectations of
Certificateholders, (iii) to add to the duties of the Servicer, (iv) to add any
other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement,
(v) to add or amend any provisions of this Agreement as required by any Rating
Agency or any other nationally recognized statistical rating agency in order to
maintain or improve any rating of each Class of Offered Certificates (it being
understood that, after obtaining the ratings in effect on the Closing Date, none
of the Certificate Insurer, the Trustee, the Seller, the Depositor, or the
Servicer is obligated to obtain, maintain or improve any such rating), (vi) to
provide for gross deposits to the Collection Account by the Servicer or (vii) to
add or amend any provisions of this Agreement to such extent as shall be
necessary to maintain the qualification of any REMIC as a REMIC; provided,
however, that (x) as evidenced by an Opinion of Counsel (at the expense of the
requesting party) in each case such action shall not adversely affect in any
material respect the interest of any Certificateholder, without regard to the
existence of the Certificate Insurance Policy, (y) in each case, such action is
necessary or desirable to maintain the qualification of any REMIC as a REMIC or
shall not adversely affect such qualification and (z) if the opinion called for
in clause (x) cannot be delivered with regard to an amendment pursuant to clause
(vii) above, such amendment is necessary to maintain the qualification of any
REMIC as a REMIC; and provided, further, that the amendment shall not be deemed
to adversely affect in any material respect the interests of the
Certificateholders and no Opinion of Counsel to that effect shall be required if
the Person requesting the amendment obtains a letter from each Rating Agency
stating that the amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Offered Certificates, without regard
to the existence of the Certificate Insurance Policy.
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(b) This Agreement also may be amended from time to time by the Seller,
the Depositor, the Servicer, and the Trustee, subject, in the case of any
amendment or modification which affects any right, benefit, duty or obligation
of the Certificate Insurer or the Custodian, to the consent of the Certificate
Insurer or the Custodian, as applicable, with the consent of the Holders of each
Class of Certificates which is affected by such amendment, evidencing Voting
Rights aggregating not less than 51% of such Class (or in the case of an
amendment which affects all classes, not less than 51% of all of the Voting
Rights in the Trust), 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 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.
(c) Without limiting the provisions of Sections 11.01(a) or 11.01(b)
the amendment to any of the following provisions shall be deemed to affect the
rights, benefits, duties or obligations of the Certificate Insurer and therefore
require the consent of the Certificate Insurer: (i) the amount and timing of any
amounts payable to the Certificate Insurer hereunder; (ii) the definitions of
Class Interest Distribution, Cumulative Loss Event, Delinquency Event,
Guaranteed Distributions, Required Overcollateralization Amount, Senior
Principal Distribution Amount, Servicing Termination Test; (iii) any other
definition to the extent that the amendment of such definition would increase or
decrease the amounts or limits calculated or specified pursuant to any of the
definitions listed in clause (ii) above or otherwise affect the intended use of
any of the definitions listed in clause (ii) above; and (iv) Section 4.01, 4.03,
8.05, 11.01, 11.09, 11.12, 11.13, and 11.14 of this Agreement. In addition, if
the Trustee is acting as Servicer hereunder, any proposed amendment shall
require the consent of the Certificate Insurer.
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(d) Prior to the solicitation of consent of Certificateholders in
connection with any such amendment, the party seeking such amendment shall
furnish the Trustee with an Opinion of Counsel stating whether such amendment
would adversely affect the qualification of any REMIC as a REMIC and notice of
the conclusion expressed in such Opinion of Counsel shall be included with any
such solicitation. An amendment made with the consent of all Certificateholders
and executed in accordance with this Section 11.01 shall be permitted or
authorized by this Agreement notwithstanding that such Opinion of Counsel may
conclude that such amendment would adversely affect the qualification of any
REMIC as a REMIC.
(e) Prior to the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Rating
Agency. In addition, promptly after the execution of any such amendment made
with the consent of the Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
the Certificate Insurer.
(f) It shall not be necessary for the consent of Certificateholders
under this Section 11.01 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 Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
(g) Notwithstanding the permissive language in Section 11.01(a) and
11.01(b), upon satisfaction of the conditions in Section 11.01(a) or 11.01(b) as
applicable, the Trustee shall execute and deliver the applicable amendment;
provided, however, that the Trustee shall not be required to execute any
amendment which, based on an Opinion of Counsel, materially and adversely
affects the rights, duties or immunities of the Trustee hereunder.
Section 11.02. Recordation of Agreement. This Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Trustee, but only upon direction of Certificateholders, accompanied by an
Opinion of Counsel to the effect that such recordation materially and
beneficially affects the interests of Certificateholders. The 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.
Section 11.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
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No Certificateholder shall have any right to vote (except as provided
in Sections 8.01, 9.01, 9.02 and 11.01) 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
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 Offered Certificates evidencing Voting Rights aggregating
not less than 51% of all the Voting Interests 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 sixty (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, the Trustee that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the Certificates,
or to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all
Certificateholders. For the protection and enforcement of the provisions of this
Section 11.03, each and every Certificateholder, the Trustee shall be entitled
to such relief as can be given either at law or in equity.
Section 11.04. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING PROVISIONS
REGARDING CONFLICTS OF LAWS) AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.05. Notices.
(a) 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
Seller, Delta Financial Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, (b) in the case of the Depositor, Renaissance Mortgage Acceptance Corp.,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, (c) in the case of the Servicer,
[____________________________], Attention: [_______], (d) in the case of the
Trustee, [____________________________], Attention: [_______]; (e) in the case
of S&P, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Residential Mortgage Group, (f) in the case of Fitch, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (g) in the case of ▇▇▇▇▇'▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇.,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (h) in the case of the Certificate Insurer, Financial
Security Assurance, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Surveillance Department Re:, (Home Equity Loan Asset-Backed Certificates, Series
2001-2, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇ or 3529 Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇ (in
each case in which notice or other communication to the Certificate Insurer
refers to an Event of Default, a claim on the Certificate Insurance Policy or
with respect to which failure on the part of the Certificate Insurer to respond
shall be deemed to constitute consent or acceptance, then a copy of such notice
or other communication shall be marked to indicate "URGENT MATERIAL ENCLOSED"),
or (i) 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 delivery such notice or document
to any Rating Agency.
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(b) Notice to Rating Agencies. The Trustee and the Servicer shall each
be obligated to use its best efforts promptly to provide notice, at the expense
of the Servicer, to each Rating Agency with respect to each of the following of
which a Responsible Officer of the Trustee or Servicer, as the case may be, has
actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured or waived;
(iii) The resignation or termination of the Servicer or the
Trustee;
(iv) The final payment to Holders of the Certificates of any
Class;
(v) Any change in the location of any Account; and
(vi) Any event that would result in the inability of the
Trustee to make advances regarding delinquent Mortgage Loans.
(c) The Trustee shall promptly furnish to each Rating Agency copies of
the following:
(i) Each annual report to Certificateholders described in
Section 5.03; and
(ii) Each statement to Certificateholders described in Section
5.03; and
(d) The Servicer shall promptly furnish to each Rating Agency copies of
the following:
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(i) Each annual statement as to compliance described in
Section 3.09;
(ii) Each annual independent public accountants' servicing
report described in Section 3.10; and
(iii) Each notice delivered pursuant to Section 8.01(b) which
relates to the fact that the Servicer has not made a Monthly Advance.
Any such notice pursuant to this Section 11.05 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to the
addresses specified above for each such Rating Agency.
Section 11.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 11.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 7.02, 7.04 and 7.05 (or 3.01),
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Holders of the Certificates evidencing Percentage
Interests aggregating not less than 66%. Notwithstanding the foregoing, the
Servicer may assign its rights to reimbursement for Monthly Advances, Servicing
Advances and Noncoverable Advances without Certificateholder consent.
Section 11.08. Certificates Nonassessable and Fully Paid. The parties
agree that the 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 6.02 are
and shall be deemed fully paid.
Section 11.09. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, the Certificateholders,
the Certificate Owners, the Certificate Insurer and their respective successors
and permitted assigns. The Certificate Insurer shall be a third-party
beneficiary of this Agreement, entitled to enforce the provisions hereof as if a
party hereto. Except as otherwise provided in this Agreement, no other person
will have any right or obligation hereunder.
Section 11.10. Counterparts. This Agreement 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 11.11. 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.
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Section 11.12. Mortgage Loans and Accounts Held for Benefit of the
Certificate Insurer. The Trustee shall hold the Mortgage Loans for the benefit
of the Certificateholders and the Certificate Insurer and all references in this
Agreement and in the Certificates to the benefit of Holders of the Certificates
shall be deemed to include the Certificate Insurer. The Trustee shall cooperate
in all reasonable respects with any reasonable request by the Certificate
Insurer for action to preserve or enforce the Certificate Insurer's rights or
interests under this Agreement and the Senior Certificates. The Servicer hereby
acknowledges and agrees that it shall service the Mortgage Loans for the benefit
of the Certificateholders and for the benefit of the Certificate Insurer, and
all references in this Agreement to the benefit of or actions on behalf of the
Certificateholders shall be deemed to include the Certificate Insurer.
Section 11.13. Effect of Payments by the Certificate Insurer;
Subrogation. Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on the Senior Certificates which is made
with moneys received pursuant to the terms of the Certificate Insurance Policy
shall not be considered payment of the Senior 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 the Senior Certificates within the meaning of
Section 5.01. The Depositor, the Seller, the Servicer and the Trustee
acknowledge, and each Holder by its acceptance of a Certificate agrees, that
without the need for any further action on the part of the Certificate Insurer,
the Depositor, the Seller, the Servicer, the Trustee or the Certificate
Registrar, to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of principal of or interest on the Senior Certificates to
the Holders of such Senior Certificates, (i) the Certificate Insurer will be
fully subrogated to the rights of such Holders to receive such principal and
interest from the Trust and (ii) the Certificate Insurer 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 Depositor, the Seller and the Servicer shall cooperate in all
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement without limiting the rights or affecting the interests of the Holders
as otherwise set forth herein.
Section 11.14. Notices to the Certificate Insurer. All notices,
statements, reports, certificates or opinions required by this Agreement to be
sent to any other party hereto or to the Certificateholders or the Rating
Agencies shall also be sent to the Certificate Insurer.
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IN WITNESS WHEREOF, the Seller, the Depositor, 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.
DELTA FUNDING CORPORATION,
as Seller
By
-------------------------------------
Name:
Title:
RENAISSANCE MORTGAGE ACCEPTANCE CORP.,
as Depositor
By
-------------------------------------
Name:
Title:
[____________________________________]
as Servicer
By
-------------------------------------
Name:
Title:
[____________________________________]
as Trustee
By
-------------------------------------
Name:
Title:
-118-
State of New York )
) ss.:
County of New York )
On the [___] day of [_________], [____] before me, a notary public in
and for the State of New York, personally appeared [_____________] known to me
who, being by me duly sworn, did depose and say that she is the
[__________________________________], one of the parties that executed the
foregoing instrument; and that s/he signed her name thereto by order of the
Board of Directors.
-----------------------
Notary Public
[Notarial Seal]
State of Florida )
) ss.:
County of )
On the [___] day of [_________], [____] before me, a notary public in
and for the State of New York, personally appeared [_____________] known to me
who, being by me duly sworn, did depose and say that she is the
[__________________________________], one of the parties that executed the
foregoing instrument; and that she signed her name thereto by order of the Board
of Directors.
-----------------------
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the [___] day of [_________], [____] before me, a notary public in
and for the State of New York, personally appeared [_____________] known to me
who, being by me duly sworn, did depose and say that he is the
[__________________________________], one of the parties that executed the
foregoing instrument; and that she signed her name thereto by order of the Board
of Directors.
-----------------------
Notary Public
[Notarial Seal]
State of New York )
) ss.:
County of New York )
On the [___] day of [_________], [____] before me, a notary public in
and for the State of New York, personally appeared [_____________] known to me
who, being by me duly sworn, did depose and say that he is the
[__________________________________], one of the parties that executed the
foregoing instrument; and that she signed her name thereto by order of the Board
of Directors.
-----------------------
Notary Public
[Notarial Seal]